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I 


51  ST  Congress,  )  SENATE.  (  Eeport 

isf  Session.      )  (    No.  847 


IN  THE  SENATE  OF  THE  UNITED  STATES. 


May  2. — Ordered  to  be  printed. 


Mr.  CuLLOM,  from  the  Committee  on  Interstate  Commerce,  submitted 

the  following 

REPORT: 

[To  accompany  Senate  resolutions  of  August  3  and  December  13,  1888.] 

During  the  first  session  of  the  Fiftieth  Congress  the  Senate  adopted 
the  following  resolution : 

SesoJved,  That  the  Committee  on  Interstate  Commerce  be,  and  it  is  hereby,  directed 
to  ascertain  and  report  to  the  Senate  whether  any  railroad  lines  located  in  the  United 
States  are  owned,  operated,  or  controlled  by  the  Grand  Trunk  Railway  Company,  the 
Canadian  Pacific  Railway  Company,  or  any  other  Canadian  railroad  corporation ; 
whether  commerce  originating  in  the  United  States  is  diverted  from  American  to 
Canadian  lines  of  transportation,  and,  if  so,  to  what  extent  and  by  what  means; 
and  whether  there  is  any  discrimination  in  the  charges  made  for  tolls  or  otherwise 
against  American  vessels  which  pass  through  the  Wellaud  and  St.  Lawrence  Canals. 

Said  committee  is  further  directed  to  inquire  fully  into  the  question  of  the  regula- 
tion of  the  commerce  carried  on  by  railroad  or  water  routes  between  the  United 
States  and  the  Dominion  of  Canada,  and  to  report  what  legislation  on  the  subject,  if 
any,  is  necessary  for  the  protection  of  the  commercial  interests  of  the  United  States 
or  to  promote  the  enforcement  of  the  "  act  to  regulate  commerce,"  approved  February 
4,  1887. 

In  making  the  inquiries  required  by  this  resolution  said  committee  shall  have  power 
to  send  for  persons  and  papers,  to  administer  oaths,  to  employ  a  clerk  and  a  stenogra- 
pher, to  sit  during  the  recess  of  Congress,  and  to  do  whatever  is  necessary  for  a 
thorough  investigation  of  the  subject.  Any  subcommittee  may  exercise  the  powers 
hereby  granted  to  said  committee,  and  the  expenses  of  said  investigation  shall  be 
paid  from  the  contingent  fund  of  the  Senate  upon  vouchers  duly  approved. 

This  resolution  was  adopted  August  3,  1888.  At  the  time  it  was 
believed  that  the  committee  would  have  an  opportunity  to  undertake 
the  investigation  ordered  during  the  recess  of  Congress  then  approach- 
ing, but  the  session  was  so  protracted  that  it  was  finally  found  to  be 
impracticable  to  hold  formal  sessions  and  take  testimony  at  the  differ- 
ent cities  which  it  seemed  necessary  to  visit  within  the  time  allowed  by 
the  brief  recess  which  followed  that  session.  The  committee,  however, 
made  the  preliminary  inquiries  necessary  to  ascertain  the  best  method 
of  obtaining  the  information  desired,  and  to  determine  the  course  that 
ought  to  be  pursued  in  conducting  the  inquiry,  and  decided  to  await 
the  further  action  of  the  Senate  before  proceeding  formally  with  the  in- 
vestigation. 

At  the  second  session  of  the  Fiftieth  Congress,  the  Senate  ordered 
the  investigation  to  be  continued,  adopting  the  following  resolution 
December  13,  1888: 

Resolved,  That  the  Committee  on  Interstate  (jommerce  be,  and  it  is  hereby,  directed 
to  continue  the  investigation  ordered  to  be  made  by  the  resolution  of  the  Senate  of 
August  3,  1888,  and  such  committee  is  hereby  given  all  the  authority  conferred  by 
said  resolution,  and  power  to  sit  during  any  recess  of  the  Senate  prior  to  December, 
1889,  the  necessary  expenses  of  such  investigation  to  be  paid  from  the  contingent 
fund  of  the  Senate. 


II  TRANSPORTATION   INTERESTS    OF 

In  compliance  with  the  order  of  the  Senate  the  committee  held  sev- 
eral meetings  and  finally  determined  to  take  testimony  upon  the  sub- 
jects under  investigation  at  the  cities  subsequently  visited.  Public 
notice  of  the  dates  and  places  of  these  hearings  was  given  through  the 
press  and  by  correspondence,  and  efforts  were  made  to  secure  the  at- 
tendance and  assistance  of  those  who  were  supposed  to  be  able  to  fur- 
nish the  information  desired  and  would  be  most  affected  by  any  legisla- 
tion or  action  that  might  be  proposed  as  a  result  of  the  investigation. 

It  is  not  claimed  by  the  committee  that  all  were  heard  who  ought  to 
have  been  given  a  hearing,  or  that  its  inquiries  were  as  searching  and 
complete  as  they  ought  to  have  been  made.  In  fact,  the  committee  was 
comi)elled  to  forego  visiting  a  number  of  cities  at  which  it  had  intended 
to  take  testimony  and  at  which  it  deemed  it  desirable  to  hold  hearings 
by  reason  of  the  fact  that  the  funds  available  for  its  use  were  found  to 
be  much  more  limited  than  had  been  expected.  While  the  committee 
was  somewhat  hampered  in  its  work  on  this  account,  it  has  endeavored 
to  make  the  inquiry  intrusted  to  it  as  as  thorough  and  complete  as  pos- 
sible under  the  circumstances,  and  believes  that  the  testimony,  state- 
ments, and  statistics  herewith  submitted  will  prove  of  value  to  Con- 
gress in  the  determination  of  such  questions  as  may  arise  with  respect 
to  the  transportation  interests  of  the  United  States  and  the  Dominion 
of  Canada. 

The  accompanying  statements  will  also  be  found  to  contain  valuable 
information  and  testimony  in  relation  to  the  effect  and  operation  of  the 
interstate  commerce  act  and  in  regard  to  questions  that  arise  with  re- 
spect to  amendments  thereto  which  are  from  time  to  time  suggested  and 
l)ublicly  discussed.  These  matters  were  not  strictly  within  the  range 
of  the  inquiry  which  the  committee  was  directed  to  make,  but  the  en- 
tire subject  of  the  regulation  of  commerce  between  the  States  being 
specially  within  the  jurisdiction  of  the  committee,  it  was  deemed  proper 
to  improve  the  opportunity  which  the  investigation  afforded  of  obtain- 
ing information  and  expressions  of  opinion  from  business  and  railroad 
men  concerning  the  general  subject  of  the  regulation  of  commerce  and 
the  practical  operation  of  the  interstate  commerce  act.  This  course  has 
given  to  the  testimony  taken  an  interest  and  value  beyond  its  applica- 
tion to  the  subject  specially  under  consideration,  and  has  in  a  measure 
enlarged  the  scope  of  the  investigation  directed  to  be  made  into  an  in- 
quiry into  the  general  subject  within  the  jurisdiction  of  the  committee. 

RAILROADS    IN    THE    UNITED    STATES    OWNED    OR    CONTROLLED    BY 

CANADIAN  ROADS. 

The  first  inquiry  which  the  Senate  directed  the  committee  to  make 
was  to  ascertain  and  report — 

Whether  any  railroad  lines  located  in  the  United  States  are  owned,  operated,  or 
controlled  by  the  Grand  Trunk  Railway  Company,  the  Canadian  Pacific  Railway 
Company,  or  any  other  Canadian  railroad  corporation. 

CTpon  this  branch  of  the  inquiry  the  committee  examined  in  detail 
Mr.  Joseph  Hickson,  the  general  manager  of  the  Grand  Trunk  Eailway 
of  Canada,  and  Mr.  William  C.  Van  Home,  president  of  the  Canadian 
Pacific  Eailway  Company,  both  of  whom  came  from  Montreal  to  New 
York  at  the  invitation  of  the  committee  especially  to  give  their  testi- 
mony, and  answered  fully  and  freely  all  questions  propounded  to  them. 

The  committee  submits  herewith  a  summary  of  the  information  ob- 
tained from  the  gentlemen  named  and  from  other  sources  in  relation  to 
this  branch  of  the  inquiry. 


X  THE    UNITED    STATES   AND    CANADA.  Ill 

LINES   CONTROLLED   BY  THE   GRAND  TRUNK. 

It  appears  from  a  statement  furnished  by  Mr.  Hickson  that  the  total 
mileage  of  the  lines  operated  and  controlled  by  the  Grand  Trunk  Rail- 
way is  as  follows : 

Miles. 

Lines  owned  and  leased  in  Canada '■^,  119 

Lines  in  the  United  States  : 

Leased  and  operated  as  a  part  of  the  Grand  Trunk  system 360 

Controlled  and  operated  in  harmony  with  the  Grand  Trunk 617 

977 

Total  mileage 4,096 

This  shows  that  there  are  977  miles  of  railway  located  in  the  CTnited 

States  which  are  operated  in  connection  with  the  Grand  Trunk  system 

and  are  under  the  control  of  that  company.     These  lines  lack  but  47 

v^    miles  of  constituting  one-fourth  of  the  entire  mileage  of  the  Grand 

\,    Trunk  system. 

sO        The  following  lines  of  railway  in  the  United  States  are  owned  or  con- 
lO^    trolled  by  the  Grand  Trunk  : 

The  Atlantic  and  St.  Lawrence,  which  extends  from  Portland  to  the 

I       boundary  between  Canada  and  the  State  of  Vermont,  a  distance  of 

166.58  miles.     This  line  is  owned  by  a  separate  corporation,  but  was 

leased  by  the  Grand  Trunk  in  1853  for  a  period  of  nine  hundred  and 

k    ninety-nine  years,  the  lease  being  sanctioned  by  the  legislatures  of  the 

"^    three  States  through  which  it  extends.     It  is  operated  as  a  part  of  the 

v^     Grand  Trunk  system.     Its  gross  earnings  during  the  year  ended  June 

^    30,  1888,  as  reported  to  the  Interstate  Commerce  Commission,  were 

^    $1,107,764.77. 
^       There  are  two  branch  lines  of  the  Atlantic  and  St.  Lawrence  oper- 
ated by  the  Grand  Trunk.    One  connects  the  line  named  with  Lewiston 
§   and  is  about  5  miles  in  length.    Another,  about  1^  miles  long,  extending 
^    from  the  Atlantic  and  St.  Lawrence  to  Norway. 

r^        In  the  State  of  New  York  there  is  a  short  line  1^  miles  in  length,  ex- 

^    tending  from  the  Canadian  boundary  to  Eouse's  Point.    This  was  built 

by  a  company  which  was  consolidated  with  the  Grand  Trunk. 

The  line  extending  from  the  Canadian  border  near  Fort  Covington 

'     to  Massena  Springs,  in  the  State  of  New  York,  a  distance  of  23  miles, 

,  >i      although  built  by  a  separate  corporation,  is  practically  owjied  by  the 

Grand  Trunk  and  connects  that  system  with  the  Eome  and  Watertown 

Railway. 

The  Chicago,  Detroit  and  Canada  Grand  Trunk  Junction  Railroad 
extends  from  Fort  Gratiot,  Mich.,  to  West  Detroit,  a  distance  of  59 
miles.  It  was  built  to  give  the  Grand  Trunk  a  connection  with  Detroit 
and  is  leased  to  the  Grand  Trunk. 

The  Michigan  Air  Line  Railway  extends  from  Lenox,  Mich.,  to  Jack- 
son, Mich.,  a  distance  of  105  miles.  The  Grand  Trunk  controls  a  ma- 
jority of  the  stock  of  the  company  and  the  operation  of  the  road. 

The  Chicago  and  Grand  Trunk  Railway  extends  from  Port  Huron, 
Mich.,  to  the  city  of  Chicago,  and  is  331  miles  in  length.  This  is  a  sep- 
arate corporation  and  a  separate  organization  is  kept  up,  the  line  being 
wholly  within  the  United  States,  but  a  majority  of  the  stock  and  bonds 
is  held  by  stockholders  of  the  Grand  Trunk  Railway  of  Canada,  which 
absolutely  controls  its  management  and  operation. 

The  Detroit,  Grand  Haven  and  Milwaukee  line,  extending  from  De- 
troit to  Grand  Haven,  Mich.,  is  controlled  in  the  same  way  by  the  Grand 
Trunk  corporation,  which  has  the  power  of  electing  the  directors  of  the 


company  and  its  ofdcers.       «?,*/*-%^  ,4^v^  » 


IV  TRANSPORTATION  INTERESTS  OF 

The  Toledo,  Saginaw  and  Muskegon  Railway  is  owned  and  controlled 
by  a  separate  corporation,  but  has  made  a  traffic  arrangement  under 
which  it  is  operated  as  a  connection  of  the  Chicago  and  Grand  Trunk 
Railway. 

LIXES   CONTROLLED   BY   THE   CANADIAN  PACIFIC. 

The  International  Railway  of  Maine,  extending  from  Montreal  across 
the  State  of  Maine  to  Mattawamkeag,  in  that  State,  is  leased  to  the 
Canadian  Pacific  Railway  Company  and  is  operated  as  a  part  of  its 
main  line  between  Montreal  and  the  maritime  provinces  of  Canada.  By 
a  trackage  arrangement  the  Canadian  Pacific  also  uses  jointly  the  line 
of  the  Maine  Central  Railway. 

The  Canadian  Pacific  owns  a  controlling  interest  in  the  road  extend- 
ing from  Montreal  to  Newport,  in  Vermont.  That  road  runs  into  Ver- 
mont for  a  short  distance,  then  back  into  Canada,  and  finally  into  Ver- 
mont again.  It  connects  the  Canadian  Pacific  at  Newport  with  the 
Boston  and  Lowell  Railroad,  thus  affording  it  a  connection  with  Boston 
and  points  in  New  England. 

The  Minneapolis,  St.  Paul  and  Sault  Ste.  Marie  Railroad  and  the 
Duluth,  South  Shore  a'ud  Atlantic  Railroad  are  known  as  the  "Soo" 
lines.  They  extend  from  Minneapolis  and  from  Duluth,  respectively,  tp 
Sault  Ste.  Marie,  connecting  there  with  the  Canadian  Pacific  by  means 
of  the  international  bridge,  owned  by  a  corporation  known  as  the  Sault 
Ste.  Marie  Bridge  Company.  One-half  of  the  stock  of  this  bridge  com- 
pany is  owned  by  the  Canadian  Pacific  Railway  Company,  one-fourth 
by  the  Minneapolis,  St.  Paul  and  Sault  Ste.  Marie  Railroad  Company, 
and  one-fourth  by  the  Duluth,  South  Shore  and  Atlantic  Railway  Com- 
pany. The  Canadian  Pacific  as  a  corporation  is  not  interested  in  these 
"Soo"  lines,  but  their  construction  was  promoted  and  aided  by  stock- 
holders and  friends  of  the  Canadian  Pacific,  who  hold  a  controlling 
interest  in  the  "  Soo"  lines.  While  operated  independently,  the  rela- 
tions between  these  lines  and  the  Canadian  Pacific  are  naturally  of  the 
most  friendly  character.  The  interests  of  each  are  the  same.  Through 
the  "  Soo"  lines  the  Canadian  Pacific  gains  access  to  the  business  be- 
tween the  Northwest  and  the  East,  passing  through  Minneapolis  and 
Duluth,  and  vice  versa. 

COMPETITION    BETWEEN    RAILROADS    IN    THE    UNITED    STATES    AND 
CANADA  AS  AFFECTED  BY  THE  INTERSTATE   COMMERCE  ACT. 

Since  the  enactment  by  Congress  of  the  interstate  commerce  act 
complaints  have  occasionally  been  made  in  behalf  of  the  railroad  inter- 
ests of  the  United  States  to  the  effect  that  certain  of  its  provisions 
operated  to  place  them  at  a  disadvantage  in  their  competition  with  the 
Canadian  railroads  which  are  engaged  in  the  transportation  of  traffic 
between  points  in  the  United  States  across  Canadian  territory  and  be- 
tween the  United  States  and  the  Dominion  of  Canada.  It  has  been 
claimed  that  the  statute  placed  restrictions  upon  the  railroads  operating 
lines  wholly  within  the  United  States  which  did  not  apply  with  like 
force  to  or  could  not  be  enforced  against  railroads  operating  lines  mainly 
within  foreign  territory  and  under  a  foreign  iurisdiction,  as  in  the  case 
of  the  Grand  Trunk  Railway  of  Canada  and  the  Canadian  Pacific  Rail- 
way, and  that  in  consequence  the  legislation  of  the  United  States  hav- 
ing in  view  the  regulation  of  interstate  commerce  practically  operated 
to  divert  traffic  from  American  to  Canadian  lines  of  transportation  and 
to  build  up  and  enrich  the  latter  at  the  expense  of  the  former. 


THE    UNITED    STATES    AND    CANADA.  V 

The  committee  was  therefore  directed  by  the  Senate  to  ascertain 
"  whether  commerce  originating  in  the  United  States  is  diverted  from 
American  to  Canadian  lines  of  transportation  ;  and,  if  so,  to  what  ex- 
tent and  by  what  means,"    And  it  was  further  directed — 

to  inquire  fully  into  the  question  of  the  regulation  of  the  commerce  carried  on  by- 
railroad  or  water  routes  between  the  United  States  and  the  Dominion  of  Canada,  and 
to  report  what  legislation  on  the  subject,  if  any,  is  necessary  for  the  protection  of 
the  commercial  interests  of  tlie  United  States  or  to  promote  *he  enforcement  of  the 
"  act  to  regulate  commerce,"  approved  February  4,  1887. 

In  endeavoring  to  carry  out  the  directions  of  the  Senate  in  these  re- 
spects the  committee  examined  a  large  number  of  witnesses  to  ascer- 
tain the  effect  of  the  regulations  imposed  by  the  interstate  commerce 
act  upon  the  railroads  of  the  United  States  in  their  competition  with 
the  Canadian  railroads  for  traffic  originating  in  the  United  States,  and 
the  effect  of  these  regulations  and  the  competition  of  the  Canadian 
railroads  upon  the  commercial  interests  of  the  United  States. 

Upon  the  one  side  the  committee  summoned  before  It  and  examined 
the  .principal  officers  of  the  leading  trunk  lines  operating-  between  Chi- 
cago and  the  Atlantic  seaboard  which  are  most  actively  in  competition 
with  the  Canadian  railroads,  representatives  of  the  leading  railroads  of 
lifew  England  which  are  in  direct  connection  with  the  Canadian  rail- 
roads, and  representatives  of  two  of  the  leading  transcontinental  lines 
which  are  in  competition  with  the  Canadian  Pacific  Railway.  Upon  the 
other  side  the  committee  secured  the  views  of  a  large  number  of  ship- 
pers and  representatives  of  commercial  and  other  organizations  through- 
out New  England  and  the  West  who  were  especially  interested  in  the 
maintenance  of  the  present  facilities  for  transportation  afforded  them 
by  the  Canadian  railroads.  As  a  result,  both  sides  of  the  various  im- 
portant questions  involved  in  the  inquiry  which  the  committee  was  di- 
rected to  make  were  fully  presented  in  the  course  of  its  public  hearings 
and  are  set  forth  in  detail  in  the  stenographic  report  of  those  hearings, 
which  is  submitted  herewith  and  made  a  part  of  this  report. 

THE   INTERSTATE  COMMERCE    ACT    AND    THE    CANADIAN   RAILROADS. 

The  two  principal  railroad  systems  of  Canada  are  those  of  the  Grand 
Trunk  Railway  of  Canada  and  of  the  Canadian  Pacific  Railway,  and 
both  have  become  formidable  competitors  of  the  American  roacls  in 
the  transportation  of  traffic  originating  in  the  United  States.  Under 
the  system  of  transportation  in  bond  which  has  grown  up  within  the 
past  twenty-three  years,  these  foreign  roads  participate  freely  and 
npon  equal  terms  with  the  railroads  of  the  United  States  in  the  car- 
rying trade  between  the  East  and  the  West,  and  the  Northwest,  and  in 
the  transportation  of  the  products  of  the  United  States  to  the  sea-board 
for  export.  Cars  belonging  to  the  Canadian  railroads  pass  freely  back 
and  forth  across  the  border,  and  are  practically  interchanged  with 
those  of  the  Amt^ricau  lines,  as  if  both  countries  were  under  the  same 
government.  The  customs  regulations  observed  at  the  border  have 
been  so  arranged  that  practically  they  do  not  interrupt  or  impede  the 
flow  of  traffic  from  one  portion  of  the  United  States  to  another  across 
Canadian  territory,  and  the  amount  of  this  traffic  increa-ses  from  year 
to  year. 

The  Grand  Trunk  Railway  of  Canada  has  been  for  years  a  member  of 
the  Trunk  Line  Association.  It  participates  with  the  other  trunk  lines 
in  the  agreements  made  by  the  members  of  that  association  and  is  gov- 
erned by  the  rules,  regulations,  and  rates  agreed  upon  by  that  associa- 


VI  TRANSPORTATION  INTERESTS  OF 

tioii.  It  is  treated  by  its  competitors  and  connections  in  the  United 
States  as  if  it  were  an  American  road,  as  it  is  in  some  respects,  having 
under  its  control  American  corporations  whose  lines  connect  it  with 
the  leading-  railroad  systems  of  the  United  States  at  Chicago  and  in 
Jfew  England. 

The  Canadian  Pacific  Kailway  and  the  lines  under  its  control  form  a 
transcontinental  route  from  ocean  to  ocean  wholly  within  Canadian  ter- 
ritory, except  a  link  running  for  a  short  distance  across  the  State  of 
Maine,  but  it  has  made  connections  with  American  railroads  at  the  in- 
ternational border  at  several  important  points  and  is  building  to  others. 
Its  main  line  was  completed  in  November,  1885,  and  was  opened  for 
traffic  in  August,  1886.  It  has  since  been  tapping  the  American  rail- 
way system  at  different  points  and  improving  its  connections,  but  its 
capacity  as  a  competitor  for  American  traffic  has  hardly  yet  been  fully 
developed  or  exhibited,  and  it  is  feared  by  its  American  rivals  more  for 
what  it  may  do  in  the  future  than  for  what  it  has  done  in  the  past. 

The  provisions  of  the  interstate  commerce  act  all  apply  to  the  trans- 
portation of  passengers  and  freight  by  these  Canadian  railways  from 
points  in  the  United  States  across  Canadian  territory  into  the  United 
States,  or  from  points  in  Canada  into  the  United  States.  The  power  of 
Congress  under  the  Constitution  "to  regulate  commerce  with  foreign 
nations"  as  well  as  " among  the  several  States,"  is  unquestioned.  The 
situation  with  respect  to  these  Canadian  railways  was  considered  when 
the  interstate  commerce  act  was  drawn,  and  it  was  so  framed  as  to 
apply  to  the  transportation  of  all  the  traffic  carried  by  rail  between 
the  two  countries  in  the  manner  indicated. 

And  with  the  view  of  rendering  more  certain  the  observance  of  the 
law  by  the  Canadian  railways  the  following  special  jDrovision  was  also 
incorporated  in  the  section  requiring  the  publication  and  posting  of 
rates : 

Any  common  carrier  subject  to  the  provisions  of  this  act  receiving  freight  in  the 
United  States  to  be  carried  through  a  foreign  country  to  any  place  in  the  United 
States  shall  also  in  like  manner  print  and  keep  open  to  public  inspection, at  every  depot 
or  office  where  such  freight  is  received  for  shipment,  schedules  showing  the  throngh 
rates  established  and  charged  by  such  common  carrier  to  all  points  in  the  United 
States  beyond  the  foreign  country  to  which  it  accepts  freight  for  shipment ;  and  any 
freight  shipped  from  the  United  States  through  a  foreign  country  into  the  United 
States,  the  through  rate  on  which  shall  not  have  been  made  public  as  required  by 
this  act,  shall,  before  it  is  admitted  iuto  the  United  States  from  said  foreign  country, 
be  subject  to  customs  duties  as  if  said  freight  were  of  foreign  production;  and  any 
law  in  conflict  with  this  section  is  hereby  repealed. 

GEOGrRAPHICAL    ADVANTAQES    OF    THE    CANADIAN  RAILWAYS   WITH 
RESPECT   TO   THE  LAW. 

But,  while  the  provisions  of  the  interstate  commerce  act  thus  apply 
to  all  the  traffic  carried  by  the  Canadian  railways  over  which  the  United 
States  has  jurisdiction,  it  will  seen  by  an  examination  of  the  testimony 
that  the  representatives  of  the  American  railroads  who  appeared  before 
the  committee  were  generally  of  the  opinion  that  the  restrictions  imposed 
by  the  statute  upon  the  railroads  of  the  United  States  did  not  apply  with 
equal  force  to  those  of  Canada.  The  feeling  of  these  witnesses  seemed  to 
be  that  the  Canadian  railways  were  in  a  position  which  would  enable  them, 
if  they  so  desired,  to  find  many  opportunities  of  evading  the  law  without 
fear  of  detection,  because  the  greater  part  of  their  operations  are  carried 
on  under  a  foreign  jurisdiction.  It  was  suggested,  for  example,  that 
while  the  agents  of  the  Canadian  railways  in  the  United  States  might 
strictly  observe  the  law  in  all  their  transactions,  their  officers  in  Canada 


THE    UNITED    STATES    AND    CANADA.  VU 

might  pay  rebates  or  offer  inducements  to  large  shippers  which  woulc' 
be  sufficient  to  divert  traffic  from  American  lines  of  transportation,  am 
which  it  would  be  very  difficult  to  detect. 

Two  illustrations  were  given  in  the  testimony  of  the  manner  in  wMcl: 
traffic  originating  in  the  United  States  might  be  diverted  to  and  carried 
by  the  Canadian  lines  without  regard  to  the  restrictions  of  the  interstate 
commerce  act.  The  Grand  Trunk  Railway,  for  instance,  might  publisl 
Its  through  rates  from  Detroit  to  the  east  and  might  observe  them  strictly 
as  to  all  passengers  starting  from  Detroit,  and  yet  it  could  make  what 
rates  it  pleased,  without  regard  to  the  law,  to  any  points  upon  its  lines 
within  the  Dominion  to  passengers  who  would  cross  the  river  at  Detroit 
and  begin  their  journey  in  Canada,  and  might  in  this  way  so  cut  the 
rates  as  to  secure  a  large  i^roportion  of  that  class  of  business  from  De- 
troit to  eastern  points.  It  was  not  directly  charged  that  this  had  been 
done,  but  it  was  suggested  that  it  could  be  done. 

A  case  in  which  freight  originating  iu  the  United  States  was  placed 
outside  of  the  operation  of  the  interstate  commerce  act  is  given  in  the 
statement  of  Mr.  J.  M.  Hannaford,  traffic  manager  of  the  i^orthern 
Pacific  Railroad.  The  following  extracts  from  his  statement  will  explain 
the  case : 

Now,  take  the  hop  business.  Last  year  there  were  probably  15,000  bales  of  hops  from 
Seattle  that  went  to  London.  Nobody  could  tell  at  what  rate  they  went.  We  'did 
not  carry  them.  They  could  local  them  by  tbose  little  outside  steamers  up  to  Van- 
couver, aud  the  moment  they  reached  there  they  were  entirely  within  the  British 
domain  uutil  they  reached  destination. 

The  Chairman.  Wherever  the  hops  would  be  gathered  in  Washington  Territory, 
would  they  be  billed  through  to  Loudon  or  up  to  Vancouver  ? 

Mr.  Haxnaford.  They  simply  would  be  lightered  up  to  Vancouver. 

The  Chairman.  And  then  billed  to  London  ? 

Mr.  Haxnaford.  And  then  billed  to  Loudon.  We  could  not  find  them.  We 
changed  our  tariff  several  times  during  the  season,  reduced  rates,  but  never  had  them 
low  enough  to  get  that  business. 

The  Chairman.  Perhaps  you  did  not  make  your  tariff  low  enough  iu  any  respect  to 
compete  with  the  Canadian  line  ? 

Mr.  Hannaford.  Possibly.  We  made  the  rate  as  low  as  §1.25  from  the  Pacific 
coast  to  the  Atlantic  sea-board,  aud  put  all  our  intermediate  busiuess  on  the  same 
basis. 

The  Chairman.  One  dollar  and  twenty-five  cents  a  hundred  ? 

Mr.  Hannaford.  Yes;  it  seemed  like  quoting  a  pretty  low  rate.  (Testimony, pp. 
571-572. 

Seattle  is  on  the  line  of  the  Northern  Pacific,  while  the  Canadian 
Pacific  Railway  has  no  connection  by  rail  with  that  city. 

EFFECT  OF  THE  LONG  AND  SHORT  HAUL  CLAUSE. 

But  the  argument  most  strongly  urged  in  behalf  of  the  American 
railroads  iu  support  of  the  claim  that  the  interstate  commerce  act  op- 
erated to  the  advantage  of  the  Canadian  railways  was  based  upon  the 
section  of  the  act  which  prohibits  the  making  of  a  greater  charge  for  a 
shorter  distance  than  for  a  longer  distance  over  the  same  line,  iu  the 
same  direction  under  substantially  similar  circumstances  and  condi- 
tions. 

There  was  a  substantial  unanimity  of  opinion  among  the  representa- 
tives of  the  American  railroads  who  appeared  before  the  committee 
with  respect  to  the  operation  of  this  section  of  the  statute.  The  follow- 
ing extracts  from  the  statements  of  representative  railroad  men  will 
serve  to  show  the  views  generally  expressed  upon  this  point. 

Mr.  Albert  Fink,  the  commissioner  of  the  Trunk  Line  Association,  of 
which  the  leading  American  trunk  lines  and  the  Grand  Trunk  Railway* 


VIII  TRANSPORTATION    INTERESTS    OF 

of  Canada  are  members,  expressed  the  belief  that  the  Canadian  rail- 
roads had  an  advantage  under  tlie  operation  of  the  short-haul  provision 
of  the  act  "  in  so  far  as  they  need  not  observe  the  law  in  Canada,"  and 
said  ; 

The  Canadian  roads  can  make  low  rates  in  competition  with  the  American  roads 
and  need  not  reduce  their  local  rates  under  the  long  and  short  haul  clause,  while  the 
low  competitive  rates  on  American  roads  force  a  reduction  in  rates  on  all  local  traffic. 
(Testimony,  p.  18.) 

In  the  event  of  a  rate  war,  Mr.  Fink  thought  the  American  railroads 
would  suffer  more  comparatively  than  the  Grand  Trunk  Railway,  be- 
cause the  short-haul  clause  would  require  the  local  rates  of  the  former 
to  conform  to  the  through  rates,  which  would  make  a  very  serious  in- 
road upon  their  revenues,  while  the  Canadian  roads  could  keep  up  their 
local  rates. 

Upon  the  same  question  Mr.  Chauncey  M.  Depew,  president  of  the 
New  York  Central  and  Hudson  River  Railroad  Company,  expressed  the 
opinion  that  the  greatest  advantage  the  Grand  Trunk  Railway  enjoyed 
over  its  competitors  in  the  United  States  in  consequence  of  the  enact- 
ment of  the  interstate  commerce  act  was  the  fact  it  could  recoup  in 
Canada.    He  said: 

They  have  got  the  whole  of  Canada  in  which  to  recoup  for  any  loss  they  may  sus- 
tain on  through  husiness  from  Chicago.  They  cau,  therefore,  at  all  times  compel  the 
American  roads  to  give  them  such  a  percentage  of  the  traffic  as  they  think  they  ought 
to  have  on  the  through  business  to  the  American  sea-boards— American  business. 
Otherwise  they  can  demoralize  the  whole  business  of  the  American  roads  and  make 
themselves -good  in  Canada  on  account  of  the  long  and  short  haul  clause,  which  makes 
the  direct  rate  cover  our  whole  business. 

Speaking  of  the  tendency  of  commerce  to  follow  the  line  of  least  re- 
sistance, Mr.  Charles  Francis  Adams,  president  of  the  Union  Pacific 
Railway,  said : 

The  effect  of  laws  recently  passed  has  been  to  create  an  artificial  resistance  on  that 
line,  and  I  find  in  the  case  of  the  Union  Pacific,  as  in  that  of  the  other  lines,  that 
there  is  a  tendency  now  to  a  diversion  of  traffic  to  what  might  be  called  the  artificial 
line  of  least  resistance  to  the  Gulf  of  Mexico  on  the  south  where  traffic  strikes  water, 
or  else  to  the  lakes  on  the  north  where  it  strikes  water.  The  tendency,  owing  to  the 
long  and  short  haul  clause  of  the  act  and  the  maintenance  of  rates  which  is  now  be- 
ing brought  about  by  the  more  perfect  enforcement  of  the  act,  is  to  cause  the  east 
and  west  lines  from  Chicago  and  St.  Paul  to  the  sea-board  to  be  put  at  a  disadvantage 
as  compared  with  the  Canadian  lines  and  the  lakes  and  the  Gulf  of  Mexico,  so  that 
there  is  a  tendency  toward  finding  new  lines  of  least  resistance,  and  in  that  way 
affecting  the  old  lines  and  the  business  of  the  country.     (Testimony,  p.  140.) 

The  St.  Paul,  Minneapolis  and  Manitoba  Railway  extends  from  St* 
Paul  to  within  500  miles  of  the  Pacific  coast,  running  about  150  miles 
south  of  the  Canadian  Pacific  Railway  on  an  average,  and  from  90  to 
150  miles  north  of  the  Northern  Pacific  Railroad.  Mr.  James  J.  Hill,  the 
president,  stated  that  his  road  was  in  competition  with  the  Canadian 
Pacific  Railway,  and  when  asked  if  he  could  compete  on  fair  terms,  the 
interstate  commerce  act  being  observed,  he  replied: 

There  are  a  great  many  times  when  the  interstate  commerce  act  would  work  an 
apparent  hardship,  and  I  might  say  a  very  great  hardship,  upou  the  American  lines, 
because  the  other  line  is  not  compelled  to  observe  it.  I  think  if  the  conditions  were 
equal,  and  that  if  we  had  relatively  the  same  conditions  that  prevail  in  Canada,  an 
American  road  could  not  live.  We  have  sixty-five  millions  of  people  in  this  country 
and  a  great  deal  more  money  than  the  people  of  Canada.  The  various  business  enter- 
prises carried  on  in  the  United  States  as  compared  with  Canada  are  enormous,  and 
furuish  business  and  traffic  and  tonnage  and  persons  traveling,  moving  in  a  way  that 
is  not  the  case  in  the  lower  or  eastern  portions  of  the  Dominion,  and  if  they  had  to 
iepeud  upon  themselves  the  same  as  our  roads  do  they  could  not  live.  (Tes'timouv, 
p.  182.)  V  J. 


THE  UNITED  STATES  AND  CANADA.  IX 

Mr.  George  B.  Koberts,  president  of  the  Pennsylvania  Railroad,  said: 

Siuce  the  National  Governuieut  has  undertaken  to  regulate  by  special  enactments 
the  methods  of  transportaiou  upon  the  American  lines  of  railway,  I  can  not  but  feel 
that  they  have  phiced  the  American  corporations  at  a  disadvantage  with  the  Cana- 
dian lines,  which  are  not  under  such  laws.  These  laws,  in  many  instances,  are  quite 
restrictive,  and  do  not  permit  the  same  freedom  that  has  existed  heretofore  in  the 
management  of  railroad  properties. 

The  Chairman.  Do  you  see  that  your  road  has  in  any  degree  suffered  from  the  fact 
that  the  Grand  Trunk  operates  in  Chicago  and  from  Chicago  east  ? 

Mr.  Roberts.  Not  directly  so;  but  we  have  felt  with  the  other  roads  the  effect  of 
the  Grand  Trunk  Railway  being  independent  in  its  action  of  the  rules  governing  the 
railways  of  the  United  States.  It  is  not  necessary  for  me  to  state  to  you  that  the  rates 
that  are  charged  upon  the  various  lines  which  are  known  generally  as  the  trunk  line 
system  of  the  country  must  be  nearly  uniform.  The  rates  are  higher  on  some  roads 
than  they  are  on  others,  but  any  severe  depression  of  rates  on  any  one  of  the  lines 
aftects  indirectly  the  revenues  or  rates  of  the  others.  It  must  be  quite  apparent  to 
you  that  the  Grand  Trunk,  for  instance,  or  the  Canadian  Pacific  Railway,  which  draws 
its  traffic  largely  from  the  States,  does  not  come  under  any  control  of  the  laws  of  this  ' 
country.  The  rates  on  that  traffic  or  its  system  of  carriage  are  not  under  such  con- 
trol, and  while  those  corporations  may  observe  the  law ,  so  far  as  their  connecting  lines 
in  the  Slates  are  concerned,  the  moment  that  traffic  leaves  the  States  and  passes  into  the 
foreign  couutry  it  is  without  such  restrictiou,  and  they  may  treat  it  in  any  manner 
they  see  fit  aiid  proper.  I  do  not  claim  that  they  are  now  operating  their  lines  in 
Canada  so  as  to  seriously  interfere  with  our  rates,  but  they  have  done  so  in  the  past, 
and  caused  very  serioiis  complications  with  the  roads  in  the  United  States.  (Testi- 
mony, p.  ^OS. ) 

Subsequently  Mr.  Roberts  said,  referring  to  the  Canadian  roads : 

I  do  not  know  that  they  are  now  doing  any  serious  injury  to  the  railway  interests 
of  this  couutry  or  to  the  country,  but  I  submit  that  it  is  entirely  within  their  power 
to  do  so.  They  have  a  very  great  advantage  over  the  railways  in  the  United  States 
in  their  independence  of  our  legal  restrictions. 

Mr.  Roberts,  however,  did  not  advocate  the  taking  of  any  radical 
steps  with  respect  to  the  regulation  of  the  competition  of  the  Canadian 
railways.  He  expressed  the  belief  that  the  question  was  one  to  be 
approached  gradually;  that  it  was  some  distance  ahead,  and  said: 

The  development  of  the  local  business  and  the  prosperity  of  the  Canadian  roads 
have  not  become  so  great  as  yet  for  us  to  have  any  serious  feeling  as  to  the  effect  of 
their  competition,  but  probably  it  would  come  in  a  very  reasonable  period  of  time. 
I  take  it  that  the  increase  of  local  prosperity  upon  our  own  lines  will  be  very  much 
greater  than  upon  the  Canadian  roads.  I  do  not  believe  the  Canadian  roads  will  ever 
catch  up  to  us.     (Testimony,  p.  220.) 

Mr.  Henry  B.  Ledyard,  president  and  general  manager  of  the  Michi- 
gan Central  Railroad  Company,  which  operates  a  line  running  through 
Canada  from  Detroit  to  Suspension  Bridge,  known  as  the  Canada 
Southern  Railway,  speaking  of  the  competition  of  his  road  with  the 
Grand  Trunk  Railway,  stated  that  "  the  Canadian  roads,  by  charging 
higher  rates  on  the  local  traffic  in  Canada,  are  enabled  to  charge  lower 
through  rates  on  traffic  from  the  United  States,"  and  said : 

The  local  rates  for  short  hauls  are  much  higher  than  in  the  United  States.  The 
passage  of  the  iuterstate  commerce  act  had  the  effect  in  this  couutry  of  reducing 
local  rates,  growing  out  of  the  application  of  the  long  and  short  haul  provisions  of 
the  act.  If  you  will  compare  the  rates  given  by  the  distance  tariffs  on  one  class 
of  freight  you  will  find  that  the  Grand  Trunk  rates  in  Canada  are  from  10  to  25  per 
cent,  highei-  on  lumber,  for  equal  distances,  than  are  charged  by  the  Michigan  Cen- 
tral Railroad  in  Michigan.     (Testimony,  p.  269.) 

Mr.  Ledyard  cited  the  rates  between  a  number  of  points  in  Canada 
and  in  Michigan  in  suj)port  of  this  statement,  and  added,  referring  to 
the  Canada  Southern  Railway : 

Our  local  rates  are  higher  in  Canada  than  in  the  United  States.  Our  local  traffic 
there  is  comparatively  nothing,  however. 


X  TRANSPORTATION    INTERESTS    OF 

Mr.  C.  S.  Meilen,  traffic  manager  of  the  Union  Pacific  Railway,  was 
of  the  opinion  that — 

the  Canadian  Pacific  lias  an  advantage  in  the  fact  that  it  is  not  compelled  to  scale 
down  its  intermediate  rates  to  meet  the  rates  it  names  on  throngh  freight  as  the 
American  lines  are  compelled  to  do,  and  thus  takes  it  away  from  the  American  roads. 
(Testimony,  p.  850.) 

He  also  stated  that — 

the  Canadian  Pacific  takes  business  around  by  way  of  Vancouver  into  an  eastern 
terminus.  They  get  an  advantage  there,  and  we  can  not  compete  with  them  on  that 
point.  As  the  American  lines  go  inland  from  either  side  of  the  continent  their  rates 
are  not  subject  to  water  competition  and  become  subject  to  the  long  and  short  haul 
provision  of  the  interstate  law.  That  is  not  the  case  with  the  Canadian  Pacific  and 
is  an  advantage  to  that  company.  Again,  by  its  various  connections  by  both  water 
and  rail  it  draws  business  from  intermediate  points  in  the  American  lines  to  it  at  va- 
rious junction  points  and  is  not  obliged  to  apply  the  rates  named  on  such  business  to 
the  various  points  on  the  line  over  which  such  business  goes  to  destination  although 
the  same  are  intermediate  and  would  under  the  law  on  an  American  line  take  the 
same  or  a  lower  rate.     (Testimony,  p.  352.) 

On  the  other  hand,  in  opposition  to  the  views  thus  generally  advanced 
by  railroad  tnen,  it  was  urged  by  Mr.  Alonzo  C.  Raymond,  who  attended 
the  different  hearings  of  the  committee  as  the  representative  of  the 
Board  of  Trade  of  Detroit,  that  the  advantage  was  all  with  the  Ameri- 
can roads.     He  said : 

It  has  been  stated  that  a  large  advantage  rests  with  the  Canadian  railroads  by  rea- 
son of  their  exception  from  the  long  and  short  haul  clause  of  our  interstate  com- 
merce act.  I  do  not  think  that  is  so.  I  think  the  advantage  is  all  with  the  Ameri- 
can roads.  The  New  York  Central  has  a  thousand  miles  of  road — the  West  Shore  and 
leased  line — most  of  it  a  four-track  line  ;  so  that  you  can  double  the  distance  almost 
in  the  calculation  as  to  these  lines  traversing  an  immensely  wealthy  and  populous 
community,  filled  with  tlie  most  fertile  farms  and  dotted  with  immense  factories. 
Their  local  traffic,  as  shown  in  this  report  to  which  I  have  referred,  is  so  great  that 
this  system  is  beyond  the  influence  of  the  interstate  commerce  act,  and  it  has  a  great 
advantage  I  think  over  any  Canadian  line. 

This  is  not  alone  true  of  the  New  York  Central  system.  The  Pennsylvania  system 
does  a  large  local  business,  and  that  road  in  the  State  of  Pennsylvania  is  exempt  from 
the  operations  of  the  long  and  short  haul  clause  of  the  act  as  well  as  the  New  York 
Central  is  exempt  within  the  State  of  New  York.  The  Michigan  Central  has  700  miles 
of  road  in  the  State  of  Michigan  over  which  the  interstate  act  has  virtually  no  qon- 
trol.  The  Canadian  lines  stretch  long  distances  over  sparsely  settled  sections  and 
through  comparatively  poor  communities,  and  their  local  traffic  amounts  to  a  small 
item.     (Testimony,  p.  .500.) 

Mr.  Raymond  contended  that  on  all  interstate  business  the  Canadian 
roads  were  just  as  thoroughly  controlled  by  the  interstate  commerce 
act  as  the  American  lines.  In  his  opinion  the  first  section  of  the  act 
was  so  drawn  as  to  govern  the  Canadian  portions  of  our  Canadian  tratfic, 
and  there  was  no  escape  from  liability  under  the  act  for  the  Canadian 
roads  on  any  interstate  traffic.     Further  than  that,  he  thought  that— 

the  ruling  of  the  Interstate  Commerce  Commission  in  the  Buffalo  coal  case  shows 
a  determination  on  the  part  of  the  Commission  to  construe  that  law  strictly  against 
the  Canadian  lines. 

In  thns  presenting  the  arguments  submitted  uponbothsides  with  re- 
spect to  the  effect  of  the  short-haul  provision  upon  the  American  rail- 
roads in  their  competition  with  the  Canadian  roads,  it  seems  proper  to 
call  attention  to  the  protection  afibrded  the  former  bv  the  provisions  of 
the  section  itself  and  by  the  rulings  of  the  Interstate  Commerce  Com- 
mission. 

It  is  provided  in  the  act  that  upon  application  to  the  Commission  the 
carriers  may  in  special  cases,  after  investigation,  be  authorized  to  charge 
less  for  longer  than  shorter  distances,  and  that  the  Commission  may 


THE    UNITED    STATES    AND    CANADA.  XI 

from  time  to  time  prescribe  the  extent  to  which  such  carriers  may  be 
relieved  from  the  operation  of  the  short-haul  provision. 

And  in  the  Louisville  and  Nashville  case,  in  which  the  Commission 
first  laid  down  the  general  principles  that  would  govern  it  in  passing 
upon  cases  based  upon  departures  by  the  carriers  from  the  general  rule 
of  the  short-haul  section  of  the  act,  referring  to  the  circumstances  and 
conditions  that  might  justify  a  departure  from  the  general  rule  marked 
out,  the  Commission  specified  certain  cases  in  which — 

the  existence  of  actual  competition,  wliicli  is  of  controlling  force  in  respect  to  traffic 
important  in  amount,  may  make  out  the  dissimilar  cii'cumstances  and  conditions  en- 
titling the  carrier  to  charge  less  for  the  longer  than  the  shorter  haul,  over  the  same 
line  in  the  same  direction,  the  shorter  being  included  in  the  longer. 

And  one  of  these  cases,  which  evidently  applied  to  the  competition  of 
the  Canadian  railways,  was— 

when  the  competition  is  with  foreign  or  other  railroads  which  are  not  subject  to  the 
provisions  of  the  statute. 

This  very  question  was  investigated  by  the  Commission  in  the  case 
of  Martin  v.  The  Southern  Pacific,  Central  Pacific,  and  Union  Pacific 
Eailways,  involving  the  violation  of  the  short-haul  section  by  the  roads 
named  in  making  higher  rates  from  San  Francisco  to  Denver  than  to 
Kansas  City,  a  gretiter  distance.  The  competition  of  the  Canadian 
Pacific,  a  foreign  railway,  was  relied  upon  by  the  defendants  as  justifi- 
cation for  their  violation  of  the  short-haul  section.  The  Commission 
obtained  the  exact  amount  of  shipments  over  the  Canadian  Pacific  dur- 
ing the  period  in  question  to  ascertain  to  what  extent  the  competition 
of  that  railway  affected  the  rates  under  consideration,  and  in  its  decis- 
ion, filed  May  17, 1888,  went  fully  into  the  character,  extent,  and  results 
of  that  competition,  thus  indicating  that  the  competition  of  a  foreign 
railway  might  create  such  a  dissimilarity  of  circumstances  and  condi- 
tions as  would  justify  the  competing  American  roads  in  departing  in 
special  cases  from  the  general  rule  of  the  short-haul  section.  But  in 
this  case,  as  the  result  of  the  active  competition  with  which  the  Cana- 
dian Pacific  inaugurated  the  opening  of  its  line  had  been  its  admis- 
sion'into  the  Transcontinental  Association  on  the  terms  it  demanded 
and  the  discontinuance  of  its  competition  at  the  points  to  which  the 
rates  complained  of  were  made,  the  Commission  held  that  the  long-dis- 
tance rates  in  question  from  the  Pacific  coast  to  Missouri  Eiver  points 
were  not  at  the  time  subject  to  "  actual  competition  of  controlling  force 
in  respect  to  trafiQc  important  in  amount "  engaged  in  by  Canadian  roads 
not  subject  to  the  provi-sions  of  the  statute,  and  that  there  was  no  jus- 
tification to  warrant  the  defendants  in  charging  more  from  San  Fran- 
cisco to  Denver  than  to  Missouri  Eiver  points. 

HOW  THE   CANADIAN    PACIFIC    INAUGURATED    THE    OPENING  OF   ITS 

THROUGH   LINE. 

Some  extracts  from  this  decision  of  the  Commission  will  be  of  interest 
in  this  connection  as  an  official  and  authoratative  statement  of  the  com- 
petition to  which  the  transcontinental  lines  were  for  a  time  subjected 
by  the  Canadian  Pacific  Eailway  while  the  latter  was  endeavoring  to 
make  favorable  terms  with  the  former  for  a  division  of  the  traffic,  and 
as  showing  the  extent  to  which  such  competition  may  be  carried.  It 
was  this  period  to  which  Mr.  Van  Home,  the  president  of  the  Canadian 
Pacific,  referred  when  he  said  to  the  committee  : 

We  had  a  little  fight  out  on  the  Pacific  coast  at  one  time,  and  we  took  freight  for 
pretty  much  everywhere  to  show  that  we  were  around,  but  we  do  not  do  that  for  a 
livins. 


XII  TRANSPORTATION    INTERESTS    OF 

The  history  of  this  contest  between  the  Canadian  Pacific  and  the 
other  transcontinental  lines  is  given  by  the  Commission  in  the  decision 
referred  to,  as  follows : 

lu  jnstificatiou  of  the  subsequent  recluctiou  on  through  business  which  took  effect 
May  25,  lir>87,  the  carriers  pointed  to  the  completion  of  the  Canadian  Pacific  Railway, 
which  was  practically  a  new  factor  in  the  situation,  and  which  became  energetic  and 
active  in  the  spring  of  1867,  contemporaneously  with  the  taking  eflect  of  the  act  to 
regulate  commerce.  Anew  line  was  thus  opened,  running  for  1,600  miles  or  more 
through  a  foreign  country,  which  competed  on  the  streets  of  San  Francisco  for  busi- 
ness from  the  Pacific  Coast  to  the  Missouri  River,  (  hicago,  New  York,  and  Boston. 
This  completion  was  so  managed  as  to  make  itself  felt  successively  upon  one  com- 
modity and  another  and  at  various  points,  forming  a  continual  menace  to  the  through 
business  of  the  transcontinental  lines  in  both  directions,  without  undertaking  the 
carriage  of  any  very  considerable  amount  of  tonnage,  except  at  the  outset,  when 
large  consignments  of  sugar  were  shipped  east  for  a  few  weeks  over  the  Canadian 
line. 

A  steamer  of  the  Pacific  Coast  Steam-ship  Company  left  Saij  Francisco  weekly  for 
Vancouver,  where  its  freight  was  loaded  upon  the  cars  of  the  Canadian  Pacific  Com- 
pany and  taken  East  across  the  mountai^is  to  be  delivered  via  -St.  Paul  or  via  more 
Eastern  routes,  according  to  its  destination.  The  rates  of  freight  established  for  each 
sailing  of  these  steamers  have  been  regularly  tiled  with  the  Commission;  and  the 
Conmnssion  has  also  obtained  accurate  information  respecting  the  amount  and  desti- 
nation of  all  goods  shipped  in  each  steamer  sailing  from  San  Fraucisco  to  Vancouver 
between  April  1  and  December  31,  1887.  The  shipments  of  May  V.i  and  May  21 
were  each  a  little  over  1,000  tons;  the  average  of  the  34  remaining  shipments  was 
about  130  tons  each.  The  goods  carried  by  this  route  to  strictly  Missouri  River 
points  were  944  tons  of  refined  sugar  (900  tons  of  which  were  carried  on  May  13),  7 
car-loads  of  beans,  2  car-loads  of  dried  fruit,  4  car-loads  of  canned  fruit,  and  1  car- 
load of  bags.  These  articles  were  taken  at  rates  lower  than  the  rates  in  force  at  the 
time  on  the  defendant  roads.  The  Canadian  Pacific  rate  on  dried  fruit  to  Chicago 
was  at  different  times  90  cents  and  $1. 

It  does  not  appear  that  the  Canadian  Pacific  line  charged  a  less  rate  to  St.  Paul 
and  other  points  in  the  United  States  near  the  northern  boundary  than  it  charged  to 
Omaha,  Kansas  City,  Chicago,  New  York,  and  other  more  distant  points  in  the 
United  States  on  the  same  line  in  the  same  direction.  It  is  not  known,  however,  that 
any  limitation  exists  upon  the  said  line  in  respect  to  charging  any  desired  rate  to  and 
from  intermediate  points  in  the  Dominion  of  Canada,  without  reference  to  the  rates 
established  at  more  distant  points,  either  iu  Canada  or  in  the  United  States ;  and 
higher  rates  to  and  from  intermediate  points  are  in  fact  there  charged.  Nor  does  it 
appear  that  the  Canadian  business  of  this  carrier  is  subject  to  any  statutory  prohibi- 
tion of  rebates,  drawbacks,  or  other  forms  of  unjust  discrimination,  or  to  any  restric- 
tions iu  respect  to  preferences  between  persons  or  localities.  So  far  as  appears,  its 
Canadian  rates  may  be  changed  at  will  and  be  varied  from  at  pleasure. 

[  Here  follows  a  reference  to  the  revision  of  the  railway  laws  then  pending  in  the 
Canadian  Parliament,  and  which  has  been  enacted  into  law  since  this  decision  was 
filed.] 

The  policy  of  the  Canadian  Pacific  Company  during  the  period  following  the  taking 
efi'ect  in  the  United  States  of  the  act  to  regulate  commerce  was  to  maintain  its  rates 
between  San  Fraucisco  and  the  Central  and  Eastern  States,  upon  leading  articles,  a 
little  below  the  rates  made  by  the  transcontinental  lines  i'n  this  country;  this  was 
designed  to  compel  the  recognition  by  the  latter  of  the  general  principle  which  it 
asserted,  that  rates  upon  a  circuitous  line  between  like  tertn'inals  should  be  lower  than 
rates  upon  the  direct  line,  in  order  to  enable  the  longer  route  to  obtain  a  certain  por- 
tion of  the  traffic.  In  other  words,  that  natural  disadvantages,  operating  to  the  preju- 
dice of  a  route  competing  for  the  business  in  question,  should  be  compensated  by 
the  privilege  of  ottering  to  the  public  a  lower  rate. 

And  that  policy  was  pursued  wath  sufficient  energy  to  produce  at  least  the  eftect 
desired.  On  January  16,  1888,  an  arrangement  was  made  by  which  the  Canadian 
Pacific  Railway  became  a  member  of  the  Transcontinental  Association.  The  trans- 
continental lines,  including  the  Canadian  Pacific,  are  now  working  under  a  tariff 
which  fixes  rates  from  Pacific  coast  points  to  Missouri  River  common  points  and 
easterly  to  ^ew  York  that  are  considerably  advanced  from  the  low  rates  which  pre- 
vailed after  May  2r,,  1887.  The  new  tariff  provides  that  on  rates  from  San  Francisco 
to  Chicago  and  the  east,  via  the  Canadian  Pacific  Railway,  certain  differentials  are 
to  be  deducted,  amounting  to  a  reduction  of  from  5  to  10  per  cent,  iu  favor  of  the 
Canadian  road.  No  differentials  are  given  that  line  on  shipments  to  and  from  the 
Missouri  River ;  the  result  of  which  is  that  business  from  the  Pacific  coast  to  Missouri 
Kiver  points  is  not  now  competed  for  by  the  Canadian  road.  (Vol.  II,  Interstate  Com- 
merce Commission  Reports,  17-20.) 


THE    UNITED    STATES   AND    CANADA.  XIII 

OBSERVANCE   OF   THE  LAW  BY   THE   CANADIAN  RAILWAYS. 

While  the  question  of  fact  as  to  whether  the  provisions  of  the  inter- 
state commerce  act  are  observed  by  the  Canadian  railways  is  not 
directly  involved  in  the  present  inquiry,  and  is  one  that  should  prop- 
erly be  passed  upon  by  the  Interstate  Commerce  Commission  rather 
than  by  this  committee,  it  seems  in  order  to  briefly  review  in  this  report 
the  statements  upon  this  subject  made  in  the  course  of  the  hearings 
held  by  the  committee.  Even  a  casual  reading  of  the  testimony  will 
reveal  decided  difterences  of  opinion  on  the  subject  among  those  exam- 
ined by  the  committee. 

Mr.  Albert  Fink,  who  as  commissioner  of  the  Trunk  Line  Association 
has  for  years  had  supervision  of  the  tariffs  and  operations  of  the  Grand 
Trunk  Railway  of  Canada,  which  is  a  member  of  that  association,  said  : 

I  think  it  is  altogether  a  vohintary  thing  with  the  Grand  Trunk  to  obey  the  law 
or  not.  It  is  a  matter  of  policy  with  them!  I  think  their  policy  is  to  obey  it.  I  think 
they  find  that  this  is  the  wisest  and  most  profitable  course;  but  it  is  voluntary  with 
them.     I  do  not  think  we  can  enfijrce  the  law  upon  them. 

Senator  Gorman.  Do  you  think  the  conditions  that  might  be  enforced  with  respect 
to  the  inspection  of  cars  is  sufficient  to  keep  the  Grand  Trunk  in  line  with  our  roads  ? 

Mr.  Fink.  I  think  the  expectation  that  you  may  take  that  course  is  a  strong  ele- 
ment in  their  trying  to  obey  the  law. 

Senator  Gorman.  Is  not  that  the  only  hold  you  have  upon  them  ? 

Mr.  Fink.  No  ;  I  think  they  have  always  ^hown  a  disposition  to  co-operate  under 
the  general  principles  on  which  the  trunk  lines  co-operate.  They  have  always  been 
a  party  to  that  agreement.  I  think  they  understand  it,  and  feel  that  that  is  the  only 
way  they  can  manage  their  property  properly.  They  are  very  much  opposed  to  war 
and  low  rates.  Their  existence  depends  on  getting  something  for  the  work  they  do. 
They  can  not  afford  to  go  to  war.    • 

Senator  Gorman.  So  you  do  not  apprehend  any  trouble  with  the  Grand  Trunk. 

Mr.  P'iNK.  No,  sir;  no  more  than  with  American  roads.     (Testimony,  p.  24.) 

And  in  answer  to  another  inquiry  Mr.  Fink  said  : 

So  far  as  my  intercourse  with  the  Grand  Trunk  is  concerned,  it  conforms  to  our 
rules  and  tariffs  about  as  well  as  other  roads  do.  I  believe  the  Grand  Trunk  is  a 
little  more  aggressive  (to  use  a  mfld  term)  in  securing  business  and  taking  every 
advantage  they  can.  I  think  they  have  been  more  conservative  since  the  interstate 
law  has  been  in  effect.  They  do  not  want  to  be  disturbers,  and  I  think  they  have 
sense  enough  to  know  that  if  they  get  too  much  business  the  American  lines  will  not 
stand  it.  The  Grand  Trunk  will  go  for  all  that  is  within  reach,  but  at  the  same  time 
they  will  not  do  anything  that  will  cause  a  disruption.  That  is  the  policy  they  pur- 
sue, and  that  is  the  policy  of  most  roads.     (Testimony,  p.  19.) 

Mr.  Chauncey  M.  Depew,  of  the  New  York  Central,  said : 

I  think  that  the  Grand  Trunk  officials  have  tried  to  live  up  fairly  to  the  law.  (Tes- 
timony, p.  62.) 

On  the  other  hand  Mr.  John  King,  president  of  the  Erie  road,  ex- 
pressed the  opinion  that  the  Canadian  railway  men  "  do  not  mind  the 
law,"  and  said : 

Of  course  we  can  not  tell  how  they  act  up  there,  not  nearly  as  well  as  we  can  tell 
how  we  act  ourselves ;  but  we  know  this,  that  they  have  abundant,  opportunities  for 
doing  things  contrary  to  law  without  being  punished. 

The  Chairman.  What  are  these  opportunities? 

Mr.  King.  The  opportunities  are  these  :  As  an  example  of  what  they  can  do,  and  I 
must  confess  I  believe  they  do  it,  they  make  a  contract  with  a  man  in  Chicago  to 
take  his  export  business  to  Liverpool,  and  they  give  him  rates  and  the  rates  are  on 
the  bill  of  lading,  and  everything  is  right  on  the  face  of  it  and  hardly  anybody  knows 
anything  different ;  but  it  is  the  easiest  thing  in  the  world,  and  I  am  told  it  is  a  fact, 
for  the  freight  agent  in  Montreal  to  send  a  draft  to  the  man  in  Liverpool  or  London 
paying  him  a  rebate.  If  the  rate  is  25  cents  on  a  bill  of  lading  and  the  agent  agreed 
to  make  it  22  cents,  the  3  cents  in  sterling  is  sent  to  Liverpool.     (Testimony,  p.  46.) 

Subsequently  Mr.  King  further  stated  : 

Well,  I  could  not  prove  it,  and  I  would  not  attempt  to  prove  it,  but  my  impr  ession 
is  that  they  do  these  things.     I  have  understood  that  they  give  drawbacks. 


XIV  TRANSPORTATION    INTERESTS    OF 

The  Chairman,  And  iu  fact  the  Canadian  road  does  not  obey  the  law  as  you  do  ? 

Mr.  King.  No,  sir. 

The  Chairman.  And  violates  it  by  giving  rebates? 

Mr.  King.  I  can  not  account  for  it  in  any  other  way.  I  do  not  say  anything  about 
our  Hue.  But  yon  take  a  line  like  the  Lake  Shore.  Nobody  knows  any  better  line 
than  the  Lake  Shore  running  from  Chicago  to  the  East.  The  Michigan  Central  also 
is  a  good  line.  It  runs  to  Detroit  aud  runs  over  the  Canadian  Southern,  which  they 
leased  to  the  Niagara  frontier.  Everybody  knows  that  the  Pennsylvania  Railroad  is 
a  splendid  line,  and  yet  the  Grand  Trunk  go  into  Chicago  and  get,  as  they  did  a  week 
or  two  ago,  39  per  cent,  of  the  business,  when  it  used  to  get  less  than  20  per  cent. 
[This  supposed  large  increase  in  the  traffic  of  the  Grand  Trunk  from  Chicago  was  re- 
ported through  a  uiistake  in  making  up  the  returns.] 

Mr.  S.  M.  Feitou,  jr.,  first  vice-president  of  the  Erie  road,  being  asked 
if  he  knew  whether  it  was  trne,  as  claimed,  that  the  Grand  Trunk  rigidly 
observed  the  law,  replied  that  he  did  not  know  anything  to  the  contrary. 
He  had  an  impression  that  the  Canadian  roads  had  been  observing  the 
law  since  it  had  been  amended,  but  did  not  think  they  observed  it  any 
more  than  the  American  lines  prior  to  that  time. 

Mr.  John  Newell,  president  of  the  Lake  Shore  and  Michigan  South- 
ern Kailway,  speaking  of  the  steady  increase  in  the  tonnage  of  the 
Grand  Trunk  from  Chicago,  said : 

I  am  inclined  to  think  that  a  large  portion  of  their  success  is  due  to  their  violation 
of  contracts  and  compacts  which  they  enter  into  for  the  maintenance  of  rates;  not 
that  they  are  accustomed  to  coming  into  the  field  openly  and  making  low  rates  i>ub- 
licly,  but,  as  a  rule,  in  all  negotiations  they  are  found  advocating  high  rates,  and 
after  the  rates  have  been  established  making  low  ones  privately  where  they  can 
secure  large  shipments  by  doing  so.     (Testimony,  p.  256.) 

Mr.  Henry  B.  Ledyard,  president  of  tl^e  Michigan  Central  Eailroad, 
expressed  the  opinion  that  the  Grand  Trunk  did  not  observe  the  law  as 
to  traffic  going  from  the  United  States  into  Canada,  and  cited  in  proof 
the  Buffalo  coal  case  decided  against  the  Grand  Trunk  by  the  Commis- 
sion. He  also  submitted  a  case  of  non-compliance  with  the  published 
tariff,  as  follows : 

I  have  another  case  of  non-compliance  with  their  published  tariff.  Here  is  a  tariff- 
sheet  of  the  Grand  Trunk  Railway  [exhibiting]  reading,  "  Interstate  tariff  on  grain 
from  Port  Huron  ex-lake  from  Chicago."  It  gives  no  other  point  but  Chicago  as  the 
point  of  origin.  Grain  has  been  taken  out  of  our  elevators  in  Detroit  in  the  last  month, 
by  vessel  and  taken  to  Port  Huron,  and  thence  forwarded  by  the  Grand  Trunk  to 
Portland,  Me.  The  rate  from  Detroit  to  Portland  by  the  Grand  Trunk  and  tlie 
Michigan  Central  is  the  same. 

The  Chairman.  The  published  rate  is  the  same  ? 

Mr.  Ledyard.  Yes,  sir ;  and  the  all-rail  tariff  from  Port  Huron  to  Portland  is  the 
same  as  Detroit  to  Portland.  Here  is  a  tariff  on  grain  only,  ex-lake  from  Chicago 
[exhibiting].  That  same  tariff  is  applied  by  the  Grand  Trunk  on  grain  by  vessel  from 
Detroit  to  Portland.     That  results  iu  reducing  the  rate,  all-rail,  by  2^  cents. 

The  Chairman.  Which  is  a  means  of  getting  around  the  interstate  commerce  act 
without  anybody  discovering  what  it  is.     That  is  the  case  you  have  just  described? 

Mr.  Ledyard.  Yes,  sir ;  I  can  not  find  that  any  tariff  has  been  issued  from  Detroit 
via  lake  and  via  Port  Huron  to  Portland,  or  any  other  eastern  point. 

The  Chairman.  What  is  the  date  of  that  last  tariff  you  speak  of? 

Mr.  Lkdyard.  April  10.     That  specifies  the  point  of  origin  as  Chicago. 

The  Chairman.  But  it  does  not  show  where  the  traffic  is  going  ? 

Mr.  Ledyard.  It  gives  the  point  of  destination,  but  says  the  grain  must  be  ex-lake 
from  Chicago.     (Testimony,  p.  268.) 

Mr.  C.  S.  Mellen,  traffic  manager  of  the  Union  Pacific  Eailway,  be- 
lieved that  the  Canadian  Pacific  was  cutting  the  published  rates.  He 
said : 

The  Canadian  Pacific  is  increasing  its  proportion  of  tonnage  carried.  When  a  road 
m  the  month  of  April  will  do  34  per  cent,  of  the  business  going  out  of  San  Francisco, 
and  when  that  road  is  such  a  road  as  you  will  see  the  Canadian  Pacific  is  by  looking 
on  the  map,  it  certainly  looks  as  if  something  was  wrong.  I  do  not  believe  that 
business  was  ever  done  on  the  differentials,  which  the  association  allows  the  Cana- 
dian Pacific.    I  believe  there  is  a  cut.    I  have  no  doubt  of  it. 


THE    UNITED    STATES    AND    CANADA.  XV 

Senator  Gorman.  Would  not  the  fact  tliat  the  Canadian  Pacific  carried  so  large  an 
amount  of  the  business  out  of  San  Francisco  be  positive  proof  that  there  was  a  cut  ? 

Mr.  Mellen.  I  do  not  believe  there  is  a  railroad  man  but  who  believes  that  there 
is  a  cut.  It  may  be  a  concession  on  business  that  goes  from  San  Francisco  to  Mon- 
treal. They  might  give  a  concession  on  Montreal  business  in  the  Dominion  of 
Canada,  and  it  would  be  wholly  legal,  and,  at  the  same  time,  it  might  be  used  to  in- 
duce the  shipment  of  American  goods  over  that  line. 

Senator  Gorman.  Do  you  know  of  any  case  where  a  drawback  has  been  given  ? 

Mr.  Mellen.  I  have  not  absolute  proof  of  it.     (Testimony,  p.  363.) 

It  was  stated  by  Mr.  Ashley  Pond,  solicitor  for  the  Michigan  Central, 
that  there  had  been  some  controversy  as  to  just  to  what  extent  the  Ca- 
nadian roads  were  subject  to  the  interstate-commerce  act,  and  that — 

almost  every  step  of  the  way  has  been  controverted  by  the  Canadian  roads,  or  by 
the  Grand  Trunk — every  step  of  the  attempt  to  enforce  the  act  against  them  has  been 
controverted. 

Mr.  Pond  made  one  suggestion  which  would  seem  to  have  a  very  dif- 
ferent application  than  the  one  he  gave  it.  He  said  that  his  company 
was  advised  that  the  Grand  Trunk  gave  a  lower  rate  to  passengers  who 
crossed  the  river  at  Detroit  and  began  their  journey  in  Canada  than  to 
those  who  started  from  Detroit.  When  asked  if  his  road  could  not  do 
the  same  thing  on  its  Canada  Southern  line,  Mr.  Pond  replied : 

Our  passengers  could  go  across  the  river  and  start  similarly ;  but  we  have  desired 
to  obey  the  law  strictly,  because  we  have  felt  a  fear,  whether  there  is  any  occasion  for 
it  or  not  I  do  not  know,  that  if  the  Canadia  i  roads  did  not  obey  the  law  there  might 
be  some  restrictive  legislation  that  would  greatly  decrease  the  value  of  our  roads  on 
the  other  side  of  the  river.  I  do  not  know  what  we  might  not  do  if  we  were  not 
under  some  fear.    (Testimony,  p.  531.) 

It  may  be  fairly  presumed  that  the  Grand  Trunk,  a  foreign  corpora- 
tion, would  be  under  as  much  restraint,  if  not  more,  on  this  account 
than  an  American  road  operating  a  line  through  Canada. 

Having  by  these  extracts  shown  the  character  of  the  charges  made 
against  the  Canadian  railways  with  respect  to  the  question  of  their 
observance  of  the  law,  it  is  in  order  to  bring  together  the  substance  of 
what  was  said  upon  the  other  side. 

When  questioned  as  to  the  observance  of  the  law  by  his  company, 
Mr.  Joseph  Hickson,  general  manager  of  the  Grand  Trunk  Railway  of 
Canada,  replied : 

We  consider  all  our  business  interchanged  with  the  United  States  and  all  our  busi- 
ness carried  through  Canada  from  State  to  State  is  subject  in  the  fullest  degree  to  the 
interstate-commerce  act.     We  have  never  assumed  any  other  position. 

The  Chairman.  You  mean  to  say,  taking  the  business  between  Chicago  and  Port- 
land, for  instance,  that  you  publish  the  rates  ? 

Mr,  Hickson.  Yes. 

The  Chairman.  And  abide  by  them  absolutely  ;  is  that  so  ? 

Mr.  Hickson.  Certainly. 

The  Chairman.  In  doing  that  do  you  take  advantage  of  what  our  roads  can  not 
do — recoup  on  local  traffic  in  your  own  country  ? 

Mr.  Hickson.  Now,  you  must  put  that  a  little  differently,  for  I  am  not  quite  sure 
what  you  mean.     I  want  to  give  the  fullest  information  I  can. 

The  Chairman.  Our  American  railroads  are  forbidden  to  charge  more  for  the 
shorter  than  for  the  longer  haul.  They  are  forbidden  to  charge  more  for  a  short  dis- 
tance on  their  line  than  for  a  long  distance — a- larger  aggregate  sum.  Now,  so  far  as 
your  business  in  Canada  is  concerned,  having  no  relation  or  reference  to  the  United 
States  whatever,  as  I  understand,  you  have  no  law  regulating  you,  and  you  can 
charge  what  you  please,  consistent  with  your  obligation  to  the  people,  between  local 
points  or  points  between  Detroit  and  Montreal. 

Mr.  Hickson.  Not  between  Detroit  and  Montreal.  Where  we  have  trafiSc  between 
Detroit  and  Montreal  we  consider  it  under  the  interstate  law,  and  that  we  are  bound 
to  obey.  But  as  regards  purely  Canadian  traffic  we  are  in  the  same  position  to-day 
as  the  New  York  Central^  They  can  make  what  rates  they  like,  so  far  as  the  inter- 
state law  is  concerned,  within  the  State  of  New  York.  We  are  in  the  same  position 
with  regard  to  the  provinces.    For  local  rates  through  the  provinces,  of  course,  we 


XVI  TRANSPORTATION   INTERESTS    OF 

are  not  amenable  to  the  interstate  act,  but  as  a  matter  of  fact  I  believe  that  the  local 
rates  in  Canada  on  the  Grand  Trunk  are  as  low,  if  not  lower,  than  the  rates  on  United 
States  lines,  for  the  reason  that  for  nearly  the  whole  length  of  the  Grand  Trunk  sys- 
tem we  have  water  routes  that  regulate  the  rates.     (Testimony,  p.  93.) 

In  answer  to  further  inquiries  Mr.  Hickson  stated  that  his  company 
complied  with  the  interstate  act  in  all  respects,  and  considered  itself 
bound  by  it  as  to  all  business  except  that  beginning  and  ending  in 
Canada.  He  explained  the  Buffalo  coal  case  which  has  been  previously 
referred  to,  saying  that  it  only  applied  to  coal  shipped  into  Canada 
from  Buffalo,  and  not  to  any  other  traffic ;  that  there  was  no  secrecy 
about  the  lower  rates  made  to  large  shippers ;  that  these  rates  were 
made  on  the  advice  of  their  counsel ;  and  that  when  the  Commission 
decided  against  their  right  to  make  such  differences  new  tariffs  were 
sent  to  the  Commission  made  in  accordance  with  its  directions. 

Being  asked  if  as  a  matter  of  fact  the  local  rates  of  the  Grand  Trunk 
in  Canada  were  higher  or  largely  higher  than  those  made  under  the  in- 
terstate act,  Mr.  Hickson  replied : 

The  local  rates  are  undoubtedly  higher  in  proportion  than  the  through  rates,  but 
I  do  not  think  they  are  higher  than  the  local  rates  in  the  States,  and  they  are  simply 
made  in  reference  to  the  exigencies  of  the  business.  I  will  give  you  the  reason  why 
our  rates  are  very  low  in  Canada,  and  that  is  because  during  the  season  of  open  nav- 
igation we  are  running  alongside  the  carriers  on  the  St.  Lawrence  River  and  the  lakes. 

He  also  stated  that  the  local  rates  in  Canada  had  not  been  changed 
on  account  of  the  lower  rates  made  on  interstate  commerce  or  because 
of  the  enactment  of  the  interstate  commerce  act. 

Mr.  Hickson  also  stated  positively  that  no  rebates  or  drawbacks  had 
been  paid  by  either  the  Grand  Trunk  or  the  steam-ship  companies  since 
the  passage  of  the  law,  and  that  his  company  had  not  been  buying 
trafl&c  by  any  rebates  or  concessions,  because  it  had  made  noue.  He 
explained  the  increase  in  the  traffic  over  his  road  from  Chicago  by  say- 
ing it  was  due  to  the  superior  facilities  provided  there  for  the  ship- 
ment of  grain. 

Mr.  William  C.  Van  Home,  president  of  the  Canadian  Pacific  Eail- 
way,  answered  similar  inquiries  as  follows : 

The  Chairman.  You  take  a  consignment  at  Pug|et  Sound  at  very  much  less  than 
you  take  a  consignment  500  miles  this  side  of  Puget  Sound  coming  east,  do  you  not? 

Mr.  Van  Horne.  No.  Our  local  rates  in  Canada  have  been  graded  down  to  meet 
the  requirements  of  the  United  States  interstate  commerce  act. 

The  Chairman.  Do  you  pay  any  attention  to  that  act  ? 

Mr.  Van  Horne.  Yes,  we  are  as  strictly  bound  by  it  as  if  we  were  operating  in  the 
United  States. 

The  Chairman.  With  respect  to  goods  that  you  take  at  Puget  Sound,  o'r  goods  that 
you  get  in  the  United  States  and  take  to  Montreal,  do  you  regard  the  interstate  com- 
merce act  ? 

Mr,  Van  Horne.  Yes,  sir ;  we  regard  every  pound  of  it  as  subject  to  the  interstate 
commerce  act.     (Testimony,  p.  241.) 

Senator  Gorman.  I  understood  you  to  say  a  moment  ago  that  in  point  of  fact  the 
Canadian  Pacific  observed  the  requirements  of  the  interstate  commerce  law.  What 
do  you  mean  by  that  ? 

Mr.  Van  Horne.  I  mean  that  all  United  States  freight  and  all  freight  we  take  from 
one  point  in  the  United  States  going  into  Canada  and  freight  from  Canada  into  the 
United  States  to  another  point  in  the  United  States,  is  carried  in  conformity  to  the 
provision  of  the  interstate  commerce  act,  so  far  as  we  understand  those  provisions. 

Senator  Gorman.  That  is  to  say,  you  publish  your  rates  on  the  roads  located  within 
our  territory  ? 

Mr.  Van  Horne.  Yes. 

Senator  Gorman.  And  you  take  the  freight  through  to  the  point  of  destination 
without  giving  rebates  or  drawbacks  of  any  description. 

Mr.  Van  Horne.  Yes,  sir.  I  believe  we  fully  comply  with  the  requirements  of  the 
act  in  that  respect.  Every  agent  we  have  working  on  United  States  territo:py,  as 
I  understand  the  law,  is  liable  to  imprisonment  if  we  fail  to  do  so. 


THE    UNITED    STATES    AND    CANADA.  XVII 

Senator  Gorman.  What  portion  of  the  dead  freight  goes  through  from  your  sea- 
port to  Europe  ? 

Mr.  Van  Horne.  We  have  done  practically  none  of  that  business.  The  export 
business  from  United  States  points  to  Great  Britain  we  have  not  much  of.  It  is  al- 
most infinitesimal.  There  is  nothing  in  it.  We  have  not  sought  the'  business.  We 
are  building  a  line  to  the  Detroit  River  now,  and  possibly  we  may  try  to  get  some  of 
it  when  it  pays. 

Senator  Gorman.  You  observe  the  provisions  of  our  law  upon  that  trade  alone. 

Mr.  Van  Horne.  Yes,  sir. 

Senator  Gorman.  But  how  as  to  the  other  branch,  where  our  roads  are  required  not 
to  charge  more  for  a  shorter  haul  than  a  longer  haul  ?  Do  you  observe  that  as  to  all 
freight  going  over  your  road,  no  matter  where  it  originates  ? 

Mr.  Van  Ho«ne.  I  think  it  is  observed  all  the  way  through.  I  remember  over- 
hauling only  a  few  months  ago  our  traiBc  department  for  a  reduction  of  rates  in  the 
interior  of  British  Columbia,  and  I  was  told  that  it  had  to  be  done  on  account  of  the 
interstate  couimerce,act.  Our  intermediate  rates  were  governed  by  the  provisions  of 
that  act  as  well  as  the  intermediate  rates  of  railways  in  the  United  States  were.  I  do 
not  know  but  that  we  have  misconstrued  the  law  in  that  respect. 

Senator  Gorman.  You  do  not  mean  to  say  that  you  apply  that  principle  to  freight 
originating  in  Canada  for  delivery  to  points  in  Canada? 

Mr.  Van  Horne.  Yes,  sir.  We  have  no  higher  intermediate  rate  than  the  rate  we 
get  on  State  to  State  traffic  carried  over  the  sauie  line,  so  I  am  informed  by  our  traffic 
department. 

Senator  Gorman.  So  you  voluntarily  enforce  the  long  and  short  haul  clause? 

Mr.  Van  Horne.  We  had  to  do  it  or  stay  out  of  the  business,  as  we  construed  the 
law.  We  did  not  want  to  pay  the  fines  or  have  our  agents  go  to  prison.  I  think  our 
tariff  manager  was  so  advised,  and  he  made  his  tariffs  in  accordance  with  this  advice. 
This  was  the  case  only  a  short  time  ago.  I  do  not  think  there  has  been  any  change 
or  I  should  have  heard  of  it.     (Testimony,  p.  247.) 

Subsequent  to  his  apijearaiice  before  the  committee  Mr.  Van  Horne 
submitted  a  letter  upon  the  subjects  covered  by  the  above  inquiries  ad- 
dressed to  him  by  Mr.  George  Olds,  traffic  manager  of  the  Canadian 
Pacific.  From  this  it  appears  that  the  Canadian  Pacific  at  first  ob- 
served the  interstate  commerce  act  as  to  local  traffic  within  Canada,  as 
stated  by  Mr.  Van  Horne,  but  that  after  the  transcontinental  tarifi:s 
were  revised  in  January  Mr.  Olds  did  not  deem  it  necessary  to  follow 
the  frequent  changes  made  on  all  the  domestic  business  within  Canada. 
He  states  that  in  a  few  instances  he  had  departed  from  the  strict  ruling 
of  the  law  as  to  Canadian  traffic,  and  adds  : 

So  far  as  States  traffic  is  concerned,  whether  "  States  to  States"  traffic  or  traffic 
between  Canada  and  the  States,  we  have  been  governed  by  the  interstate-commerce 
law.  We  have  not  attempted  to  discriminate  between  individuals  or  localities ;  nor 
have  we  paid  rebates  or  anything  equivalent  thereto  in  any  shape  »r  form  ;  nor  have 
we  assisted  our  American  connections  in  any  way  to  evade  the  law. 

We  have  l>een  unable,  as  I  have  before  stated,  and  for  the  reasons  stated,  to  bring 
our  domestic  traffic  strictly  within  the  long  and  short  haul  principle ;  but  I  can  safely 
assure  you  that  both  the  letter  and  spirit  of  the  interstate-commerce  law  has  been 
far  better  observed  by  the  Canadian  Pacific  than  by  any  of  its  competitors  in  the 
United  States.  The  reports  to  the  contrary  originate  with  rival  lines  or  interested 
parties  and  their  purpose  is  obvious. 

The  laws  of  Canada  prohibit  pooling,  also  discriminations  as  to  localities  and  in- 
dividuals ;  they  do  not,  however,  prohibit  carriers  f^om  charging  less  for  a  long  than 
for  a  short  haul,  the  Canadian  lines  being  left  comparatively  free  from  the  long  and 
short  haul  restriction,  owing  to  our  extensive  lake-coast  lines  and  the  competition  the 
water-routes  insure  to  shippers  during  the  season  of  navigation,  but  our  deviations 
from  the  long  and  short  haul  principle  in  this  domestic  traffic  do  not  in  the  slightest 
degree  affect  our  American  competitors. 

The  full  opening  of  the  lines  between  Montreal  and  St.  Paul  and  Duluth,  via  Sault 
Ste.  Marie,  for  all  traffic  may  require  us  to  make  our  rates  on  local  traffic  between 
points  in  eastern  Ontario,  the  province  of  Quebec,  and  the  Ottawa  Valley  and  Sault 
Ste.  Marie  conform  to  the  long  and  short  haul  principle  of  the  interstate-commerce 
law.  As  we  have  but  recently  opened  this  line  for  through  traffic  our  existing  local 
tariff's  may  be  considered  temporary.  The  traffic  of  this  part  of  our  system  during 
the  season  of  navigation  is  exposed  to  lake  competition  ;  but  we  will  have  no  greater 
difficulty  in  conforming  strictly  to  all  the  provisions  of  the  interstate-commerce  law 
than  will  our  American  competitors.  We  should  not,  however,  be  expected  to  con- 
form to  that  law  any  more  strictly  than  they  do, 

S.  Kep.  847 2 


XVIII  TRANSPORTATION   INTERESTS    OF 

With  regard  to  the  products  of  the  country,  we  are  governed  in  Ontario  generally 
bv  the  rates  from  Detroit  to  the  Atlantic  sea-board,  and  we  find  that  the  Detroit  rates 
are  as  high  as  we  can  get  on  domestic  produce  shipped  from  any  Ontario,  point  east 
of  the  Detroit  River  and  the  Georgian  Bay.  The  necessity  which  compels  the  Cana- 
dian farmer  to  seek  foreign  markets  in  common  with  his  American  neighbor  forces  us 
to  conform  to  the  rates  offered  by  the  American  lines.     (Testimony,  pp.  254-255.) 

Mr.  Alden  Speare,  president  of  the  Cliamber  of  commerce  of  Boston, 
who  represented  a  large  number  of  the  commercial  organizations  of  that 
ftity  before  the  committee,  stated  that — 

I  have  read  with  great  care  tlie  testimony  taken  in  New  York,  and  I  have  also  read 
statements  of  parties  in  Chicago.  I  find  there  is  not  a  man  but  who  says  the  Cana- 
dian roads  have  served  him  reasonably,  honorably,  and  squarely  ;  that  he  has  had  no 
rebates  in  any  shape  or  kind,  and  does  not  believe  anybody  has.  So  far  as  my  own 
knowledge  goes,  no  man  in  Boston  or  New  England  receives  any  rebate  from  the 
Canadian  railways.     (Testimony,  p.  380. ; 

Governor  J.  Gregory  Smith,  president  of  the  Central  Vermont  Eail- 
road,  said : 

I  doubt  if  there  is  a  president  of  any  of  the  competing  lines  known  as  the  trunk- 
lines  who  would  be  unwilling  to  admit  that  in  all  the  dealings  of  the  Grand  Trunk 
system,  so  far  as  its  relation  to  the  interstate  commerce  law  is  concerned,  they  have 
endeavored  to  conduct  their  business  upon  sound  business  principles,  and  to  recog- 
nize the  fact  that  they  are  to  a  large  extent  dependent  for  the  prosperity  of  their  road 
upon  their  relations  to  the  American  traffic,  to  the  traffic  of  the  United  States.  They 
are  the  simple  medium  of  transportation  from  one  important  point  of  the  United 
States  to  another — from  the  ijoint  where  the  products  of  the  country  are  raised  to  the 
consumer.  It  is  the  medium  by  which  what  the  East  has  to  eat  is  brought  to  them, 
and  so  the  Grand  Trunk  feels  itself  compelled,  as  a  pure  matter  of  self-protectiou  and 
as  a  matter  of  sound  policy,  to  conform  to  such  rules  and  regulations  and  fair  dealing 
as  the  roads  in  the  United  States  are  compelled  to  conform  to  under  the  interstate 
commerce  law,  whether  all  its  iirovisions  be  sound  and  wise  or  not. 

In  all  my  intercourse  and  association  and  experience  with  the  Grand  Trunk  road — 
and  we  are  in  daily  communication  with  them  on  all  the  j)oints  involved  in  this  in- 
quiry— I  have  found  that  in  practice  they  have  not  only  shown  a  readiness  to  conform 
to  the  requirements  of  the  law,  but  also  a  ready  disposition  to  throw  no  obstacle  in 
the  way  of  its  fair  execution.     (Testimony,  p.  441.) 

Mr.  William  G.  Brownlee,  a  lumber  manufacturer  of  Detroit,  testi- 
fied: 

I  have  been  a  shipper  over  the  Grand  Trunk  and  other  roads  for  a  great  many 
years,  certainly  for  twenty  years,  and  I  have  never  received  a  cent  from  the  Grand 
Trunk  Railroad  in  the  way  of  rebates,  and  quite  recently  we  have  been  exporting  by 
the  Grand  Trunk  Railroad.     (Testimony,  p.  536. ) 

And  it  was  S'Uggested  by  Mr.  A.  0.  Eaymond,  of  Detroit,  that — 

The  only  charge  that  is  made  against  the  Canadian  lines  is  that  they  have  op- 
portunity for  violating  the  law  by  way  of  rebates  and  all  that  sort  of  thing.  Now, 
the  American  lines  have  the  same  opportunity  if  they  choose  to  violate  the  law  as 
the  Canadian  roads,  and  I  think,  if  this  committee  will  recall  Mr.  John  Newell's  tes- 
timony given  before  the  committee  in  New  York,  he  stated  that  it  was  an  easy  thing 
for  railroads  to  pay  rebates — an  easy  thing  for  any  railroad  to  pay  rebates — without 
its  appearing  on  their  books  or  in  their  vouchers. 

So  far  as  opportunity  is  concerned  it  seems  to  me  fhat  the  American  lines  and  the 
Canadian  lines  are  alike,  and  the  mere  charge  that  the  Canadian  roads  do  these  wrong- 
ful things  because  they  have  the  opportunity  should  have  no  weight  with  this  com- 
mittee considering  this  great  question  of  the  importance  of  the  Canadian  lines  to 
American  business  interests. 

Senator  Harris.  The  opportunity  being  common  to  all  railroads  ? 

Mr.  Raymond.  Yes,  sir. 

The  Chairman.  Provided  they  are  not  caught. 

Mr.  Raymond.  Yes,  sir.  And  further,  it  seems  to  me,  that  the  Canadian  roads  are 
in  a  more  dangerous  position  and  less  likely  to  violate  intentionally  the  interstate 
commerce  act  than  the  American  roads,  because  I  should  be  in  favor,  and  I  think 
every  American  citizen  would,  that  if  they  willfully,  intentionallv,  and  defiantly  dis- 
obey the  law  that  they  should  be  cut  off,  and  I  think  they  are  conscious  that  they 
would  be  the  loser.  So  that  the  restraint  upon  Canadian  lines  is  very  much  greater 
than  upon  the  American  lines,  and  the  Canadian  lines  are  less  likely  to  violate  the 
law,  and  so  far  it  has  not  been  shown  that  they  have  willfully  violated  it.  (Testi- 
mony, pp.  501-2.)  ^  ^ 


THE    UNITED    STATES    AND    CANADA.  XIX 

Mr.  David  Edwards,  Assistant  General  Manager  of  the  Flint  and 
Pere  Marquette  Eailroad,  stated  that  his  road  at  certain  seasons  car- 
ried considerable  freight  destined  to  Canadian  points,  and  he  did  not 
know  of  a  single  instance  in  which  any  allowance  had  been  made  to 
shippers  from  the  published  rates  on  such  freight.  On  the  subject  of 
rebates  he  further  testified  as  follows : 

The  Chairman.  Is  there  any  arrangement  by  which  a  Canadian — a  man  living 
across  the  line — can  get  a  rebate,  and  Ijy  which  he  can  avoid  being  detected  in  so  do- 
ing where  Americans  would  be  detected  if  they  did  the  same  thing  ?  Can  any  of  you 
go  on  and  disregard  the  law,  pay  rebates,  or  make  secret  rebates  without  being  caught 
at  it  ? 

Mr.  Edwards.  Not  on  this  side  of  the  frontier. 

The  Chairman.  How  about  the  other  side  ? 

Mr.  Edwards.  That  depends.  If  the  man  in  Canada  can  be  put  on  his  honor  I  have 
no  doubt  it  could  be  done.  It  is  the  same  way  here.  It  is  a  question  of  honor.  If 
you  say  to  him,  "  Here,  I  will  pay  you  5  cents  rebate,  and  you  say  nothing  about  it," 
you  have  to  depend  on  his  honesty.  I  would  not  dare,  and  I  do  not  think  the  railroad 
companies  and  their  representatives  to-day  would  dare,  to  make  such  a  proposition.  I 
think  they  are  afraid  to  do  anything  of  that  kind.  They  are  getting  out  of  the 
habit  of  doing  it.     (Testimony,  p.  544.) 

Mr.  William  J.  Spicer,  general  manager  of  the  Detroit,  Grand  Haven 
and  Milwaukee  Eailroad,  and  of  the  Chicago  and  Grand  Trunk  Rail- 
road, entered  a  denial  of  the  statements  made  by  Mr.  Pond  in  reference 
to  the  payment  of  rebates  by  the  Grand  Trunk.  With  respect  to  the 
Buffalo  coal  case  he  said  : 

So  far  as  concerns  the  shipment  of  the  coal  to  which  he  referred  that  matter  has 
been  tried  before  the  Interstate  Commerce  Commission  and  a  decision  has  been  reached. 
There  is  no  doubt  that  a  concession  was  made  to  a  shipper  on  coal  to  some  place  in 
Canada  on  the  ground  that  he  was  a  large  shipper  and  provided  a  special  coal-yard 
and  gave  particular  dispatch  to  the  unloading  of  the  cars.  That  is  why  the  con- 
cession was  luade,  and  it  was  not  considered  at  the  time  to  be  a  violation  of  law. 
(Testimony,  p.  545.) 

He  thought  this  concession  was  stopped  as  soon  as  the  decision  of 
the  Commission  was  made  known,  and  did  not  believe  the  violations  of 
the  act  and  discriminations  charged  had  been  going  on,  and  he  was  in 
a  position  where  the  rates  were  brought  to  his  notice  and  he  would  be 
apt  to  know  it  if  such  discriminations  were  made.  Mr.  Spicer's  answers 
to  questions  concerning  the  observance  of  the  law  by  the  Grand  Trunk 
were  as  follows: 

I  am  quite  sure  that  our  desire  is  to  observe  the  interstate  commerce  law  in  every 
particular.     We  have  no  desire  to  evade  it. 

The  Chairman.  How  far  do  you  regard  the  interstate  commerce  act  as  extending 
with  reference  to  business  going  into  and  coming  out  of  Canada  ? 

Mr.  Spicer.  I  understand  that  it  extends  to  all  business  going  through  Canada  from 
one  United  States  point  to  another. 

The  Chairman.  And  not  on  traffic  from  the  United  States  to  Canada  or  from  Can- 
ada into  the  United  States  ? 

Mr.  Spicer.  I  think  it  apiilies  to  that  business.  I  should  so  interpret  it,  and  I  be- 
lieve it  is  so  interpreted  by  our  people  of  the  Grand  Trunk. 

The  Chairman.  Does  that  in  any  way  operate  in  favor  of  your  roads  or  against 
them  ? 

Mr.  Spicer.  I  do  not  think  it  is  against  the  road.  I  think  it  leads  to  a  maintenance 
of  rates,  a  steadiness  of  rates,  which  is  very  desirable.  The  tariffs  are  published  and 
I  think  generally  observed.     (Testimony,  v.  546.) 

THE  ADVANTAGES  AFFORDED  SHIPPERS  IN  THE  UNITED  STATES  BY 
THE  FACILITIES  FOR  TRANSPORTATION  FURNISHED  BY  THE  CANA- 
DIAN RAILWAYS. 

The  geographical  situation  of  Canada  with  respect  to  the  United  States 
is  such  that  the  railway  lines  extending  across  the  peninsula  of  Canada 
between  New  York  and  Michigan  afford  the  shortest  and  most  direct 


XX  TRANSPORTATION   INTERESTS    OF 

channels  of  communication  between  important  sections  of  the  United 
States  contiguous  to  the  Dominion  of  Canada  in  the  West  and  North- 
west and  in  northern  New  York  and  New  England.  With  their  con- 
nections in  the  United  States  they  afford  direct  lines  of  transportation 
between  other  sections  of  the  West  and  on  the  Atlantic  sea-board;  and 
for  still  larger  areas  of  territory  in  the  East  and  West,  between  which  the 
Canadian  railways  do  not  in  all  cases  constitute  the  most  direct  lines  of 
communication,  they  furnish  routes  sufficiently  advantageous  to  largely 
increase  the  facilities  for  transportation  such  sections  enjoy  and  to  ren- 
der more  active  the  competition  between  rival  lines  which  secures  to 
the  shipper  better  service  and  more  favorable  rates. 

There  is  no  doubt  that  the  Canadian  railways  engaged  in  transporta- 
tion within  the  United  States  have  contributed  very  materially  to  the 
development  and  commercial  prosperity  of  those  particular  communities 
they  have  directly  served,  and  that  they  have  also  benefited  other  sec- 
tions of  the  United  States  in  so  far  as  their  competition  has  tended  to 
regulate  and  reduce  the  rates  charged  upon  other  lines  of  transporta- 
tion. To  those  commercial  centers  and  communities  which  they  have 
most  directly  benefited  the  continuance  of  the  advantages  afforded  by 
the  Canadian  roads  is  a  matter  of  vital  importance.  Many  millions 
have  been  invested  in  business  enterprises  of  all  kinds  that  are  depend- 
ent for  their  existence  and  success  upon  the  transportation  facilities 
which  the  Canadian  railways  have  furnished  or  assisted  in  securing,  and 
any  action  by  Congress  that  would  result  in  the  withdrawal  or  abridge-  ■ 
ment  of  these  advantages  would  prove  disastrous  to  the  communities  in 
question. 

These  communities  naturally  regard  the  continuance  of  the  relations 
at  present  existing  between  the  shippers  of  the  United  States  and  the 
Canadian  railways  as  of  vital  importance  to  their  commercial  pros- 
perity, and  emphatic  protests  were  made  to  the  committee  in  their  be- 
half against  any  legislation  that  would  in  any  wise  restrict  the  privileges 
now  enjoyed  by  the  Canadian  railways  under  the  existing  system  of 
transportation  in  bond  or  that  would  occasion  the  withdrawal  of  the 
advantages  these  foreign  lines  now  afford. 

The  extent  to  which  these  Canadian  railways  have  i^roved  of  benefit 
to  shipi^ers  in  the  United  States  will  more  clearly  appear  by  grouping 
together  some  of  the  statements  made  and  views  expressed  upon  the 
subject  by  witnesses  who  appeared  before  the  committee. 

Mr.  Erastus  Wiman,  of  New  York,  was  of  the  opinion  that — 

there  has  been  no  contribution  to  the  Western  States  quite  so  advantageous  as  the 
construction  of  the  Canadian  railways.  Next  to  the'  construction  of  the  American 
railways  and  the  provisions  of  nature  in  the  water-ways  which  Mr.  Hill  has  spoken  of 
just  now  these  Canadian  railroads  have  proved  the  most  beneficial.  I  think  the 
Canadian  railways  have  contributed  more  to  the  facilities  for  thehandling  of  products 
going  east  and  the  merchandise  going  west,  at  rates  lower  than  ever  before  dreamed 
of,  than  any  other  enterprises  that  have  been  inaugurated  in  this  country.  First, 
there  is  the  directness  of  route,  and  second  the  business  has  been  done  at  rales  so  low 
that  they  never  paid  anything  on  the  capital  invested.     (Testimony,  p.  190.) 

He  thought  the  facihties  afforded  by  the  Canadian  roads  had  done 
more  to  develop  the  West  than  anything  else,  and  said : 

These  roads  have  paid  nothing  to  the  investors,  while  at  the  same  time  they  have 
afforded  enormous  advantages  to  the  West.  The  Vanderbilt  line,  known  as  the 
Canada  Southern,  the  old  Great  Western  line,  and  the  Grand  Trunk  are  three  great 
avenues  running  as  straight  as  a  crow  flies  across  the  Canadian  peninsula  from  New 
York  to  Michigan.  The  Canada  Southern  is  the  best  line  toward  the  West.  It  is 
perfectly  straight,  and  can  carry  more  stuff  to  the  train  than  any  other  line.  It  has 
low  grades  and  comparatively  no  curves  at  all.  Then  there  is  the  Grand  Trunk 
rnnning  down  from  Sarnia  to  Toronto,  Montreal,  and  Boston.  Then  there  is  a 
northern  route  that  formerly  carried  enormous  amounts  of  grain  from  Georgian  Bay 


THB   UNITED    STATES    AND    CANADA.  XXI 

to  Toronto  and  then  reshipped  it  across  the  lake  into  the  canals.  Then  there -^as  a 
route  frou]  Georgian  Bay,  by  Port  Hope,  to  Rochester  ;  then  the  Grand  Trunk  line  from 
Port  Hurou  to  Ogdensburgh,  taking  the  river  from  there  and  crossing  and  joining  the 
Vermont  Central  system  and  other  roads  to  New  England.  Besides  this  the  Canada 
Pacitic  will  soon  be  at  Detroit,  and  add  still  another  link  to  the  Great  Soo  route  as  au 
outlet  for  American  produce.  So  that  it  would  be  impossible  to  have  a  more  com- 
plete system  or  means  of  communication  between  the  extreme  East  and  West  than 
these  two  great  roads  afford.  The  development  of  this  Soo  route  has  cost  millions  of 
dollars  of  American  capital,  which  would  hu  completely  lost  if  you  adopted  extreme 
measures.      (Testimony,  p.  196.) 

Mr.  Charles  S.  Smith,  president  of  the  Chamber  of  Commerce  of 
New  York,  said  of  the  Canadian  lines  that — 

they  have  been  of  very  great  advantage  to  New  England  and  to  the  West.  There 
are  a  large  number  of  Very  important  mills,  with  a  production  of  from  one  to  two  mil- 
lions per  annum,  located  in  the  East,  notably  at  such  places  as  York,  Lewiston,  Saco, 
and  Biddeford,  which  cau  ship  their  goods  by  the  Canadian  lines  direct  to  Chicago 
quite  as  cheaply,  and  I  have  known  instances  in  which  they  have  been  shipped  5  cents 
per  hundred  cheaper,  than  they  could  be  landed  in  New  York  from  the  points  I  have 
named. 

Now,  it  is  unfair  to  cut  off  Chicago  and  other  western  ciMes  from  these  facilities. 
If  you  should  do  away  with  competition  by  the  Canadian  lines  our  Western  friends 
wouh',  in  many  instances  and  at  certain  times,  have  to  pay  at  least  50  per  cent,  more 
on  freight,  because  the  goods  would  have  to  be  brought  to  New  York  or  Boston  and 
then  shipped  to  the  West.     (Testimony,  p.  27ti.) 

Mr.  Charles  F.  Choate,  president  of  the  Old  Colony  Railroad,  ex- 
pressed himself  as  clearly  of  the  opinion  that — 

the  Canadian  lines  in  the  past  have  exerted  a  very  important  part  with  respect  to 
all  business  to  and  from  New  England.  It  has  simply  been  through  the  competition 
of  the  Canadian  lines  that  rates  to  and  from  New  England  have  been  reduced.  The 
Canadian  roads  have  made  manufacturing  more  possible  and  more  profitable  in  New 
England  than  it  ever  was  before.  All  the  heavy  freight  brought  here  is  brought  at 
much  lower  rates  since  the  Canadian  roads  have  entered  into  this  business,  and  the 
products  of  New  England  have  been  carried  cheaper  than  they  ever  were.  (Testi- 
mony, p.  322.) 

I  think  the  opening  of  the  Canadian  roads  has  been  much  more  important  to  the 
people  of  New  England  than  it  has  been  to  the  owners  of  those  roads,  I  do  not  think 
the  owners  of  those  roads  have  got  very  much  money  out  of  the  New  England  busi- 
ness. What  business  has  been  done  has  been  done  at  extremely  low  rates.  (Testi- 
mony, p.  332.) 

A  comprehensive  showing  of  the  importance  of  transportation  facili- 
ties to  New  England  was  made  by  Mr.  Alden  Speare,  president  of  the 
Boston  Chamber  of  Commerce,  when  he  stated  that — 

New  England  has  8  per  cent,  of  the  population  of  the  United  States,  and  grows 
one-fourth  of  1  per  cent,  of  the  wheat  crop  and  one-half  of  1  per  cent,  of  the  corn 
crop  to  feed  8  per  cent,  of  the  inhabitants  of  the  United  States  ;  not  enough  to  sup- 
ply the  inhabitants  of  Rhode  Island  alone,  and  we  have  to  buy  annually  of  and  bring 
from  other  sections  550,000  tons  of  grain,  52.5,000  tons  of  flour,  and  .$50,000,000  worth 
<Jf  meat  for  our  own  consumption.  We  grow  but  4  pei  cent,  of  the  wool  crop  of  the 
country,  but  consume  .50  per  cent,  of  the  entire  clip  and  55  per  cent,  of  all  consumed 
in  the  country.  We  grow  not  a  pound  of  cotton,  but  consume  annually  23  per  cent, 
of  the  whole  crop  and  75  per  cent,  of  all  consumed  in  this  country. 

While  New  England  has  31  per  cent,  of  the  water-power  employed  in  industrial 
work,  we  also  have  15  per  cent,  of  steam-power,  and  consume  5,250,000  tons  of  an- 
thracite and  4,000,000  tons  of  bituminous  coal,  and  we  do  not  produce  a  pound  of 
either,  and,  of  course,  buy  of  and  transport  from  other  sections. 

The  estimated  value  of  American  goods  consumed  in  New  England  in  1888  was 
$310,000,000. 

New  England  annually  produces  more  than  $200,000,000  in  value  of  boots  and  shoes 
and  leather,  at  least  50  per  cent,  of  the  production  and  consumption  of  the  United 
States. 

Such  being  our  inability  to  supply  our  own  wants  within  our  own  borders,  the 
value  to  us  of  reasonable  freight  rates  must  be  apparent  to  every  one,  and  the  abso- 
lute necessity  in  order  that  we  may  retain  such  reasonable  rates  that  we  should  re- 
tain every  line  of  transportation  that  we  now  have  to  and  from  other  sections  of  our 
country  that  furnish  us  our  needed  supplies  and  take  our  manufactured  products. 
(Testimony,  p.  367.) 


XXII  TRANSPORTATION    INTERESTS    OF 

Mr.  Speare  considered  the  facilities  furnislied  by  the  Canadian  lines 
under  the  existing  bonding  regulations  of  vital  importance  to  New  Eng- 
land and  a  u.anifest  advantage  to  every  section  of  the  country  that 
furnished  New  England  with  any  of  its  supplies  or  consumed  any  of 
its  products.  And  he  expressed  the  belief  that  it  would  be  gross  in- 
justice to  those  industries  which  have  been  created  and  fostered  by 
these  facilities  to  deprive  them  of  facilities  which  can  not  be  supplied 
on  equally, advantageous  terms  by  any  existing  American  line. 

Mr.  Speare  stated  that  prior  to  the  establishment  of  the  Canadian 
lines,  when  Boston  depended  upon  the  New  York  Central  and  the  Bos- 
ton and  Albany,  the  rates  were  high,  but  that,  through  the  opening  of 
the  Hoosac  Tunnel  and  the  arrangements  made  with  the  Grand  Trunk 
and  the  Lackawanna  and  Western,  the  rates  had  been  reduced,  and  a 
large  number  of  towns  in  New  England  had  secured  the  advantage  of 
the  Boston  rates. 

To  illustrate  the  benefits  derived  through  the  Canadian  lines,  he 
stated  that — 

when  the  interstate  commerce  laAv  first  went  into  effect  the  Trunk  Line  Association 
notified  the  various  liueS  that  they  must  not  give  any  reduced  Boston  rates  beyond 
Boston.  A  little  later  the  Canadian  Pacific  perfected  its  arrangements  whereby  it 
came  in  contact  with  the  whole  Boston  and  Maine  system,  and  opened  up,  in  con-' 
nection  with  the  Grand  Trunk,  seven  or  eight  hundred  towns  in  New  England  which 
became  benefited  by  Boston  rates,  as  well  as  towns  in  Canada.  So  that  to-day  goods 
can  be  shipped  from  the  West  by  means  of  the  two  Canadian  lines  and  their  connec- 
tions ;  also  by  the  Red,  White  and  Blue  Line,  and  the  Erie  Despatch,  and  one  or  two 
other  lines,  to  a  vast  number  of  towns  in  New  England,  to  the  great  benefit  of  the 
people. 

Mr.  Mellen  admitted  here  on  yesterday  that  north  of  a  line  drawn  through  White 
River  Junction  there  was  great  benefit  derived  by  the  existence  of  tbe  Canadian 
lines.  But  we  could  draw  the  line  at  the  Fitchburg  Railroad,  or,  for  that  matter, 
take  in  the  territory  north  of  the  Boston  and  Albany,  and  say  that  all  that  country  is 
benefited  by  the  Canadian  lines.     (Testimony,  p.  369.) 

The  views  entertained  upon  the  subject  by  the  commercial  organiza- 
tions of  Boston  are  indicated  by  the  following  paragraphs  of  the  reso- 
lutions adopted  by  the  Boston  Executive  Business  Association,  which  is 
composed  of  eighteen  different  organizations : 

Eesolved,  That  for  many  years  a  considerable  quantity  of  proditce  from  the  West- 
ern States  has  been  carried  through  Canada  to  Boston,  not  only  for  home  consumption, 
but  also  for  export  from  the  port  of  Boston,  and  a  large  amount  of  manufactured  and 
imported  goods  has  been  sent  from  Boston  to  Canada,  and  through  Canada  to  the 
Western  States,  much  to  the  advantage  of  Boston  and  New  England  interests. 

liesolvcd,  That  the  route  through  Canada,  to  and  from  Boston,  is  geographically 
the  natural  route  for  many  places  of  importance  in  the  Western  and  Northwestern 
States. 

Eesolved,  That  for  the  long  period  during  which  business  has  been  open  to  the  mer- 
chants and  manufacturers  of  Boston  and  New  England  by  this  channel,  it  has  been 
carried  on  by  the  Canadian  railway  companies  undertaking  it  in  a  fair  and  greatly 
advantageous  manner. 

Eesolved,  Tbat  a  competitive  route  through  Canada,  independent  of  other  trunk 
lines  in  America,  has  been  of  great  benefit  to  the  merchants,  manufacturers,  and  the 
community  generally  of  Boston  and  New  England,  as  by  that  means  any  tendency 
there  might  otherwise  have  been  to  charge  exorbitant  rates  has  been  held  in  check. 
(Testimony,  p.  367.) 

In  behalf  of  the  business  interests  of  Boston  Mr.  H.  B.  Goodwin, 
president  of  the  Boston  Executive  Business  Association,  who  also  rep- 
resented the  Boston  Chamber  of  Commerce,  stated  that 

the  Boston  Chamber  of  Commerce  represents  a  number  of  large  and  important 
interests,  particularly  in  Boston— the  breadstuff'  interest,  the  produce  interest,  the 
provision  interest,  the  oil  interest,  the  grocery  interest,  and  a  number  of  other  inter- 
ests of  less  inniortance.  To  three  or  four  of  these  interests  the  maintenance  of  the 
Canadian  traffic  (the  traffic  over  the  Canadian  roads  in  all  its  entirety)  is  especially 


THE    UNITED    STATES    AND    CANADA.  XXIII 

important.  Take,  for  iustauce,  the  grain  interest.  Dnring  t>he  winter  season — the 
season  of  closed  navi;iation — a  very  large  proportion  of  the  grain  shipped  from  Chi- 
cago to  Boston  and  New  England,  as  much  as  40  per  cent.,  is  carried  over  the  Cana- 
dian roads,  leaving  Chicago  by  the  Chicago  and  Grand  Trunk  Railroad,  and  carried 
hy  the  northern  route  to  New  England  and  there  distributed.  Port  Huron  is  the 
principal  point  where  the  Grand  Trunk  receives  its  grain.  The  grain  is  stored  on 
the  eastern  coast  of  Georgian  Bay  during  the  season  of  navigation,  and  distributed 
later  in  the  season  to  northern  and  northeastern  New  England,  as  occasion  requires. 
We  will  take  next  the  produce  interest,  which  is  a  very  large  one,  especially  with 
Boston.  That  interest  complained  that  until  the  advent  of  this  Canadian  transpor- 
tation, this  route  by  the  Chicago  and  Grand  Trunk,  and  also  over  the  Grand  Trunk 
of  Canada,  they  had  to  submit  to  high  charges  and  poor  transportation  service,  and 
that  the  Grand  Trunk  has  been  the  means  of  improving  the  service  and  lowering  the 
rates.  Ten  or  twelve  years  ago,  when  this  National  Dispatch  Line  was  established, 
the  rate  on  British  products,  such  as  butter,  cheese,  and  eggs— butter  more  particu- 
larly— was  §1  a  hundred,  and  the  time  consumed  in  the  transportatio^n  of  it  from  Chi- 
cago and  the  initial  points  to  Boston  was  at  least  twelve  days.  Owing  to  the  com- 
petition established  by  the  Grand  Trunk  line  the  rates  were  reduced  from  !?1  a  hun- 
dred to  75  cents  a  hundred,  and  the  time  of  carriage  has  been  reduced  from  twelve 
days  to  six,  and  even  five  days.  In  many  cases  the  time  from  the  West  to  Boston  is 
not  now  over  four  days,  therebj'  obviating  the  necessity  of  re-icing  the  cars  in  transit, 
which  was  a  matter  of  considerable  expense.     (Testimony,  p.  388. ) 

Mr.  Goodwiu  further  stated — 

That  immediately  after  the  passage  of  the  interstate  commerce  law  the  trunk  lines 
■withdrew  their  through  Boston  rates  from  a  large  number  of  New  England  points, 
terminating  the  billing  at  Boston,  and  thus  compelling  New  England  freight  to  pay 
the  local  rates,  ranging  from  5  to  10  or  15  cents,  according  to  distance.  That  operated 
in  this  way,  as  was  foreseen  at  the  time  the  interstate  commerce  law^  was  passed: 
A  5-ceut  arbiti-ary,  added  to  the  local  freight  on  the  Canadian  roads,  enabled  New 
York  merchants  to  come  in  by  water  to  Boston  and  to  various  points  along  the  Mas- 
sachusetts coast,  and  take  from  us  our  Boston  business.  During  the  first  summer, 
while  that  state  of  things  continued,  the  largest  consumer  of  grain  in  Boston  was 
supplied  by  vessel  from  New  York.  The  Canadian  lines  came  to  the  rescue  at  that 
point,  and,  as  has  been  stated)  opened  up  several  hundred  points  in  southeastern  New 
England  at  Boston  rates,  and  the  American  trunk  lines  were  compelled  to  follow. 

The  effect  of  restricting  or  suppressing  this  Canadian  traffic  would  undoubtedly 
be  to  restore  that  condition  of  things  of  which  I  have  just  spoken,  namely,  to  with- 
draw again  the  Boston  rates  from  this  very  large  number  of  New  England  points 
and  terminate  billing  at  Boston,  thereby  increasing  the  cost  to  the  consumer  by  just 
so  much  on  all  the  food  products  that  are  brought  from  the"West. 

I  do  not  mean  to  claim  that  the  Canadian  lines  have  been  reckless  in  rates, 
for  they  have  not.  The  trunk  lines  sepm  to  consider  New  England  a  harvest-field 
from  which  to  reap  large  profits,  and  this  competition  on  the  part  of  the  Canadian 
lines  is  about  the  only  check  we  have.  Aside  from  the  competition  of  the  Cana- 
dian railroads  it  can  hardly  be  claimed  that  we  have  any  competition  because, 
although  we  have  two  trunk  lines,  the  West  Shore  line  and  the  New  York  Central, 
they  are  both  under  Vanderbilt  control,  and  the  New  York  and  New  England 
route  is  so  circuitous,  that  at  minimum  rates  they  are  unable  to  compete. 

Boston  has  had  a  hard  struggle  for  years  to  maintain  her  trade  against  all  these 
disadvantages,  and  it  is  vital  that  wo  should  not  now  lose  anj'  of  our  advan- 
tages.    (Testimony,  p.  39^.) 

Speiikiu^  for  the  Arkwright  Club,  of  Boston,  composed  of  manufact- 
urers representing  the  principal  industries  of  New  England,  Mr.  L.  j\I. 

Sargent  said : 

• 

It  is  very  essential,  indeed,  to  the  mills  of  New  England,  especially  to  those  in 
Maine,  New  Hampshire,  and  Massachusetts,  that  every  possible  means  of  transporta- 
tion should  be  kept  open.  Business  is  under  sharp  competition,  and  any  regulation 
of  the  Canadian  roads  which  would  tend  to  increase  the  cost  of  transportation  would 
be  a  serious  injury  to  the  mills. 

The  business  of  making  freight  contracts  is  done  by  the  customers,  by  the  buyers 
who  live  in  the  Northwest  and  West — speaking  now  of  the  business  that  goes  to  the 
Northwest.  They  are,  therefore,  familiar  with  the  rates  of  freight,  and  the  managers 
of  the  mills  here  in  New  England  are  not,  as  a  general  rule.  Our  customers  prefer  to 
use  the  Grand  Trunk  for  certain  portions  of  their  shipment,  particularly  in  the  win- 
ter season.  The  Canadian  Pacific  is  used  principally  on  business  for  export  to  China. 
(Testimony,  p.  419.) 


XXIV  TRANSPORTATION    INTERESTS    OF 

IMr.  Jerome  Jones,  of  Boston,  an  importer  of  earthenware,  in  behalf 
of  the  importers  expressed  the  belief  that  the  success  of  that  commerce 
was  ilependeut  upon  a  reliable  continuance  of  comparatively  low  rail 
rates  to  and  from  Boston,  and  that  this  reliance  was  secured  by  the 
competition  of  the  northern  roads  which  are  a  part  of  the  Grand  Trunk 
and  Canadian  roads,  and  which  have  brought  about  an  equality  of 
rates.  Having  secured  this  equality  of  rates,  it  seemed  to  be  next  to 
if  not  a  vested  right,  and  they  believed  the  burden  of  proof  was  upon 
those  who  would  make  a  change.     (Testimony,  p.  473.) 

Ex-Governor  William  Claliin,  of  Boston,  stated  that  the  position  of 
almost  all  New  England  merchants  and  manufacturers  w^as  that  they  did 
not  wish  matters  changed  so  far  as  the  Canadian  railroads  were  con- 
cerned, and  explained  their  position  by  saying : 

It  has  been  the  experience  of  Massachusetts  for  more  than  thirty  years  that  she 
was  hampered  by  want  of  complete  communication,  and  she  spent  enormous  sums 
in  order  to  make  her  road  to  the  West  easy  and  inexpensive.  Massachusetts  abso- 
lutely lost  nearly  )5il2,000,000  in  the  construction  of  the  Hoosac  Tunnel  line  in  order 
that  her  merchandise  might  be  carried  from  the  Atlantic  coast  to  the  West  at  low 
rates.  She  has  fostered  railroads  by  large  expenditures.  She  almost  built  a  road 
out  of  Worcester  to  the  West.  I  speak  of  this  because  it  was  brought  to  your  atten- 
tion that  roads  had  been  subsidized  by  the  Canadian  or  British  Government,  or  by 
both.  Massachusetts  subsidized  roads  in  the  way  I  speak  of  in  order  that  her  people, 
who  were  shut  up  here,  as  it  were,  in  one  part  of  the  world,  might  have  egress. 
We  of  New  England  have  no  mines  of  any  value,  and  we  have  nothing  but  the 
industry  of  the  people  and  the  water-courses  to  attract  people  here. 

One  great  means  of  equalizing  the  transportation  for  the  last  twenty  or  twenty-five 
years  has  been  these  Canadian  roads.  The  routes  through  Canada  have  been  very 
potential.  In  the  first  place,  we  went  by  northern  lake  routes  and  reached  the  West 
at  moderate  prices,  and  those  prices  controlled  the  great  central  lines.  Say  what 
they  would,  they  could  not  overcome  the  fact.     (Testimony,  p.  475.) 

Some  interesting  facts  were  contributed  by  Mr.  Francis  F.  Emery,  of 
Boston,  who  appeared  as  the  representative  of  the  Shoe  and  Leather 
Association  of  New  England,  as  follows: 

The  operation  of  this  northern  line  under  its  liberal  management  has  been  of  ines- 
timable benefit  to  the  people  of  all  sections  of  this  country.  It  is  an  avenue  through 
which  a  large  quantity  of  the  manufactures  of  the  East  are  transported  to  the  con- 
sumers of  the  West  and  the  South,  and  a  large  quantity  of  raw  materials  is  brought 
from  the  South  and  West  to  be  manufactured-at  the  East;  it  is  also  the  carrier  of  a 
large  food  supply  from  the  West  to  the  consumers  of  the  East.  By  its  moderate  and 
just  rate  of  charges  its  iuilueuce  has  extended  to  other  lines,  so  that,  although  carry- 
ing but  a  small  part  of  this  entire  freight,  it  has  been  the  great  power  in  the  interest 
of  the  people  for  the  regulation  of  the  rates  of  freight  of  all  lines  between  the  diifer- 
ent  sections  of  the  country.  Every  man,  woman,  and  child  in  the  northern  half  of 
the  United  States,  and  probably  also  in  the  greater  part  of  the  southern  half,  has 
been  directly  benefited  by  the  reasonable  charges  which  have  been  obtained  through 
this  line; 

The  geographical  position  of  the  State  of  New  York  operates  to  cut  in  twain  the 
great  streams  of  business  which  flow  between  the  Eastern  and  the  Western  and  South- 
ern sections  of  our  country.  Without  the  competition  which  has  come  from  this 
northern  line  the  railroads  of  that  State  have  it  in  their  power  to  monopolize  and  im- 
pose upon  this  large  volume  of  business  any  tribute  that  their  manager  might  dic- 
tate ;  in  fact,  it  was  the  excessive  tribute  which  was  so  extorted  which  first  led  to 
the  establishment  of  this  northern  line  from  Boston  to  Chicago.  It  was  to  free  the 
people  of  the  country  from  this  oppression  that  the  business  men  of  the  great  West 
and  of  the  great  East  united  in  a  request  to  the  management  of  the  northern  roads  to 
establish  this  through  line.  It  is  not  really  a  foreign  line  in  the  ordinary  accepta- 
tion of  the  word,  since  it  was  established  for  the  benefit  of  the  business  of  our  own 
country  by  our  own  business  men,  who  co-operated  to  sustain  the  line  until  it  was 
firmly  established.  A  large  portion  of  it  is  located  within  our  boundary.  These  busi- 
ness men  established  it  at  great  labor  and  cost,  and  it  has  been  to  them  one  of  their 
greatest  boons.  They  now  cherish  it,  regard  it  as  a  national  right,  and  of  vital  con- 
sequence to  the  people  of  all  sections  of  the  country.  They  theretore  protest  strongly 
when  any  scheme  is  projected  which  threatens  to'  take  from  them  the  reliefs  which 
they  have  experienced  from  this  important  line  of  transportation. 


THE    UNITED    STATES    AND    CANADA.  XXV 

To  refer  more  iu  detail  to  this  matter,  the  particular  business  interest  which  I 
represent  is  that  of  manufacturing  and  distributing  boots  and  shoes  throughout  the 
country.  The  boot  and  shoe  industry  probably  had  more  to  do  with  the  establish- 
ment of  this  northern  line  between  Boston  and  Chicago  than  had  any  other  industry. 

At  the  time  this  line  was  established  the  New  York  Central  Railroad  system  im- 
posed a  charge  of  $1.80  per  100  pounds  upon  boots  and  shoes  from  Boston  to  Chicago 
and  St.  Louis — a  charge  that  was  equal  to  from  5  to  6  per  cent,  of  the  value  of  the 
grade  that  was  being  transported.  Remonstranee  was  unavailing.  Every  avenue 
of  transportation  westward  from  Boston  was  induenced  or  controlled  by  one  line. 
The  geographical  situation  of  the  State  of  New  York  enabled  its  railroad  systems  to 
accomplish  this  and  to  exact  this  high  charge.  It  was  then  that  the  shoe  merchants 
of  the  West  and  South,  co-operating  with  those  of  the  East,  worked  together  to  eifecl 
the  establishment  of  this  northern  line.  As  a  result  of  their  pledge  of  support  to 
this  northern  line  it  was  established,  and  the  freight  of  boots  and  shoes  to  the  points 
named  was  reduced  to  a  satisfactory  rate,  and  ever  since  a  fair  and  reasonable  rate 
has  prevailed. 

The  benefits  which  have  come  to  the  i>eople  from  this  action  are  almost  beyond 
computation.  For  instance :  The  number  of  pairs  of  boots  and  shoes  which  are  pro- 
duced annually  in  New  England  and  are  distributed  through  the  West  and  South  is 
probably  not  far  from  90,000,000  pairs.  This  number  of  pairs  represents  probably 
36,000,0*00  individuals  outside  of  New  England  who  are  directly  affected.  If  a  tax  of 
5  per  cent,  is  imposed  upon  these  shoes,  as  it  was  formerly,  in  lieu  of  1+  per  cent, 
which  lately  prevails,  it  means  every  man,  woman,  and  child  of  the  36,000,000  is  to 
pay  that  much  additional  for  each  and  every  pair  of  boots  or  shoes  consumed  by  them. 
The  number  of  persons  affected  and  the  cost  to  each  is  a  very  serious  matter.  If 
added  to  this  is  the  extra  tax  which  is  put  upon  the  raw  material  which  comes  from 
the  South  and  West,  and  which  entered  into  the  construction  of  the  boots  and  shoes, 
the  added  cost  is  very  materially  further  increased  and  becomes  a  serious  matter. 

The  people  of  New  England,  amounting  to  several  million  persons,  are  also  affected 
through  their  food  supply,  which  comes  to  them  mainly  from  the  West  and  South. 
Every  cent  of  all  such  unnecessary  tax  upon  freight  would  be  an  unnecessary  tax 
bearing  directly  and  only  upon  all  these  millions  of  people,  and  would  affect  directly 
their  comfort  and  welfare.     (Testimony,  pp.  484-485.) 

For  these  reasons  Mr.  Emery  contended  that  it  would  not  be  prudent 
to  interfere  with  these  northern  lines  until  it  could  be  shown  that  they 
were'  working  injury  to  other  lines  or  oppressing  the  people  of  the 
United  States. 

TNIr.  Jonathan  A.  Lane,  president  of  the  Boston  Merchants'  Associa- 
tion, composed  of  about  two  hundred  mercantile  firms,  most  of  which 
are  the  large  wholesale  houses  of  the  city,  thought  that  Boston  labored 
under  a  good  deal  of  disadvantage  in  its  efforts  to  secure  trade  through- 
out the  country  in  competition  with  New  York,  and  that  the  merchants 
of  Boston  could  not  aft'ord  to  lose  any  advantage  they  possessed.  This 
was  the  case  with  the  advantages  secured  through  the  Central  Vermont 
and  its  northern  connections,  and  he  believed  it  would  be  a  tremendous 
loss  to  Boston  if  any  of  these  advantages  were  seriously  curtailed. 

Mr.  Lane  stated  that  the  Canadian  Pacific  was  carrying  cheap  grades 
of  merchandise  that  would  not  bear  high  rates — what  he  called  the 
skimmed  milk  of  the  business — from  the  East  to  San  Francisco,  ths 
haul  being  700  miles  further  than  by  the  American  roads,  at  rates  by 
which  the  San  Francisco  merchant  was  said  to  save  from  2.i  to  5  per 
cent,  in  sending  the  goods  that  way.  He  did  not  believe  the  transac- 
tion could  be  very  profitable  to  the  Canadian  Pacific,  and  thought  that 
road  was  serving  the  interests  of  the  people  of  the  West  and  New  Eng- 
land in  thus  transporting  ordinary  and  cheap  meichandise  that  could 
not  stand  the  high  rate  that  first  class  dry  goods  stand.  It  was 
therefore  his  opinion  that  if  the  people  of  the  United  States  got  a  good 
job  out  of  the  Canadian  roads  there  was  no  occasion  to  worry  about 
whether  they  recoui)ed  upon  their  friends  in  Canada  or  what  rates  were 
paid  by  the  people  in  Canada.     (Testimony,  pp.  487-488.) 

Mr.  S.  Henry  Skilton,  of  Charles  H.  North  &  Co.,  ])ork  packers  at 
Boston,  considered  the  Canadian  railroads  of  vital  importance  to  Bos- 


XXVI  TRANSPORTATION    INTERESTS    OF 

ton,  and  tbougbt  that  without  them  Boston  would  be  entirely  at  the 
mercy  of  the  V^anderbilt  system  of  roads,  which  favored  New  York  as 
agJiinst  Boston  every  time.  His  house  was  using  the  Canadian  rail- 
roads, but  did  not  get  any  less  rate  from  them  than  they  would  over 
the  Vanderbilt  lines.  He  felt  that  the  Canadian  roads  had  a  pretty 
hard  tight  as  it  -was.  and  that  any  legislation  against  them  would  not 
only  be  detrimental  to  the  Canadian  roads  and  those  that  connect  with 
them  but  also  to  the  merchants  of  Boston  and  to  every  line  of  trade. 
(Testimony,  pp.  493-494.) 

Ex-Governor  J.  Gregory  Smith,  president  of  the  Central  Vermont 
Eailroad,  called  attention  to  the  fact  that — 

AH  the  territory  covered  by  our  system,  and  reaching  down  into  New  Hampshire, 
Massachusetts,  Connecticut,  and  Rhode  Island,  is  all  dependent  for  its  main  supply 
of  breadstuff's  and  food  upon  the  West.  No  State  in  New  England  raises  enough  to 
supply  its  population.  Our  line  is  the  most  direct  and  the  cheapest  for  the  supply  of 
the  git-eat  manufacturing  districts  in  New  England  north  of  Boston,  like  Lowell, 
Lawrence,  Concord,  and  all  those  places.  We  are  in  more  direct  communication  by 
the  cheapest  and  shortest  line  through  our  connections  to  the  West  for  the  supply  of 
those  points.  They  constitute,  perhaps,  a  larger  distributive  district  than  even 
Boston  itself.  • 

Now,  then,  the  question  arises,  Mr.  Chairman",  what  is  to  be  the  effect  of  any  dis- 
turbance of  the  relations  existing  at  present  for  the  direct  and  speedy  transportation 
of  all  the  material  we  bring  in  to  supply  this  wide  territory  and  this  large  population  ? 
The  tonnage  passing  over  our  road  amounts  to  very  nearly  3,000,000  of  tons  annually, 
over  one-half  of  which  is  what  we  denominate  through  tonnage — tonnage  coming 
from  the  West  to  the  East  to  supply  the  demand  and  to  feed  the  population  here. 
(Testimony,  p.  440.) 

He  did  not  believe  that  the  points  raised  with  respect  to  the  restric- 
tion of  the  commerce  passing  over  the  Canadian  lines  were  sound.  On 
the  contrary,  he  thought  they  were  specious  and  did  not  comport  with 
the  facts.    It  seemed  to  him  that  was  the  view — 

one  nnist  take  when  he  comes  to  understand  fully  the  geographical  situation  and  the 
physical  condition  of  the  roads  under  consideration,  and  particularly  that  of  the 
Canadian  Pacitic,  which  is  charged  with  being  the  most  obnoxious,  because  of  inter- 
ference with  American  roads. 

Governor  Smith  thought  it  had  been  clearly  established  that  the 
Grand  Trunk  conducted  its  business  ujjon  sound  business  principles, 
and  recognized  the  fact  that  it  was  to  a  large  extent  dependent  for  the 
prosperity  of  its  road  upon  its  relations  to  the  American  people  and  its 
traffic  in  the  United  States.    Nor  did  he  believe  that — 

the  Canadian  Pacitic"  would  attempt  to  recoup  from  the  inhabitants  of  Canada  what 
it  is  alleged  they  lose  by  low  rates  on  through  traffic,  for  the  simple  reason  that, 
traversing  as  they  do  almost  an  entire  wilderness  from  the  time  they  leave  Ottawa 
until  they  reach  Port  Moody,  there  are  no  opportunities  to  recoup.  There  is  no  such 
local  business  on  the  line  of  that  road  as  would  enable  them  to  recoup  if  they  had 
the  disposition  so  to  do.  It  is  a  very  sparsely  settled  country,  and  miles  and  miles  of 
railway  have  to  be  maintained  and  operated  and  the  transportation  of  the  through 
freight  done  with  scarcely  a  watering  place,  with  no  population  to  help  support  il. 

Hence  to  my  mind,  with  what  little  knowledge  I  have  of  railroading,  I  think  the 
fact  that  they  are  compelled  to  carry  that  freight  and  support  their  raitroad  forms  of 
itself,  without  the  intervention  of  Congress  or  anybody  else,  a  sufficient  protection 
to  the  American  lines  dotted  all  along  as  they  are  through  this  country  with  thickly 
populated  sections  and  places,  affording  an  immense  traflfic  known  as  local  traffic,  and 
therefore  the  physical  condition  of  the  two  systems  is  of  itself  a  protection,  or  else 
the  Canadian  roads  must  involve  themselves  in  losses  on  every  ton  of  freight  they 
carry.     (Testimony,  p.  441.) 

It  was  therefore  his  opinion  that  any  interruption  of  the  relations 
existing  between  the  Central  Vermont  Railroad  and  the  Canadian 
railways  would  cause  great  injury  to  New  England  at  large,  which 
would  be  severely  felt  while  no  corresponding  benefit  could  in  any  way 
result. 


THE    UNITED    STAT.ES    AND    CANADA.  XXVII 

In  behalf  of  the  Board  of  Trade  of  Portland,  Me.,  Mr.  William  L. 
Putnam  submitted  resolutions  setting  forth  at  considerable  length 
the  advantages  afforded  by  the  Canadian  railways  to  Portland  and  the 
State  of  Maine,  and  coucludiug  as  follows: 

Ee-iolved,  That  this  board  protests  against  the  enactment  of  any  legislation  which 
will  deprive  our  citizens  of  the  facilities  for  transportation  of  breadstuffs  and  other 
manufactures  now  offered  by  our  great  commercial  highways  through  Canada  and 
between  the  Atlantic  sea-board  and  the  West,  and  especially  protests  against  any 
amendment  of  existing  laws  for  the  purpose  of  throwing  obstacles  in  the  way  of  such 
transportation  and  against  the  withdrawal  of  the  privilege  of  carrying  merchandise 
of  the  United  States  in  bond  through  Canada  as  now  practiced,  and  against  any  ac- 
tion which  will  tend  to  obstruct  or  destroy  competition  in  the  transportation  of  such 
merchandise  and  thereby  build  up  monopolies  to  the  detriment  of  cities  and  commer- 
cial interests  now  receiving  the  benefits  of  free  and  unobstructed  transportation  to 
and  from  the  West  over  Canadian  roads.     (Testimony,  p.  402.) 

In  narrating  the  history  of  the  extension  of  the  transportation  facil* 
ities  of  Portland,  Mr.  Putnam  stated  that  in  the  forties  the  people  of 
that  city  tried  to  open  a  route  to  MoutreA,l ;  that  the  Grand  Irunk  took 
it  off  their  hands  or  they  would  have  been  crushed  entirely,  and  that 
the  Grand  Trunk  had  faithfully  performed  its  obligations.  By  the  aid 
of  the  Grand  Trunk,  Portland  and  a  number  of  other  points  in  Maine 
had  become  billing  points  and  received  western  products  at  the  same 
rates  at  which  they  were  received  at  Boston.  This  was  an  important 
matter  for  Portland  and  the  whole  State  of  Maine.  It  was  estimated 
that  the  amount  of  western  products,  including  grain  and  beef  and 
other  products,  received  annually  in  the  State  of  Maine  from  the  West 
and  Northwest  was  equivalent  to  about  2,225,000  barrels  of  flour,  and 
if  the  present  bonding  system  was  abrog,ated  or  the  Canadian  roads  in- 
terfered with  it  was  believed  that  the  arbitrary  rates  that  would  be  put 
upon  these  products  would  be  equal  to  not  less  than  10  cents  per  bar- 
rel, and  would  cost  the  people  of  Maine  $225,000  a  year,  besides  break- 
ing uj)  the  ports  of  Portland  and  Bangor.  Mr.  Putnam  stated  that 
the  city  of  Portland,  in  its  municipal  capacity,  invested  about $2,020,000 
some  twenty  years  ago  in  the  construction  of  a  line  through  the  White 
Mountains  across  the  State  of  Vermont,  to  secure  a  connection  with 
the  lines  then  in  contemplation  through  Canada,  which  have  since  be- 
come incorporated  into  the  Canadian  Pacific  system,  and  that  the  people 
of  Portland  felt  that  they  ought  to  be  i^rotected  in  those  investments, 
which  amounted  to  over  $3,000,000,  and  which  had  been  made  by  the 
city  for  the  purpose  of  securing  more  complete  western  connections. 
Through  the  aid  of  the  Canadian  railways  the  people  of  Maine  could 
reach  the  West  with  from  150  to  500  miles  less  carriage  than  is  required 
to  Boston,  and  practically  Portland  was  as  near  to  St.  Paul  as  New 
York. 

Similar  views  were  expressed  by  Mr.  S.  W.  Thaxter,  a  merchant  of 
Portland,  who  thought  there  was  no  community  in  the  United  States, 
perhaps,  that  depended  so  largely  for  its  supplies  upon  the  West  as  the 
State  of  Maine.  The  people  of  the  whole  State  were  largely  dependent 
for  their  supplies  upon  the  Grand  Trunk,  which  touched  the  Elaine 
Central  system  at  two  points,  Yarmouth  Junction  and  Danville  Junc- 
tion. Practically  the  Grand  Trunk  was  their  only  through  line,  their 
only  connection  with  the  West,  and  the  geographical  situation  of  Maine 
was  such  that  it  must  be  connected  with  the  West  through  Canada. 
(Testimony,  p.  415.) 

The  situation  of  Bangor,  with  respect  to  the  Canadian  railways,  appears 
to  be  similar  to  that  of  Portland.  Mr.  Charles  P.  Stetson,  who  appeared 
in  behalf  of  the  Bangor  Board  of  Trade  and  the  Baugor  and  Piscataquis 
Eailroad,  informed  the  committee  that  Bangor  many  years  ago  em- 


XXVIII  TRANSPORTATION    INTERESTS    OF 

barked  in  the  enterprise  of  building-  the  Bangor  and  Piscataquis  Eail- 
road  from  Bangor  to  Moosehead  Lake,  to  secure  a  connection  with  the 
raih^oad  system  of  Canada,  and  invested  in  that  enterprise  between 
$1,000,000  and  $1,500,000.  The  city  of  Bangor  had  not  the  ability  to 
carry  out  this  scheme  and  it  lay  dormant  for  a  considerable  length  of 
time.  They  finished  their  road  to  the  lake,  and  the  Canadian  Pacific  had 
lately  constructed  a  railroad  from  the  western  line  of  the  State  to  the 
foot  of  Moosehead  Lake.  This  gave  Bangor  a  short  route  to  the  West, 
making  the  distance  over  that  railroad  and  the  "Soo"  line  from  Minne- 
apolis to  Bangor  about  the  same  as  from  Minneapolis  to  Boston  by  the 
American  routes  and  within  40  miles  of  the  shortest  distance  to  Port- 
land by  the  Grand  Trunk.  Consequently  the  people  of  Bangor  felt  that 
it  would  benefit  their  railroad,  their  city,  and  the  eastern  part  of  the 
State  of  Maine  to  be  allowed  to  maintain  as  favorable  connections  with 
the  Canadian  Pacific  as  possible.     (Testimony,  p.  424.) 

But  the  advantages  conferred  by  the  Canadian  lines  have  not  been 
confined  to  New  England,  although  that  section  is  more  largely 
dependent  upon  them  than  au}^  other.  Mr.  A.  C.  Raymond,  represent- 
ing the  Board  of  Trkde  of  Detroit,  was  convinced  that  the  importance 
of  the  Canadian  lines  to  Detroit  and  the  State  of  Michigan  was  very 
great,  and  that  the  prosperity  of  the  State  depended  largely  upon  them. 
He  also  believed  that  they  favorably  aftected  the  commercial  interests 
of  the  country  generally,  and  that  the  Grantl  Trunk  exercised  great 
influence  in  making  reasonable  the  rate  from  Chicago  to  New  York, 
upon  which  all  the  rates  of  the  trunk  lines  and  their  connections  are 
based.     (Testimony,  p.  496.) 

Mr.  Charles  C.  Boweu,  of  the  Detroit  firm  of  Terry  &  Co.,  seedsmen, 
after  referring  to  the  great  differences  in  the  distance  from  Port  Huron 
and  Detroit  to  Buffalo  by  the  lines  through  Canada  and  by  those  in 
the  United  States,  said: 

In  view  of  these  facts,  I  submit  that  the  denial  of  these  short  routes  to  the  com- 
merce of  Michigau  would  be  an  outrage  to  the  citizens  of  this  Commonwealth,  and 
would  impose  upon  us  a  burden  destructive  not  only  to  our  material  interests,  but, 
in  my  opinion,  would  foster  and  encourage  disloyalty  among  our  citizens.  It  seems 
to  me  our  Government  can  not  afford  to  antagonize  a  large  portion  of  her  citizens 
unless  some  adequate  compensation  is  to  follow.  If  the  British  Government  has  sub- 
sidized railroads  in  Canada,  and  thereby  brought  immeasurable  advantages  to  us,  it 
is  our  duty  to  foster  this  state  of  affairs. 

If  it  is  desirable  to  have  in  mind  the  acquisition  of  Canada  peacefully,  we  should 
cultivate  close  commercial  relations.  On  the  other  hand,  it  may  be  urged  that  in  sc 
doing  we  strengthen  the  hands  of  a  foreign  people.  True,  we  do;  but  if  we  add  to 
our  own  strength  by  this  process  in  a  ratio  of  five  to  their  one,  which  I  think  is  our 
experience  in  the  past,  it  is  the  only  true  course  to  pursue.     (Testimony,  p.  522.) 

Mr.  David  Edwards,  assistant  general  manager  of  the  Flint  and  Pere 
Marquette  Railroad,  speaking  of  the  relations  of  the  Canadian  railroads 
with  the»ailroads  and  shippers  of  Michigan,  believed  that  it  would  be 
most  disastrous  to  the  railways  and  the  commercial  interests  of  Michi- 
gan and  especially  of  the  northern  portion  of  the  State,  if  any  action 
should  be  taken  by  Congress  that  would  prevent  the  lines  through  Can- 
ada operated  by  the  Michigan  Central  and  the  Grand  Trunk  from  doing 
business  in  the  United  States  on  precisely  the  same  basis  as  American 
roads.  He  claimed  that  traffic  originating  in  the  United  States  was  not 
unnaturally  diverted  from  the  American  lines  by  the  Canadian  lines. 
The  traffic  from  Northern  Michigan  destined  to  the  Eastern  States 
found  a  more  natural  outlet  by  the  Canadian  lines  than  by  any  other. 
The  purely  American  lines  running  south  of  Lake  Erie  secured  a  fair 
share  of  the  traflHc,  and  it  would  be  a  great  hardship  upon  the  shippers 
located  on  the  lines  of  the  railways  in  Northern  Michigan  should  they 


THE    UNITED    STATES    AND    CANADA.  XXIX 

be  compelled  to  forward  all  their  iirodncts  by  purely  American  lines. 
Mr.  Edwards  was  of  the  opinion  that  more  than  50  per  cent,  of  the 
northwestern  business  over  his  road,  and  between  50  and  60  per  cent, 
of  that  originating  on  the  road,  was  carried  east  over  the  Canadian  lines. 
(Testimony,  pp.  510-542.) 

In  behalf  of  the  Chamber  of  Commerce  of  Sault  Ste.  Marie,  Mich., 
Mr.  Henry  W.  Sej  mour  presented  resolutions  adopted  hy  that  organ- 
ization most  earnestly  i)rotesting  against — 

any  legislation  on  the  part  of  the  United  States  tbat  shall  tend,  in  any  manner,  to 
discriminate  in  favor  of  any  line  of  transportation,  or  to  deprive  any  citizen  of  free, 
unrestricted  transportation  of  western  products  over  the  great  central  line  of  trans- 
portation from  the  Northwest  to  the  East  or  from  the  East  to  the  Northwest,  over  any 
and  all  lines  of  transportation,  be  the  same  Canadian  or  American  lines.  (Testimony, 
p.  548.) 

Mr.  Seymour  stated  that  Sault  Ste.  Marie  was  especially  interested  in 
the  question  under  consideration  by  the  committee  because  of  the  re- 
cent construction  to  that  city  of  two  lines  of  railway,  one  from  Minne- 
apolis and  one  from  Duluth,  which  connect  at  the  international  bridge 
with  a  branch  of  the  Canadian  Pacific  Kailway  that  joins  the  main  line  at 
Sudbury  Junction.  He  believed  that  any  restrictions  upon  transporta- 
tion between  Canada  and  the  United  States  would  not  only  operate 
very  strongly  against  his  city  locally,  but  against  the  entire  Northwest. 

At  Chicago  the  committee  appointed  to  represent  the  Board  of  Trade 
of  that  city  submitted  a  formal  report  upon  the  questions  involved  in 
the  present  inquiry,  which  appears  in  full  in  the  statement  of  Mr.  George 
F.  Stone,  the  secretary  of  the  board.  It  is  stated  in  this  report  that  the 
Canadian  lines  of  transportation  operating  in  the  United  States  affect 
the  commercial  interests  of  this  country  favorably — 

First — By  their  effect  in  smashing  iniquitous  and  scandalous  pools  and  agreement* 
at  times  existing  between  the  Michigan  Central,  Michigan  Southern,  and  Pennsyl- 
vania Railways,  by  which  unjust  and  unreasonable  rates'were  exacted  on  western 
products  from  Chicago  to  the  sea-board  previous  to  the  entrance  of  the  so-called 
Canadian  lines  into  this  city.  For  facts  and  figures  on  this  point,  set)  special  report 
of  Chicago  Board  of  Trade  of  February,  1876,  herewith  appended. 

Second — By  the  equalization  of  freights  on  all  western  products  to  numerous  points 
in  New  England,  where  previously  American  railway  lines  charged  and  exacted  se- 
vere and  unjust  arbitraries,  averaging  from  5  to  25  cents  per  cental  over  rates  to 
Boston  and  other  sea-board  points,  which,  under  the  competition  of  Canadian  lines, 
have  been  entirely  discontinued. 

Third — The  Grand  Trunk  system  of  railway  was  the  pioneer  in  the  dressed-beef 
traffic,  which  it  commenced  and  fostered  years  ago,  while  the  New  York  Central  and 
Pennsylvania  systems  antagonized  the  shipment  of  dressed  beef  and  favored  the 
shipment  of  live  cattle,  that  their  transportation  and  stock-yard  revenues  might  be 
augmented,  to  the  detriment  of  the  cattle-producing  and  beef-consuming  public. 
(Testimony,  p.  606.) 

In  support  of  this  answer  the  committee  say,  in  a  supplemental  sta- 
tistical report : 

We  wish  to  call  the  attention  of  your  honorable  committee  to  the  rate  charged  by 
railroads  running  wholly  through  the  United  States,  on  grain  and  flour,  from  Chicago 
to  Springfield  and  Boston,  Mass.,  and  Nashua,  N.  H.,  in  the  winter  of  1867-8,  which 
was  85  cents  percental;  the  arbitraries  charged  from  these  junction  points  named 
to  points  in  Maine,  New  Hampshire,  and  Vermont  ranged  from  10  to  25  cents  per 
cental.  The  last-named  rate  applied  from  Nashua,  N.  H.,  to  Newport,  Vt.,  making 
the  through  rate  from  Chicago  to  Newport,  Vt.,  fl.lO  per  cental. 

The  present  tariff — Chicago  to  Newport,  Vt. — on  like  commodities,  via  the  Cana- 
dian railways,  is  25  cents  per  cental,  and  while  we  do  not  claim  that  all  this  reduction 
has  been  caused  by  Canadian  railways,  we  do  claim  that  Canadian  railways  have 
eradicated  all  arbitraries  and  given  practically  to  all  the  territory  north  of  the  Boston 
and  Albany  Kailwav  in  New  England,  rates  equal  with  Boston  to  and  from  the 
West. 

And  in  answer  to  the  question  as  to  what  extent  and  by  what  means 
traffic  originating  in  the  United  States  has  been  diverted  from  American. 


XXX  TRANSPOETATION  INTERESTS  OF 

to  Canadian  lines  of  transportation  the  committee  of  the  board  of  trade 
further  say : 

Tiartic  origiuatiiig  in  the  Uuited  States  and  which  would  naturally  be  carried  over 
American  lines  has  not,  in  the  opinion  of  this  committee,  been  diverted  to  Canadian 
lines,  only  in  so  far  as  the  latter  have  offered  greater  facilities  for  the  safe  and  quick 
carriage  of  perishable  and  other  property  to  eastern  points  and  for  export.  The  Ca- 
nadian lines  were  among  tlie  lirst  to  build  and  operate  transfer  elevators  here  for  the 
preservation  of  identity  and  the  weighing  of  grain  in  hoj)per  scales,  as  required  by 
the  law  of  this  State  (acopyof  which  is  hereto  annexed),  and  which  law  is  now  openly 
defied  by  some  of  the  American  lines  centering  here.  The  Canadian  lines  have  won 
the  larger  share  of  this  business  from  the  West  by  such  and  kindred  measures,  and 
by  uniformly  just  and  equitable  treatment  of  their  patrons,  and  not  by  any  favorit- 
ism to  one  shipper  over  another,  as  evinced  by  the  popular  regard  that  is  had  for 
these  lines  so  universally  by  the  merchants  of  this  and  other  Western  cities. 

Mr.  William  J,  Pope,  a  member  of  the  Chicago  Board  of  Trade  com- 
mittee, in  his  statement  expressed  the  belief  that  the  only  complaints  in 
regard  to  the  Canadian  lines  seemed  to  come  from  attorneys  of  lines  in 
direct  competition  with  them,  adding  that  he  had  yet  to  find  the  first 
merchant  in  Chicago  who  found  any  fault  with  them. 

The  foregoing  summary  of  the  testimony  taken  on  the  subject  shows 
that  there  was  a  substantial  unanimity  of  opinion  on  the  part  of  those 
who  appeared  before  the  committee,  as  to  the  great  advantages  gained 
by  important  sections  of  the  United  States  through  the  additional  facil- 
ities for  transportation  furnished  by  the  Canadian  railways.  The  value 
of  these  advantages  to  those  enjoying  them  was  not  questioned  even  by 
those  who  complained  of  the  unfavorable  effect  of  the  competition  of  the 
Canadian  railways  upon  railroads  in  the  United  States.  It  was  sug- 
gested, however,  by  Mr.  Aldace  F.  Walker,  chairman  of  the  Interstate 
Commerce  Eailway  Association,  that,  while  the  Canadian  lines  of  trans- 
portation operating  in  the  United  States  affect  the  business  interests  of 
certain  parts  of  this  country  favorably,  especially  Few  England  and  some 
otlier  sections  immediately  contiguous  to  the  border,  they,  as  a  buite 
natural  corollary,  affect  business  interests  in  other  parts  of  the  country 
to  some  extent  unfavorably,  and  it  seems  appropriate  to  conclude  this 
summary  of  the  testimony  relating  to  this  branch  of  the  committee's  in- 
quiry by  quoting  Mr.  Walker's  suggestions  upon  this  subject,  as  follows: 

Circumstances  which  add  to  the  advantages  of  competing  centers  of  trade  in  one 
locality  naturally  do  so  more  or  less  at  the  expense  of  rival  communities  elsewhere. 
For  example,  there  can  be  no  doubt  that  the  Grand  Trunk  Railway  and  the  Canada 
Southern  have  been  large  factors  in  the  development  of  Chicago ;  it  is  also  quite 
probable  that  the  influence  of  these  transportation  routes  has  diverted  traffic  to  some 
extent  from  St.  Louis  and  some  other  western  cities  to  the  Chicago  gateway  ;  and. 
again,  the  usefulness  of  the  Canadian  roads  above  mentioned  to  the  merchants  and 
traders  of  Chicago  may  fairly  be  offset  by  the  injury  done  to  that  city  as  a  distribut- 
ing point  through  the  opening  of  the  "Soo"  line  to  Minneapolis  and  St.  Paul,  that 
route  operating  with  the  Canadian  Pacific  to  the  Atlantic  sea-board,  now  making 
rates  which  very  largely  assist  the  merchants  of  the  ''twin  cities"  at  the  expense  of 
their  Chicago  rivals ;  it  is  likewise  undoubtedly  true  that  the  competition  of  the 
Grand  Trunk  has  materially  aided  in  bringing  about  the  exceptionally  low  long-dis- 
tance rates  which  have  prevailed  for  the  past  few  years  upon  commodities  transported 
in  both  directions  between  the  Western  and  Northwestern  States  and  the  Eastern 
sea-board  ;  these  rates  have  very  largely  promoted  the  development  of  many  States 
and  Territories  m  the  West,  but  in  order  to  afford  this  result  the  interests  of  the  agri- 
cultural communities  at  intermediate  localities,  and  to  some  extent  in  New  England 
even,  have  correspondingly  suffered. 

These  illustrations,  which  might  be  multiplied  indefinitely,  indicate  some  of  the 
ways  in  which  the  Canadian  lines  affect  commercial  interests  in  the  United  States; 
and  the  extent  of  their  influence  is  undoubtedly  verv  considerable.  Whether  the  re-, 
suit  obtained  has  on  the  whole  been  more  favorable  than  otherwise  is  not  for  me  to 
say.  In  fact  it  hardly  seems  worth  while  to  adjust  the  balance;  the  Canadian  rail- 
roads are  in  existence ;  commercial  conditions  have  become  firmly  settled  in  their  use, 
and  they  are  rapidly  working  their  way  in  other  directions.  It  is  obvious  that  their 
relations  to  interstate  commerce  in  the  United  States  can  by  no  possibility  be  entirely 
eradicated.     (Testimony,  p.  640.)  •         i.  j  j 


THE    UNITED    STATES    AND    CANADA.  XXXI 


OPINION    OF    WITNESSES    AS   TO    PLACINGr    AMERICAN   AND   CANADIAN 
LINES   ON  AN  EQUAL,  BASIS. 

The  general  opinion  of  gentlemen  examined  by  the  committee  in  its 
investigation  was  to  the  effect  that  if  the  Canadian  lines  secured  any 
undue  advantage  by  being  outside  the  jurisdiction  of  the  interstate- 
commerce  act,  that  they  should  be  placed  under  the  same  regulations 
as  the  American  roads.  In  support  of  this  view,  a  few  extracts  from 
the  testimony  are  inserted.  While  it  appears  from  the  volume  of  testi- 
mony that  the  damage  done  the  American  roads  by  the  construction 
and  operation  of  the  Canadian  roads  has  not  yet  assumed  dangerous 
proportions,  yet  a  good  deal  of  testimony  was  given  as  to  the  power  of 
the  Canadian  roads  to  interfere  with  the  business  of  the  American  roads 
and  thereby  injuriously  affect  them.  Mr.  Eoberts,  the  president  of  the 
Pennsylvania  Eailroad,  was  interrogated  on  this  subject,  as  follows: 

The  Chairman.  So  far,  then,  you  do  not  realize  that  the  Canadian  roads  are  doing 
any  particular  damage  to  the  roads  in  this  country  ? 

To  this  question  Mr.  Eoberts  replied : 

No,  sir;  I  do  not  know  that  they  are  now  doing  any  serious  injury  to  the  railway 
interests  of  this  country  or  to  the  country,  hut  I  submit  that  it  is  entirely  within 
their  power  to  do  so.  They  have  a  very  great  advantage  over  the  railways  in  the 
United  States  in  their  independence  of  our  legal  restrictions. 

Mr.  King,  president  of  the  Xew  York,  Lake  Erie  and  Western,  in  re- 
ply to  a  similar  question,  stated : 

Of  course  we  can  not  tell  how  they  [the  Canadian  roads]  act  up  there,  not  nearly  as 
well  as  we  can  tell  how  we  act  ourselves ;  but  we  know  this,  that  they  have  abun- 
dant opportunities  for  doing  things  contrary  to  law  without  being  punished. 

Mr.  Depew's  views  on  this  question  follow : 

But  what  we  complain  of  is  that  they  should  have  the  power,  it  they  choose  to  ex- 
ercise it,  to  do  things  that  we  can  not  do,  to  recoup  where  we  are  tied  up,  and  to  ac- 
complish in  Canada,  free  from  the  restrictions  that  bind  us,  things  that  give  them  an 
advantage  which,  if  we  do,  is  a  penal  offense.     (Testimony,  j).  69.) 

Mr.  John  King,  president  of  the  New  York,  Lake  Erie  and  Western, 
said: 

We  do  not  ask  that  we  shall  have  any  advantage  over  the  Canadian  road,  but  we 
ask  that  the  Canadian  road  be  put  exactly  on  the  same  footing  as  we  are.  (Testi- 
mony, p.  48.) 


XXXII  TRANSPORTATION    INTERESTS    OF       " 

Mr.  Depew  stated  his  opinion  in  the  course  of  the  following  colloquy: 

The  Chairman.  State  again,  Mr.  Depew,  exactly  what  you  think  ought  to  be  an 
ameuduieut  to  the  pijesent  iuterstate-commerce  act  in  order  to  protect  American  inter- 
ests as  against  Canadian  interests. 

Mr.  Depew.  I  have  ah-eady  said  what  I  think  is  necessary,  which  is  the  enlarge- 
ment of  the  powers  of  the  commissioners,  so  that  they  can  very  properly  say  to  any 
foreign  road,  whether  Mexican  or  Canadian,  "If  you  wish  to  do  any  business  in  the 
United  States  the  condition  is  that  you  shall  conform  to  our  abt."  *  *  *  (Testi- 
mony, page  70. ) 

It  certainly  seems  a  monstrous  case  that  you  have  here  in  the  United  States  almost 
eight  thousand  million  dollars  invested  in  railways  which  are  subject  to  our  laws, 
which  pay  their  taxes,  which  help  support  the  Government,  and  are  therefore  enti- 
tled to  a  measure  of  protection,  which  are,  in  return,  regulated  and  supervised  as 
semi-public  bodies,  and  yet  that  the  Government  itself  should  take  their  taxes  and 
then  permit  the  roads  of  a  foreign  country,  which  contribute  nothing  to  the  support 
of  our  Government,  owe  it  no  allegiance,  are  not  owned  by  our  citizens,  and  in  case 
of  war  would  be  used  against  us,  to  emasculate  our  own  properties.  (Testimony, 
p.  67. )  •  . 

Mr.  Felton,  vice-president  of  the  New  York,  Lake  Erie  and  Western, 
who  appeared  before  the  committee  in  New  York,  entertained  decided 
opinions  as  to  the  justice  of  applying  similar  laws  and  regulations  to 
the  Canadian  and  Americau  roads. 

The  Chairman.  Do  you  think  there  ought  to  be  any  legislation  to  protect  Amer- 
ican railroad  interests  as  against  Canadian  railroad  interests  more  than  we  have  al- 
ready ? 

Mr.  Felton.  I  think  that  the  Canadian  lines  should  be  placed  on  exactly  the  foot- 
ing as  are  the  American  lines.  I  take  it,  it  is  within  the  power  of  Congress  to  com- 
pel the  Canadian  railroads  to  conform  to  our  laws  if  they  want  to  do  business  in  the 
United  States,  but  I  do  not  suppose  it  is  within  the  power  of  Congress  to  regulate 
traffic  in  Canada.     (Testimony,  p.  125,  126.) 

Mr.  Adams,  president  of  the  Union  Pacific  Eailway,  was  asked  this 
question  by  Senator  Gorman  : 

Then,  as  a  fair  arrangement,  I  ask  your  opinion  whether  it  would  not  be  the  act  of 
wisdom  before  the  United  States  permits  this  road  to  complete  its  line  through  Maine 
and  then  on  to  Halifax,  that  we  insist  on  the  Canadian  Government  agreeing  to  op- 
erate with  us  under  the  same  conditions  that  we  impose  upon  you? 

To  which  Mr.  Adams  replied : 

That  would  be  a  perfectly  fair  proposition  for  us  to  make.     (Testimony,  p.  155.) 

Mr.  Erastus  Wiman,  in  the  course  of  his  address,  said : 

It  ^eems  to  me  that  in  common  equity  there  should  be  reciprocity  by  Canada  as 
between  all  nations,  and  that  transportation  should  be  put  on  the  same  footing, 
(Testimony,  p.  195.) 

Mr.  Newell,  president  Lake  Shore  and  Michigan  Southern  Eailway, 
expressed  himself  as  follows : 

My  point  is  whether  it  is  not  within  the  province  of  the  Government  of  this  country 
to  say  to  the  Canadians  that  if  they  come  into  this  country  to  transact  what  may  be 
termed  interstate  traffic,  or  international  traffic,  they  must,  before  they  commence  to 
take  hold  of  that  traffic,  put  their  whole  traffic  under  the  same  regulations  as  the 
American  roads  are  under  that  compete  with  them.  I  would  ask  them  not  only  to 
accept  the  provisions  of  the  interstate-commerce  act  with  regard  to  traffic  that  is 
interstate  or  international,  but  I  would  also  ask  them  to  apply  it  to  their  local  traffic 
as  well,  so  that  they  would  be  under,  in  all  respects,  the  same  general  rules  as  our 
roads  are  under.  You  have  not  a  railroad  running  east  and  west  to  or  from  here  that 
does  not  go  through  one  or  more  States,  except  the  New  York  Central.  (Testimony, 
p.  263.) 

Mr.  Ledyard,  president  and  general  manager  Michigan  Southern  Eail- 
way Company,  said: 

I  would  say  simply,  "If  you  [the  Canadian  roads]  want  to  do  the  business,  you 
shall  do  it  on  principles  that  are  just  to  you,  but  not  unjust  to  the  American  railways 
that  have  not  the  aid  you  have,  and  that  are  not  able  to  recoup  themselves  by  charg- 
ing as  high  local  rates  as  you  can  charge,"    (Testimony,  p.  273.) 


THE    UNITED    STATES    AND    CANADA.  XXXIII 

Mr.  Ledyard  previously  stated: 

I  made  a  suggestion  to  Judge  Cooley  some  two  years  since,  with  regard  to  the  state 
of  aftairs  tlien  existing,  and  he  asked  me  what  I  thought  about  the  matter,  and  I 
told  him  I  thought  that  all  Canadian  railways,  before  being  allowed  to  do  business 
in  carrying  traffic  from  the  United  States  into  Canada,  or  from  the  United  States  into 
Canada  and  then  into  the  United  States  again,  or  from  Canada  into  the  United  States, 
should  tile  with  the  Commission  their  assent  to  the  law.     (Testimony,  p.  270.) 

Mr.  Smith,  president  of  tlie  Chamber  of  Commerce  of  New  York, 
said : 

I  know  that  the  Canadian  railroad  officials  claim  that  they  observe  the  provisions 
of  the  interstate-commerce  law.  It  is  denied  on  the  part  of  our  American  friends. 
I  know  personally  that  the  Canadian  lines  are  getting  a  very  much  larger  percent- 
age of  business  from  the  New  England  States  and  Chicago  than  they  received  in  former 
years,  and  I  think  it  is  due  to  our  exclusively  American  lines  that  they  should  have 
a  fair  investigation  of  that  subject,  and  that  the  question,  as  far  as  they  are  con- 
cerned, should  be  put  upon  a  fair  basis.  That  is,  we  ask  fair' play  for  American  lines ; 
we  do  not  ask  anything  more.     (Testimony,  p.  279.) 

Mr.  Ammidown,  a  member  of  the  Chamber  of  Commerce  of  New 
York,  said : 

I  do  not  beheve  there  is  much  difference  of  opinion  on  that  subject.  It  is  a  ques- 
tion of  fair  dealing.  No  man  would  claim — I  do  not  believe  a  fair  Canadian  himself 
would — that  the  Canadian  roads  should  be  allowed  to  take  advantage  of  specific 
legislation  controlling  American  roads.  I  am  quite  sure  the  American  people  will 
not  stand  it.     (Testimony,  p.  297.) 

Mr.  Kern  an,  formerly  a  railroad  commissioner  for  the  State  of  New 
York,  said : 

The  one  direction  in  which  we  can  move  seems  to  be  simply  to  insist  that  the 
Canadian  lines  in  competition  with  American  lines  over  American  soil  to  and  from 
American  points  shall  observe  American  laws  applicable  to  that  transportation  upon 
our  own  railroads.  Now  this  demand  of  the  American  railroads  is  right.  If  you  at- 
tempt to  restrict  an  American  railway  by  law  it  is  the  duty  of  the  country  to  it  as 
one  of  its  citizens,  and  it  is  the  duty  of  the  country  to  the  capital  invested  in  it,  that 
we  insist  that  foreign  competing  lines  running  in  and  out  of  American  points  shall 
observe  that  same  law.  While  this  is  true,  it  is  a  very  different  question  to  say  that 
we  must  amend  the  interstate-commerce  act  to  accomj)lish  it.     (Testimony,  p.  297.) 

He  also  stated: 

I  say  simply  this,  that  if  you  put  American  railroads  engaged  in  transporting 
traffic  from  Chicago  to  New  York  under  certain  restrictions,  such  as  the  publication 
and  tiling  of  rates,  the  long  and  short  haul  clause,  etc.,  that  in  justice  to  them  you 
ought  to  put  foreign  lines  carrying  from  Chicago  to  New  York,  or  from  Chicago  to 
Portland,  under  the  same  law ;  that  is  all.     (Testimony,  p.  297.) 

Mr.  F.  B.  Thurber,  of  Thurber,  Wyland  &  Co.,  wholesale  grocers,  in 
the  opening  of  his  address  expressed  his  opinion  as  follows : 

Upon  the  question  which  this  committee  is  investigating  as  to  the  competition  of 
Canadian  railways  with  those  of  the  United  States  and  the  workings  of  the  interstate- 
commerce  law,  I  would  say  that  it  seems  to  me,  in  justice  to  our  American  railroads, 
that  competing  Canadian  roads  should  be  placed  under  similar  restrictions  to  those  of 
our  own  roads,  and  if  this  can  not  be  done  then  our  own  roads  should  be  relieved  from 
these  restrictions  to  an  extent  which  would  enable  them  to  compete  with  Canadian 
roads.     (Testimony,  p.  306). 

Mr.  Bliss,  president  of  the  Boston  and  Albany  Eailroad,  in  the  course 
of  his  statement  said  : 

I  think  that  foreign  lines  ought  to  be  subject  to  all  the  rules  and  regulations  to 
which  the  United  States  roads  are  subject,  both  with  respect  to  Canadian  business 
and  interstate  business.     (Testimony,  p.  310.) 

Mr.  Bliss  also  stated  : 

I  think  it  a  very  good  plan  to  have  the  railroads  regulated.  I  think  it  equally  well 
as  a  principle  that  the  shorter  haul  should  pay  no  more  than  the  longer  haul,  but  I 

S.  Eep.  847 3 


XXXIV  TRANSPORTATION    INTERESTS    OF 

can  not  conceive  of  any  condition  of  affairs  under  which  a  foreign  corporation  should 
be  allowed  to  come  into  the  United  States  and  make  such  rates  as  they  see  ht  while 
the  American  roads  are  tied  hand  and  foot.     (Testimony,  p.  315.) 

JNIr.  Choate,  president  of  the  Old  Colony  Eailroad,  was  asked  by  Mr. 
Gorman : 

But  what  we  are  after  is  to  get  the  opinion  of  such  gentlemen  as  yourself,  who  are 
familiar  with  the  question  from  a  business  stand-point.  That  is  the  gist  of  our  in- 
quiry, and  I  should  like  very  much  to  have  your  opinion  on  that  point.  (Testimony, 
p.  331.) 

Mr.  Choate  responded : 

I  thiuk  if  the  Canadian  roads  are  allowed  to  compete  with  the  American  roads  they 
should  be  required  to  do  so  on  equal  terms.     (Testimony,  p.  331.) 

Mr.  lilellen,  traffic  manager  of  the  Union  Pacific  Railway,  said  that 
he  was  not  a  practical  legislator,  but  that  it  would  seem  to  him  but 
mere  justice  to  make  the  Canadian  Pacific  come  fully  under  the  inter- 
state commerce  law  in  all  its  business,  as  the  American  roads  are  com- 
pelled to  do.  It  seemed  to  him  that  Congress  should  require  the  Cana- 
dian Pacific  to  be  placed  under  bonds,  to  produce  its  books  and  its 
officials  before  the  Interstate  Commerce  Commission,  as  the  American 
roads  are  now  obliged  to  do,  and  to  compel  it,  under  heavy  penalties, 
to  observe  the  law. 

It  seems  to  me  that  that  is  the  only  sensible  thing  to  do — either  do  that,  or  relieve 
the  burdens  that  are  now  placed  upon  the  American  lines  in  competition  with  the 
Canadian  Pacific.     (Testimony,  p.  354.) 

The  following  examination  by  the  Chairman  of  Mr.  Goodwin,  repre- 
senting the  Chamber  of  Commerce,  of  Boston,  expresses  that  gentle- 
man's sentiments : 

The  Chairman.  Suppose  that  any  arrangement  could  be  made  by  which  the  same 
regulation  of  interstate  commerce  as  exists  in  the  United  States  now  could  prevail 
in  Canada,  so  that  the  Canadian  roads  would  be  brought  under  exactly  the  same  con- 
dition of  regulation  that  the  American  roads  are,  would  you  have  any  objection  to  it  ? 

Mr.  Goodwin.  Not  at  all,  sir.  I  think  that  our  American  roads  should  be  pro- 
tected, but  I  do  not  think  that  they  should  be  protected  by  excluding  the  Canadian 
lines,  to  the  great  detriment  of  New  England  and  the  Northwest. 

The  Chairman.  No  one  in  this  country  thinks  of  putting  up  a  w-all  between  this 
country  and  Canada,  I  suppose,  to  keep  out  the  Canadian  roads.  The  only  question 
that  we  are  directed  to  consider  especially  is  whether  there  is  anything  that  can  be 
done,  or  whether  anything  is  necessary  to  be  done,  and  if  anything  is  necessary,  vli^-t 
it  is,  that  will  protect  the  American  roads  and  stop  the  Cauadian  roads  getting  an 
'  undue  advantage  of  the  American  roads  because  of  any  regulation  we  may  have  in 
this  country.  So  that  you  conclude  if  the  Cauadian  lines  could"  be  placed  under  the 
same  regulation,  by  any  arrangement  between  the  two  Governments,  you  would  have 
no  objection  to  it  ? 

Mr.  Goodwin.  No,  sir ;  I  would  not.  I  thiuk  it  is  fair  that  the  American  lines 
should  be  jjrotected. 

The  Chairman.  You  think  something  of  that  kind  ought  to  be  done,  in  fairness  to 
American  capital  ? 

Mr.  Goodwin.  Yes,  sir.    (Testimony,  p.  395.) 

Mr.  A.  C.  Raymond,  who  represented  the  Board  of  Trade  of  Detroit, 
appeared  before  the  committee  in  Detroit.  Appended  is  an  excerpt 
from  his  testimony : 

Senator  Hiscock.  Now,  your  understanding,  as  I  understood  you  to  say  to  Senator 
CiTLLOM,  is  that  you  see  no  reason  why  the  truuk  lines  in  the  United  States  and  in  Can- 
ada should  not  be  put  on  the  same  basis  before  the  law  ? 

Mr.  Raymond.  Yes,  sir ;  except  so  far  as  Congress  can  not  control  local  traffic  in 
Canada,  any  more  than  Congress  can  control  local  traffic  in  Michigan.  (Testimony, 
p.  417.') 

Mr.  Mulliken,  who  is  vice-president  and  general  manager  of  the  Chi- 
cago and  West  Michigan  Railway  Comj^any,  was  examined  by  the  com- 


THE    UNITED    STATES    AND    CANADA.  XXXV 

mittee  in  Detroit.  Mr.  Mulliken  thought  the  same  regulations  should 
exist  in  respect  to  both  Canadian  and  American  roads,  as  the  following 
extract  shows : 

The  Chairman.  You  beard  Senator  Hiscock's  question  to  Mr.  Raymond  as  to 
whether  lie  would  have  any  objection  to  tbe  same  regulations  prevailing  witb  re- 
spect to  tbe  Canadian  lines  as  prevail  witb  respect  to  tbe  American  lines.  Have  you 
any  objection  to  sucb  a  condition  of  tbings? 

Mr.  Mulliken.  I  think  tbe  same  regulations  sbould  obtain  in  both  cases. 

The  Chairman.  And  if  they  do  not  obtain  now  in  both  cases  you  would  be  willing 
to  advocate  a  law  that  would  bave  that  effect  ? 

Mr.  Mulliken.  Yes,  sir.     (Testimony,  p.  520.) 

Mr.  Bo  wen,  a  member  of  the  firm  of  Ferry  &  Co.,  seedsmen,  of  Detroit, 
had  not  the  slightest  objection  to  placing  Canadian  and  American  roads 
on  an  equality. 

The  Chairman.  You  do  not  want  to  put  up  an  embargo  against  your  traveling  or 
shipping  over  tbe  Canadian  roads,  but  if  there  is  anything  to  be  doue  at  all  you 
simply  want  tbe  Canadian  roads  placed  exactly  on  an  equality  with  our  own  roads  ? 

Mr.  BoWEN.  That  is  it. 

The  Chairman.  And  to  do  that,  if  it  should  be  found  necessary,  by  whatever  ar- 
rangement would  be  potential  between  the  two  Governments.  Have  you  any  objec- 
tion to  that  ? 

Mr. -60 WEN.  No,  sir;  not  the  slightest.     (Testimony,  p.  522.) 

Mr.  Pond,  an  attorney  at  law,  of  Detroit,  was  asked — 

The  Chairman.  Is  it  your  opinion  or  not,  Mr.  Pond,  that  something  different  from 
what  now  exista  ought  to  be  done  to  protect  American  roads  as  against  Canadian 
roads  ?  ' 

And  he  responded — 

I  think  that  either  the  interstate-commerce  law  should  be  repealed  or  that  it  should 
be  so  amended  that  the  Canadian  roads  would  be  made  subject  to  the  same  restric- 
tions as  the  American  roads.     (Testimony,  p.  532.) 

Mr.  Brownlee,  a  lumber  manufacturer,  of  Detroit,  was  willing  to  have 
the  American  and  Canadian  systems  of  roads  placed  under  the  same 
regulations.    An  extract  from  his  testimony  follows : 

The  Chairman.  And  you  are  willing  to  have  them  [the  Canadian  roads]  placed 
under  the  same  regulations  as  the  American  roads,  if  it  can  be  done  ? 
Mr.  Brownlee.  Most  assuredly,  if  it  can  be  done.     (Testimony,  p.  540.) 

Mr.  Edwards,  assistant  general  manager  of  the  Flint  and  Pere  Mar- 
quette Railroad,  was  examined  as  follows : 

The  Chairman.  As  a  railroad  man,  would  you  have  any  objection  to  placing  the 
Canadian  railroads  under  the  same  regulation  as  the  American  roads  are  under? 
Mr.  Edwards.  No,  sir ;  not  the  slightest. 
The  Chairman.  Do  you  think  that  ought  to  be  done  ? 
Mr.  Edwards.  Yes,  sir. 

The  Chairman.  Do  you  think  that  such  action  would  injure  anybody  ? 
Mr.  Edwards.  No,  sir;  I  do  not. 

The  Chairman.  Do  you  think  it  would  injure  the  commerce  of  Detroit? 
Mr.  Edwards.  I  can  not  appreciate  why  it  should.     (Testimony,  p.  543.) 

Mr.  Butler,  a  freight  agent  of  the  Wabash  Western  Eailroad,  said  : 

I  am  heartily  in  favor  of  sucb  restrictions  being  put  on  the  Canadian  lines  as  will 
place  them  on  a  plane  of  absolute  equality  with  their  American  competitors,  if  that 
regulation  does  not  already  exist.     (Testimony,  p.  558.) 

Mr.  Jeffery,  at  the  time  of  his  examihation,  general  manager  of  the 
Illinois  Central  Eailway  Company,  stated — 

In  reference  to  the  first  branch  of  the  subject,  Mr.  Chairman  and  gentlemen,  "What 
is  the  effect  of  Canadian  competition  on  American  railroads  and  American  commerce," 
it  is  proper  for  me  to  state  that  the  road  I  represent  is  mainly  a  north  and  south  rail- 
road, extending  from  Chicago  to  New  Orleans,  and  therefore  is  not  one  that  feels 
directly  the  effect  of  that  competition.     In  common  with  other  railroad  managers 


XXXVI  TRANSPORTATION    INTERESTS    OF 

-nlio  no  doubt  have  expressed  their  views  fully  and  clearly  before  you  heretofore, and 
perhaps  better  than  I  can  do,  I  believe  that  the  same  restrictious  ought  to  be  thrown 
arouml  forei<ru  railroads  engaged  in  similar  traffic  in  the  United  States  as  are  thrown 
around  Ignited  States  carriers.  It  is  a  self-evident  proposition  and  also  one  borae  out 
by  the  facts  and  the  evidence  that  you  have  had  before  you  heretofore,  that  the 
Canadian  lines  can  and  do  affect  materuilly  the  traffic  of  the  West  and  Northwest — 
particularly  of  the  Northwest. 

The  United  States  railroads  are  held  under  the  interstate  commerce  law  to  certain 
lines  of  action.  The  restrictions  that  are  thrown  upon  the  United  States  railroads 
are  such  that  these  railroads,  as  a  general  thing,  do  not  complain  seriously  of  them, 
provided  their  competitors,  who  apparently  have  been  free  from  such  restrictious, 
are  held  up  to  the  law  and  are  required  to  abide  by  ib.     (Testimony,  p.  599.) 

Mr.  Stone,  who  appeared  before  the  committee  as  representing  the 
Board  of  Trade  of  Chicago,  stated  his  views  as  follows  : 

The  Chairman.  Some  of  the  railroads  in  the  United  States  complain  that  they  are 
at  a  disadvantage  by  reason  of  being  regulated  by  the  interstate-commerce  act  and 
by  State  laws,  while  the  Canadian  roads  in  competition  with  them  are  not.  Do  you 
know  any  reason  why,  if  it  could  be  done,  the  same  regulations  should  not  be  ap 
plied  to  the  Canadian  roads  as  now  exist  in  reference  to  American  roads  ! 

Mr.  Stone.  I  think  the  report  of  the  committee  recommends  that  the  Canadian 
lines  operating  wholly  in  the  United  States  should  observe  the  provisions  of  the  in- 
terstate-commerce act. 

The  Chairman.  "Lines  operating  wholly  in  the  United  States";  but  that  practi- 
cally makes  an  American  road  in  the  sense  that  it  is  within  the  jurisdiction  of  the 
United  States.  But  take  the  Chicago  and  Grand  Trunk,  for  instance.  Its  connection 
is  with  the  Grand  Trunk  of  Canada,  and  by  the  connections  of  the  two  you  do  a  busi- 
ness with  New  England  and  other  points  east,  as  you  say.  Now,  while  the  Chicago 
and  Grand  Trunk  is  under  the  jurisdiction  of  the  United  States  the  Grand  Trunk  of 
Canada  is  not,  only  inasmuch  as  they  regard  the  interstate-commerce  act  in  force 
over  them  touching  the  United  States,  or  in  connection  with  freight  taken  from 
here.  Is  there  any  objection,  therefore,  that  you  gentlemen  know  of,  to  placing  the 
Canadian  lines  under  the  same  regulations  as  the  American  roads,  if  it  can  be  done, 
in  view  of  the  roads  of  this  country  being  at  a  disadvantage  on  account  of  our  re- 
strictions ?  I  am  not  saying  whether  or  not  our  roads  are  at  a  disadvantage  in  com- 
petition with  the  Canadian  roads,  but  if  the  situation  is  such  that  the  Canadian 
roads  get  an  advantage  because  of  our  regulations,  is  there  any  objection  to  placing 
the  Canadian  roads  under  the  same  rules  and  regulations  as  our  own  roads  are  sub- 
ject to  ? 

Mr.  Stone.  I  do  not  know,  Mr.  Chairman,  of  any  reason  why  they  should  not  be 
subject  to  a  uniform  treatment  with  the  laws  and  regulations  which  apply  to  the 
roads  of  the  United  States  in  the  transportation  of  American  products.     (Testimony, 

Mr.  Pope,  a  representative  of  the  Board  of  Trade  of  Chicago,  thought 
the  two  systems  of  roads  should  be  placed  on  an  equality,  so  that  the 
Canadian  roads  should  not  have  an  advantage. 

The  Chairman.  If  it  should  turn  out  that  you  are  mistaken  and  that  they  are  at  a 
disadvantage,  what  would  you  favor?  Would  you  favor  placing  the  Canadian 
roads,  if  there  is  any  power  to  do  it,  upon  the  same  level,  or  would  you  want  to 
change  the   laws  of  the  United  States  ? 

Mr.  Pope.  The  two  systems  of  roads  should  be  placed,  in  my  judgment,  on  the 
same  level.  As  far  as  I  know,  the  Canadian  lines  competing  for  business  here  can 
not  be  reached.  I  think  the  Canadian  Pacific  owns  and  operates  its  line  in  Vermont 
or  Maine.  There  is  no  difficulty  about  reaching  the  Grand  Trunk  any  more  than 
there  is  in  reaching  the  Chicago  and  Grand  Trunk.     (Testimony,  p.  633.) 

Mr.  Walker,  chairman  of  the  Interstate  Commerce  Railway  Associ- 
ation, expresses  himself  on  this  point  as  follows  : 

In  view  of  these  features  of  the  case,  it  apparently  would  not  be  unjust  for  our 
Government  to  require  from  Canadian  lines  which  are  employed  in  conducting  com- 
merce between  the  different  States  of  the  Union  an  engagement  with  the  United 
States  Government  in  some  effectual  form,  and,  if  necessary,  under  the  sanction  of 
a  treaty,  providing  that  the  entire  traffic  of  the  roads  composing  the  several  routes 
so  used  shall  be  conducted  in  accordance  with  all  the  provisions  of  the  act  to  regu- 
late commerce,  adding  suitable  arraugements  for  the  service  of  process  and  the  en- 
forcement and  collection  of  penalties.     In  other  words,  all  that  is  required  would 


THE    UNITED    STATES    AND    CANADA.  XXXVII 

Beein  to  be  some  provision  whioh  should  put  the  Cauadian  roads  upon  an  exactparity 
with  our  own  ;  that  being  accomplished  our  roads  can  safely  be  left  to  fight  their  own 
battles,  and  those  communities  which  find  the  Canadian  roads  of  use  commercially 
can  coutinue  to  enjoy  the  facilities  which  they  aftbrd.     (Testimony,  p.  642.) 

Mr.  Wicker,  trafific  manager  of  the  Chicag'o  and  ^Northwestern  Eail- 
way  Company,  appeared  before  the  committee  in  Chicago,  and,  referring 
to  the  American  and  Canadian  roads,  said  : 

I  think  that  they  should  be  put  on  an  equality  and  be  subject  to  the  same 
restrictions  that  American  lines  are  subject  to,  and  if  it  is  not  possible  to  do  that  my 
opinion  is  that  that  fact  alone  would  create  conditions  which  would  be  dissimilar, 
and  that  the  American  lines  should  be  relieved  from  the  operation  of  the  provisions 
of  the  fourth  section  of  the  act  in  their  competition  with  these  foreign  lines.  (Tes- 
timony, p.  638.) 


GENERAL  OBSERVATIONS  BY  THE  COMMITTEE. 

The  act  to  regulate  commerce,  approved  February  4,  1887,  was 
enacted  for  the  purpose  of  protecting  the  commercial  and  industrial 
interests  of  the  country.  It  also  had  in  view  the  object  of  maintaining 
orderly  and  just  relations  between  the  railroads.  In  securing  these 
objects  new  conditions  have  been  introduced  to  which  the  commercial 
and  transportation  interests  have  become  conformed  or  are  rapidly  ad- 
justing themselves.  Experience  will  undoubtedly  suggest  such  amend- 
ments to  the  law  as  will  the  better  conform  it  to  the  developed  needs  of 
the  country. 

But  this  act  for  the  regulation  of  our  own  internal  and  foreign  com- 
merce, which  has  accomplished  much  good,  is  to  some  extent  nullified 
by  the  fact  that  many  of  the  chief  lines  of  transportation  in  the  United 
States  meet  the  competition  of  Canadian  lines  which  are  not  so  regu- 
lated. In  competing  with  American  railroads  not  only  does  the 
Canadian  Pacific  Railway  Company  enjoy  the  advantages  of  enormous 
governmental  subventions,  franchises,  and  privileges  by  which  its  road 
was  built,  and  the  advantages  derived  from  the  heavily  subsidized 
steamer  line  which  forms  its  connection  to  China  and  Japan,  but  it  is 
aided  by  express  provisions  of  Canadian  statute  by  being  relieved  from 
the  liability  to  conform  to  the  princi}  le  enunciated  in  the  fourth  section 
of  the  interstate-commerce  act,  commonly  known  as  the  long  and  short 
haul  clause. 

The  import  of  these  statements  will  become  more  clearly  apparent 
from  facts  hereinafter  presented,  in  regard  to  the  interest  of  the  Do- 
minion government  in  transportation  lines,  the  measures  which  have 
been  adopted  by  the  Canadian  and  British  Governments  for  the  pur- 
pose of  securing  such  results,  and  the  political  objects  which  have 
prompted  such  measures. 

THE  INTEREST  OF  THE  CANADIAN  GOVERNMENT  IN  TRANSPORTA- 
TION LINES. 

The  government  of  the  Dominion  of  Canada  is,  and  from  the  time  of 
its  organization  has  been,  a  large  owner  of  transportation  lines.  The 
actual  management  and  operation  of  these  lines  constitutes  a  x^art  of 
the  governmental  machinery  of  Canada.  The  principal  lines  of  trans- 
j)ortation  owned  and  operated  by  the  Dominion  government  are : 

First.  The  system  of  Canadian  canals,  embracing  the  Welland  Canal, 
which  connects  Lakes  Erie  and  Ontario,  the  St.  Lawrence  River  canals, 
the  Rideau  Canal,  the  Champlain  River  canals,  and  certain  lateral 


XXXVIII  TRANSPOETATION    INTERESTS    OF 

canals.  The  total  cost  of  the  Canadian  canal  system  has  been  about 
$54,000,000,  as  shown  on  page  7  of  the  Annual  Eeport  of  the  Minister 
of  Kaihyavs  and  Canals  of  the  Dominion  of  (Canada  for  the  year  ended 
June  30, 1889. 

Second.  The  Inter-colonial  Kailway  system,  the  main  line  of  which 
extends  from  Point  Levis,  opposite  Quebec,  by  a  circuitous  route 
through  Canadian  territory  to  Halifax.  The  total  mileage  of  this  system 
is  between  1,200  and  1,300  miles,  and  its  cost,  as  near  as  can  be  ascer- 
tained from  Canadian  reports,  has  been  about  $47,000,000. 

But  the  most  important  railway  enterprise  of  Canada  is  the  Canadian 
Pacific  Kailway,  which,  in  the  Annual  Report  of  the  Minister  of  Railways 
and  Canals,  is  classed  as  a  "  government  railway."  The  construction 
of  the  Canadian  Pacific  Railway  was  begun  by  the  Dominion  govern- 
ment soon  after  its  formation  in  1867. 

It  was  the  original  intention  that,  like  the  Intercolonial,  it  should  be 
owned  and  operated  by  the  government,  but,  after  some  progress  in  its 
construction  had  been  made,  the  work  was  suspended  for  several 
years.  Fnally,  in  the  year  1878,  upon  the  direct  issue  of  building  the 
Pacific  Railway  as-  a  governmental  undertaking  under  the  ownership 
and  control  of  a  private  corporation,  the  Canadian  Pacific  Railway 
Company  began  work  anew  May  2,  1881.  The  road  was  opened  for 
passenger  traffic  in  June,  188G,  and  for  freight  traffic  in  August,  1886. 

When  the  Canadian  Pacific  Railway  Company  took  charge  of  the 
work  in  1881,  the  Dominion  government  turned  over  to  it,  as  a  gift,  all 
that  had  been  done  in  the  way  of  construction,  the  cost  of  such  works 
having  been  about  $35,000,000. 

The  total  value  of  the  aids  of  various  sorts — gifts,  loans,  guaranties 
of  credit,  etc.,  extended  by  the  Dominion  government  to  the  Canadian 
Pacific  Railway  Com^iany,  are  presented  in  tabular  form  herein.  This 
table  was  exhibited  by  the  committee  to  Mr.  Van  Home,  president  of 
the  Canadian  Pacific  Railway,  when  he  appeared  before  the  committee 
in  New  York,  and  was  explained  and  commented  on  by  him,  as  will 
appear  in  his  testimony.  It  is  also  given  in  the  statement  made 
to  the  committee  by  Mr.  Nimmo. 

Bevised  estimate  of  sithventiona  of  various  sorts  extended  hii  the  Dominion  government  to 
Ihe  Canadian  Pacific  Raihvaij  Company,  embracing  securities  zvliich  that  company  has 
been  enabled  to  float  {stocks  and  bonds)  as  the  result  of  the  Dominion  guaranty  and  a 
grant  o/ 25,000,000  acres  of  land. 

Cash  subsidies  as  follows:  (a)  Subsidy  of  '25,000,000  mentioned  in  sec- 
tion 3  of  act  of  February  15,  1881 ;  {b)  714  miles  of  railroad  con- 
structed by  the  Dominion  goverumeut,  coating  $35,000,000,  which 
was  presented  to  the  Canadian  Pacific  Company  as  a  gift,  with  in.- 
terest  to  June  30,  1887.     (See  Public  Accounts  of  Canada  for  1887).. 

Capital  stock  originally  §100,000,000,  but  reduced  to  $65,000,000,  wnth 
a  dividend  of  3  per  cent,  guarantied  for  ten  years.  (See  Poor's 
^iauHiil) 65,000,000 

During  the  session  of  parliameut  of  1884,  the  Dominion  government 
authorized  a  loan  to  the  company  of  $29,880,916,  to  be  paid  as  the 
work  of  construction  continued,  and  for  the  purpose  of  expediting 
construction.  Of  this  amount  $9,880,912  is  secured  by  lien  on  the 
entire  road  and  land  grant  subject  to  the  then  outstanding  land- 
grant  bonds;  also  government  bonds  to  the  amount  of  $20,000,000, 
which  was  exchanged  for  a  like  ammint  of  the  company's  loan  of 
$35,000,000,  whicli  h  id  been  issued  in  the  place  of  the  $35',000,000  of 
origiual  stock  which  had  been  retired.  (See  section  4,  act  20,  July, 
18«5) 29,880,912 

Balance  of  §35,000,000  loan,  after  deducting  $20,000,000  placed  in  the 
hands  of  the  Government  in  order  to  secure  the  $20,000,000  bonds 
above  mentioned... 15,000,000 


1,760,785 


THE    UNITED    STATES    AND    CANADA.  XXXIX 

Land-grant  bonds  issued  by  the  company  as  a  lien  upon  the   lauds 

which  it  acquired  by  gift  of  the  Dominion ^25,000,000 

Bonds,  interest  guarantied  by  the  Dominion  for  fifty  years  at  3i  per 
cent.,  issued  to  the  company  for  the  purpose  of  remunerating  it  for 
the  loss  of  its  relinquishment  of  the  monopoly  of  railroad  building 
in  Manitoba 1 15,000,000 

Subsid  V  of  $186,000  a  year  for  twenty  years  to  line  through  the  State 
of  Maine .' ." 3,720,000 

Total 215,361,097 

The  balance-sheet  of  the  company  for  December,  1888,  sljows  that 
the  total  cost  of  the  road,  and  its  equipment,  etc.,  was  $167,093,895. 
The  total  stock,  bonded  debt,  etc.,  of  the  company  at  same  time 
amounted  to  $131,350,019.  From  this  it  seems  that  the  aids  received 
from  the  government  at  their  par  value  were  largely  in  excess  of  the 
cost  of  the  road  and  of  its  liabilities. 

But  even  this  fails  to  express  the  total  value  of  the  aids  which  the 
Dominion  government  extended  to  the  Canadian  Pacific  Eailway,  as 
will  appear  from  a  table  on  page  660  of  the  testimony. 

The  Dominion  gov^ernment  has,  however,  gone  still  further  in  its  efforts 
to  secure  the  success  of  the  Canadian  Paciflo  Railway  Company.  It  has 
had  recourse  to  a  special  statutory  provision  not  only  enabling  but 
prompting  Canadian  railroads  to  violate  the  rule  of  law  enunciated  in 
the  fourth  section  of  the  interstate-commerce  act  of  the  United  States, 
which  enables  such  railroad-s  to  take  advantage  of  a  restraint  imposed 
upon  American  railroads  by  our  own  laws.  This  statutory  provision  of 
the  Dominion  of  Canada  is  embodied  in  the  following  extract  from  the 
third  annual  report  of  the  Interstate  Commerce  Commission: 

They  are  practically  under  no  restrictions  imposed  by  their  own  statutes  in  respect 
to  long  and  short  haul  traffic,  but  are  at  liberty  to  charge  high  rates  on  local  business 
to  indemnify  for  losses  on  through  or  international  business.  Their  managers  deny, 
with  more  or  less  emphasis,  that  their  local  traffic  is  subjected  to  higher  rates,  but 
■when  the  liberty  to  make  such  charges  and  the  necessity  for  it  can  exist,  the  induce- 
ment, at  least,  is  strong.  The  provisions  of  the  Canadian  statute  on  this  subject  are 
as  follows: 

"  Sec.  226.  The  company,  in  fixing  or  regulating  the  tolls  to  be  demanded  and  taken 
for  the  transportation  of  goods,  shall,  except  in  resiyect  to  Ihrough  traffic  to  or  from  the 
United  States,  adojit  and  conform  to  any  uniform  classification  of  freight  which  the 
governor  in  council  on  the  report  of  the  minister  from  time  to  time  prescribes. 

"Sec.  232.  No  company  in  fixing  any  toll  or  rate  shall,  under  like  conditions  and 
circumstances,  make  any  unjust  or  partial  discrimination  between  difi'erent  localities, 
but  no  discrimination  between  localities,  wMc/i  hy  reason  of  competition  by  tvater  or  rail- 
ivay,  it  is  necessary  to  make  to  secure  traffic,  shall  be  deemed  to  be  unjust  or  partial." 

These  enactments  give  all  traffic  carried  in  competition  with  our  car- 
riers unlimited  freedom. 

The  Canadian  people,  and  especially  the  political  party  so  long  in 
power  in  Canada,  have  not  attempted  to  disguise  the  fact  that  it  was 
their  deliberate  and  undaunted  purpose  to  secure  a  railroad  across  the 
continent  of  commanding  intiuence,  which,  in  connection  with  the  subsi- 
dized steamer  lines,  would  be  able  to  dominate  the  transcontinental 
commerce  of  the  United  States,  and  to  deflect  from  American  vessels, 
American  sea-ports,  and  American  railroads  a  large  share  of  our  own 
commerce  with  the  countries  of  Asia  and  with  Australia  and  New  Zea- 
land. This  has,  to  a  considerable  extent,  been  done  already,  and  the 
work  is  still  going  on. 


XL  TRANSPORTATION    INTERESTS    OF 

THE  POLITICAL  OBJECTS  WHICH  PROMPTED  THE  DOMINION  GOVERN- 
MENT TO  ENTER  UPON  THE  CONSTRUCTION  OF  THE  CANADIAN 
PACIFIC  RAILWAY  AND  TO  HAVE  RECOURSE  TO  SUCH  STRENUOUS 
MEASURES  FOR   SECURING  THE   SUCCESS   OP   THAT   SCHEME. 

The  Dominion  of  Canada  consists  of  four  blocks  of  inhabited  terri- 
tory, separated  by  vast  desert  spaces.  Tliese  detached  portions  of  the 
Dominion  prior  to  confederation  had  little  commercial  intercourse  with 
each  other,  and  they  were  socially  and  politically  separate.  The  only 
bond  between  them  was  their  common  affection  for  the  mother  country. 
Each  i»roviuce  was  virtually  a  political  autonomy,  for  Great  Britain  had 
lono-  ceased  to  exercise  any  control  whatever  over  their  governmental 
affairs.  There  were,  however,  close  and  constantly  growing  commer- 
cial relationships  springing  up  between  the  provinces  and  the  adjacent 
States  of  this  country — Maine,  New  Hampshire,  Vermont,  and  New 
York.  During  the  civil  war  in  this  country  the  political  party  so  long 
in  power  in  Canada  resolved  upon  a  line  of  policy  which  should  secure 
closer  commercial  relations  between  the  several  provinces  and  check 
the  growing  commercial  intercourse  with  the  United  States.  This  was 
accomplished  by  the  British  North  American  act  of  1867,  which  estab- 
lished the  confederation  known  as  the  Dominion  of  Canada. 

The  organic  act  of  the  Canadian  confederacy  in  terms  provided  for 
the  construction  of  the  Intercolonial  Railway  as  a  government  railroad, 
and  the  construction  of  the  Canadian  Pacific  Railway  became  a  funda- 
mental tenet  of  the  political  party  which  secured  confederation,  and 
which  i^  now  in  power  under  the  leadership  of  that  astute  and  able 
statesman  Sir  John  A.  Macdonald.  The  political  character  of  the  whole 
scheme  was  for  years  proclaimed  in  Canada  and  in  England,  and  is  still 
openly  declared  by  all  its  adherents.  In  the  year  1861  the  Duke  of 
Newcastle,  then  a  member  of  the  British  Cabinet,  declared  that  the 
Intercolonial  Railway  "satisfied  military  and  other  conditions  in  the 
interest  of  the  Empire,"  and  on  the  3d  of  January,  1863,  while  the  war 
of  the  rebellion  was  raging  in  this  country,  he  declared  in  the  House 
of  Lords  that  an  inter-oceanic  railway  through  British  North  America 
would  subserve  important  ends  "in  the  event  of  war  on  the  other  side 
of  the  Atlantic." 

In  ]862  Sir  E.  Bulwer  Lytton  advocated  the  construction  of  the  two 
political  railroads  of  Canada  "for  imperial  interests,  commercial  and 
military." 

About  three  years  ago  Sir  John  A.  Macdonald,  in  referring  to  the 
Canadian  Pacific  Railway  as  a  part  of  an  enormous  British  political 
scheiue,  said, "  With  England  as  a  central  power,  with  Canada,  Australia 
and  South  Africa  as  auxiliaries,  we  (the  confederated  British  Empire) 
must  control  the  seas,  and  the  control  of  the  seas  means  the  control  of  the 
world." 

The  strength  of  this  political  purpose,  and  the  deep  hold  which  it  has 
taken  upon  the  Canadian  people  from  Nova  Scotia  to  Vancouver,  is 
evidenced  by  the  subsidies,  franchises,  and  privileges  which  their  gov- 
ernment has  conferred  upon  the  Canadian  Pacific  Railway,  to  which 
that  enterprise  owes  its  existence  and  its  potentiality  as  a  disturbing 
power  in  the  conduct  of  the  internal  and  foreign  commerce  of  the  United 
States.  This  purpose  is  also  evidenced  bv  the  fact  that  the  public  debt 
of  Canada  was  increased  from  $93,000,000  in  1867  to  $235,107,948  in 
1889,  that  large  increase  being  in  the  main  the  result  of  construction  of 
railroads  by  the  government.    The  debt  thus  incurred  is  proportionally 


THE  UNITED  STATES  AND  CANADA.  XLI 

as  great  as  that  incurred  by  the  United  States  Government  for  the 
l^reservatiou  of  our  National  Union. 

THE  MEANS  ADOPTED  AND  THE  DEGREE  OF  SUCCESS  ATTAINED  BY 
THE  CANADIAN  PACIFIC  RAILWAY  IN  COMPETING  WITH  AMERICAN 
RAILROADS. 

Upon  the  opening  of  the  Canadian  Pacific  Eailway  for  freight  trafSc 
it  formed  a  connection  with  the  Pacific  Coast  Steam-ship  Company,  an 
American  line,  whereby  it  was  enabled  to  compete  for  traffic  between 
San  Francisco  and  other  Pacific  coast  ports  of  the  United  States  and 
points  in  the  United  States  east  of  the  Missouri  River,  connections  hav- 
ing been  formed  at  the  east  with  railroads  in  this  country.  Soon  after- 
wards a  line  of  British  steamers  was  established  between  Vancouver, 
British  Columbia,  and  China  and  Japan.  This  line  is  receiving  a  large 
subsidy  from  the  British  and  Canadian  Governments.  Thus,  the  Cana- 
dian Pacific  route  was  at  once  equipped  for  active  competition  with 
American  steamers  eugaged  in  our  commerce  with  China  and  Japan, 
and  also  for  active  competition  with  the  transcontinental  railroads  of 
the  United  States. 

By  virtue  of  the  subsidies  which  the  Canadian  Pacific  had  received 
from  the  Dominion  government  it  was  enabled  to  underbid  the  Amer- 
ican roads  in  rates.  A  "war  of  rates"  was  at  once  inaugurated  by  the 
Canadian  Pacific,  and  was  continued  until  a  compromise  was  reached, 
on  the  basis  of  differentials  in  favor  of  that  road. 

The  committee  refer  to  the  statement  of  Mr.  Nimmo,  in  his  testimony, 
page  673,  in  which  he  furnishes  tables  showing  the  rates  which  pre- 
vailed in  February,  1890,  on  through  traffic  from  San  Francisco  to 
Chicago,  both  on  the  American  routes  and  the  Canadian  Pacific  route, 
the  Canadian  route  being  formed  by  the  steamer  route  from  San  Fran- 
cisco to  Vancouver,  and  thence  by  the  Canadian  Pacific  Eailway  and 
its  eastern  connections;  also  rates  from  St.  Paul,  Minn.,  to  Portland, 
Oregon,  via  the  Northern  Pacific  and  the  Canadian  Pacific  Railroads. 

The  Interstate  Commerce  Commission,  in  their  third  annual  report, 
say : 

It  is  estiniatefl  that  fully  oue-tbird  of  the  through  business  of  the  Canadian  Pacific 
to  aud  from  the  Facitic  coast  consists  of  traffic  furnished  from  the  United  States. 

The  traffic  secured  by  the  Canadian  Pacific  between  Asia  and  points 
in  tlie  United  States  east  of  the  Missouri  River  is  not  included  in  the 
above  statement  of  the  percentage  secured  by  that  line.  This  traffic  is 
of  very  considerable  magnitude. 

THE  OCEAN  STEAMER  LINE   CONNECTIONS   OF   THE   CANADIAN  PACIFIC 

RAILWAY. 

The  ocean  steamer  line  portions  of  the  Canadian  Pacific  scheme  have 
been  inaugurated  by  the  establishment  of  a  heavily-subsidized  line  of 
steamers  connecting  Vancouver,  the  western  terminus  of  the  Canadian 
Pacific  Railway,  with  China  and  Japan,  provision  having  been  made  in 
the  same  act  for  the  establishment  of  a  steamer  line  from  Vancouver  to 
Australia  and  ifew  Zealand,  and  also  a  line  from  Halifax  to  Liverjiool; 
all  of  these  lines  being  so  heavily  subsidized  as  to  enable  them  at  the 
very  beginning  to  deflect  commerce  from  American  ships,  American 
shippers,  and  American  internal  transportation  lines.     Tiie  act  of  the 


XLII  TRANSPORTATION    INTERESTS    OF 

Dominion  parliament,  at  its  session  for  the  year  1889,  upon  the  subject] 
of  ocean-steamer  line  subsidies,  is  as  follows: 

[AN  ACT  relating  to  ocean  steam-sbip  subsidies.] 

Her  Majesty,  hy  and  with  the  advice  and  consent  of  the  senate  and  house  of  commons 
of  Canada,  enacts  as  follows  : 

1.  The  jrovernor  iu  council  may  grant  to  any  individual  or  company  a  subsidy  not 
exceeding  the  sum  of  twenty-five  thousand  pounds  sterling  per  annum,  to  assist  iu 
establisbiiig  an  etiective  fortnightly  steam-ship  service  between  British  Columbia  and 
the  Australian  colonies  and  New  Zealand,  or  such  proportion  thereof  as  is  decided  on 
by  the  governor  in  council  to  asist  in  establishing  a  monthly  service  with  the  said 
countries,  such  subsidy  to  be  granted  for  such  term  of  years,  not  exceeding  ten,  and 
ou  such  conditions  as  the  governor  iu  council  considers  expedient. 

2.  The  governor  in  council  may  grant  to  any  individual  or  company,  to  whom 
there  is  granted  by  the  Government  of  the  United  Kingdom  the  aid  hereinafter  men- 
tioned, a  subsidy  not  exceeding  the  sum  of  fifteen  thousand  pounds  sterling  per  • 
annum,  for  a  monthly  steam-ship  service,  or  a  subsidy  not  exceeding  the  sum  of  twenty- 
five  thousand  pounds  sterling  per  annum,  for  a  fortnightly  steam-ship  service  between 
Britisli  Columbia  and  China  and  Japan,  such  subsidy  to  be  granted  for  such  terra  of 
years  and  on  such  conditions  as  the  governor  in  council  considers  expedient :  Fro- 
vided  ahvays.  That  during  such  term  the  Government  of  the  United  Kingdom  grants 
to  such  individual  or  company  a  subidy  of  not  less  than  forty-five  thousand  pounds 
sterling  per  annum  for  the  monthly  service,  or  of  not  less  than  seventy-five  thousand 
pounds  sterling  per  annum  for  the  fortnightly  service  above  mentioned. 

3.  The  governor  in  council  may  enter  into  a  contract  for  a  term  not  exceeding  ten 
years  with  any  individual  or  company  for  the  performance  of  a  fast  weekly  steam- 
ship service  between  Canada  and  the  United  Kingdom,  making  connection  with  a 
French  port,  on  such  terms  and  conditions  as  to  the  carriage  of  mails  and  otherwise 
as  the  governor  in  council  deems  expedient,  for  a  subsidy  not  exceeding  th'e  sum  of 
five  hundred  thousand  dollars  a  year. 

From  this  act  it  appears  that  the  following:  British  lines  of  steamers 
are  authorized: 

First.  A  line  from  Vancouver  to  Australia  and  New  Zealand,  with 
a  subsidy  of  $125,000  a  year. 

Second.  A  line  from  Vancouver  to  China  and  Japan,  with  a  subsidy 
of  8300,000. 

Third.  A  line  of  steamers  from  St.  John,  New  Brunswick,  to  Liver- 
pool, with  a  subsidy  of  $500,000  a  year,  the  latter  to  be  supplemented 
by  a  British  subsidy,  supposed  to  be  $300,000  a  year,  making  a  total  of 
$800,000  a  year. 

The  steamers  of  the  Pacific  and  Atlantic  lines  are  to  be  so  constructed 
as  to  be  available  as  armed  cruisers  iu  the  military  navy  of  Great 
Britain. 

The  committee  calls  attention  to  the  division  of  our  commerce  with 
China  and  Japan,  which  is  shown  by  statements  from  the  ofticial  re- 
ports of  the  United  States  inspector  of  customs  at  Vancouver,  and 
which  are  found  in  detail  in  the  statement  of  Mr.  Nimmo,  on  pages  674 
and  075  of  the  testimony. 

TRANSIT  TRADE  OP  THE  UNITED  STATES  AND  CANADA. 

In  order  to  understand  the  merits  of  the  questions,,  in  regard  to  which 
the  oi)inions  of  various  parties  have  been  exi)ressed'in  their  testimony 
before  the  committee  presented  in  this  report,  involves  an  explanation 
of  those  reciprocal  relations  of  transportation  facilities  between  the  two 
Governments  known  as  the  United  States  and  Canadian  transit  trade. 

The  transit  trade  had  its  origin  about  the  year  1847  in  the  fact  that 
the  ports  of  Montreal  and  Quebec  are  closed  for  about  six  months  of 
the  year  by  ice,  during  which  period  access  to  foreign  countries  beyond 
the  sea  can  be  gained  only  across  the  territory  of  the  United  States 


THE    UNITED    STATES    AND    CANADA.  XLIII 

and  through  American  sea-ports.  The  opening*  of  the  WellHud  and  St. 
Lawrence  Canals  in  the  year  1848  also  provided  a  means  of  transporta- 
tion for  our  Western  and  North  western-  States  with  ocean  commerce  at 
Montreal.  These  movements  of  commerce  are  of  great  benefit  to  both 
countries,  and  constitute  what  is  known  as  The  Foreign  Transit  Trade  of 
the  United  States  and  Canada.  In  both  cases  the  merchandise  of  each 
country  is  permitted  to  pass  through  the  territory  of  the  other  without 
payment  of  duty. 

But  the  transit  trade,  consisting  in  the  transportation  of  goods  from 
one  point  in  the  United  States  to  another  point  in  the  United  States 
through  Canada,  and  from  one  point  in  Canada  to  another  point  in 
Canada  through  the  United  States,  in  both  cases  without  payment  of 
duty,  is  more  important.  This  may  be  called  The  Domestic  Transit 
Trade  of  the  Two  Countries.  Both  these  movements  of  traffic,  like  The 
Foreign  Transit  Trade,  are  of  great  mutual  benefit  to  the  two  countries. 

The  trade  or  commerce  just  described  has  its  origin  and  sanction  in 
physicial  characteristics  of  the  two  countries  on  the  eastern  side  of  the 
continent.  One  of  these  characteristics  is  the  fact  already  mentioned, 
that  the  St.  Lawrence  River  is  closed  by  ice  and  fogs  for  about  six 
months  of  the  year,  and  the  other  is  the  fact  of  an  interlacing  boundary 
line,  making  it  desirable  to  run  direct  lines  of  transportation  across  the 
two  countries  and  connecting  by  short  routes  the  different  parts  of  either 
by  railroads  crossing  the  interjections  of  the  other.  Almost  the  entire 
inhabited  portions  of  Quebec  and  Ontario  lie  south  of  a  straight  line 
drawn  between  the  northern  boundary  of  Minnesota  and  the  northern 
boundary  of  Maine.  Besides  this,  the  states  of  New  Hampshire  and  Ver- 
mont and  the  northern  portion  of  the  State  of  New  York  constitute  a 
territorial  interjection  between  the  provinces  of  Quebec  and  Ontario 
on  the  west,  and  New  Brunswick  and  Nova  Scotia  on  the  east. 

The  provinces  of  Quebec  and  Ontario  lie  in  the  paths  of  several  di- 
rect lines  of  railroad  which  have  already  been  constructed  between  the 
States  of  Michigan,  Wisconsin,  and  Minnesota  at  the  west  and  the  New 
England  States  at  the  east.  13y  this  means  the  distance  by  rail  from 
Boston  and  Portland  to  St.  Paul  and  Minneapolis  is  about  the  same  as 
the  distance  from  those  business  centers  of  Minnesota  to  New  York, 
Philadelphia,  and  Baltimore.  The  traffic  over  these  lines  has  been  of 
inestimable  value  to  the  New  England  States  and  of  vast  importance 
to  the  Northwestern  States,  and  especially  to  Chicago,  the  principal 
center  of  the  internal  commerce  of  the  country.",  A^  the  same  time  this 
traffic  has  constituted  the  life  of  the  principal  railroads  of  Canada,  and 
directly  and  indirectly  has  been  of  immense  benefit  to  the  commercial 
and  industrial  interests  of  that  country. 

The  transit  trade,  both  as  to  the  shipment  of  goods  through  the 
territory  of  either  country  to  and  from  foreign  countries,  and  as  to  the 
shipment  of  goods  from  one  point  in  one  country  to  another  point  in  the 
same  country  through  the  territory  of  the  other,  had  their  origin  in  acts 
of  administrative  discretion  on  the  part  of  the  Secretary  of  the  Treasury 
in  order  to  meet  the  demands  of  reciprocal  commercial  necessities,  and, 
as  before  shown,  .was  justified  by  the  mutual  commercial  needs  of 
the  two  countries.  On  July  28, 186G,  the  following  act  of  Congress  was 
passed  (Revised  Statutes,  sections  3005  and  3006.;  Chapter  CCXCVIII ; 
approved  July  28,  1866) : 

AN  ACT  to  protect  the  revenue  and  for  other  purposes. 

Sec.  3005.  And  he  it  furiher  enacted,  That  from  and  after  the  passage  of  this  act,  all 
goods,  wares,  or  merchandise  arriviug  at  the  ports  of  New  York,  Boston,  and  Port- 
laud,  or  any  other  port  of  the  United  States  which  may  be  specially  designated  by 


XLIV  TRANSPORTATION  INTERESTS  OF 

the  Secretary  of  the  Treasury,  and  destiued  for  places  iu  the  adjacent  British 
Provinces,  or  ariiving  at  the  port  of  Point  Isabel,  Texas,  or  any  other  port  of  the 
United  States  whicli  may  be  specially  designated  by  the  Secretary  of  the  Treasury, 
and  destined  lor  places  in  the  Republic  of  Mexico,  may  be  entered  at  the  custom- 
house and  conveye<l,  in  transit,  through  the  territory  of  the  United  States,  without 
the  i)ayn)eut  of  duties,  under  such  rules,  regulations,  and  conditions  for  the  protection 
of  the  "revenue  as  the  Secretary  of  the  Treasury  may  prescribe. 

Sec.  'MOd.  And  be  it  further  enacted,  That  imported  goods,  wares,  or  merchandise  in 
bond,  or  duty  ])aid.  and  ])roducts  or  manufactures  of  the  United  States,  may,  with  the 
consent  of  the  i)ro]ier  authorities  of  the  provinces  or  republic  aforesaid,  be  transported 
from  one  port  or  place  in  the  United  States  to  another  port  or  place  therein,  over  the 
territory  of  said  provinces  or  republic,  by  such  routes  and  under  such  rules,  regula- 
tions iiiid  conditions  as  the  Secretary  of  the  Treasury  may  prescribe  ;  and  the  goods, 
wares,  or  merchandise  so  transported  shall,  upon  arrival  in  the  United  States  from  the 
provinces  or  republic  aforesaid,  be  treated  in  regard  to  the  liability  to  or  exemption 
from  duty  or  tax  as  if  the  transportation  had  taken  place  entirely  within  the  limits 
of  the  United  States. 

Section  3005  legalized  the  foreign  transit  trade  and  section  3006  the 
domestic  transit  trade. 

On  May  8,  1871,  the  treaty  of  Washington  was  concluded,  article 
XXIX  of  which,  being  applicable  to  the  transit  trade,  is  also  given. 

1  Article  XXIX  of  the  Treaty  of  |Washington,  concluded  May  8,  1871.  | 
ARTICLE  XXIX. 

It  18  agreed  that  for  the  term  of  years  mentioned  in  Article  XXXIII  of  this  treaty 
goods,  wares,  or  merchandise  arriving  at  the  ports  of  New  York,  Boston,  and  Port- 
laud,  and  any  other  ports  in  the  United  States  which  have  been,  or  may,  from 
time  to  time,  be  specially  desiguated  by  the  President  of  the  United  States,  and  des- 
tiued for  Her  Britannic  Majesty's  possessions  in  North  America,  may  be  entered  at  the 
proper  custom-house  and  conveyed  in  transit,  without  the  payment  of  duties, 
through  the  territory  of  the  United  States,  under  such  rules,  regulations,  and  condi- 
tions for  the  protection  of  the  revenue  as  the  Government  of  the  United  States  may 
from  time  to  time  prescribe;  and  under  like  rules,  regulations,  and  conditions 
goods,  wares,  or  merchandise  may  be  conveyed  in  transit,  without  the  payment  of 
duties,  from  such  possessions  through  the  territory  of  the  United  States,  for  export 
from  the  said  ports  of  the  United  States. 

It  is  further  agreed  that,  for  the  like  period,  goods,  wares,  or  merchandise  arriving 
at  any  of  the  ports  of  Her  Britannic  Majesty's  possessions  in  North  America,  and 
destined  for  the  United  States,  may  be  entered  at  the  proper  custom-house  and  con- 
veyed in  transit  without  the  payment  of  duties  through  the  said  possessions  under 
such  rules,  regulations,  and  conditions  for  the  protection  of  the  revenue  as  the 
governments  of  the  said  possessions  may  from  time  to  time  prescribe;  and  under 
like  rules,  regulations,  and  conditions  goods,  wares,  or  merchandise  may  be  con- 
veyed in  transit  without  payment  of  duties  from  the  United  States  through  the  said 
possessions  to  other  places  ki  the  United  States,  or  for  export  from  ports  in  the  said 
possessions. 

The  treaty  of  Washington  was  made  many  years  before  the  Cana- 
dian Pacific  Railway  was  built,  and  only  two  years  after  the  first  trans- 
continental line,  formed  by  the  Union  Pacific  Railway  and  the  Central 
Pacific  Railroad,  was  completed. 

On  the  western  side  of  the  continent  there  is  an  entire  absence  of 
those  natural  and  commercial  conditions  which  not  only  justify  the 
United  States  and  Canadian  transit  trade  on  the  eastern  side  of  the 
continent,  but  which  render  it  of  the  highest  mutual  benefit  to  both 
countries.  It  is  certain  that  the  act  of  July  28,  1866^  would  never  have 
become  a  law,  and  that  the  provision  of  the  treatv  of  Washington  just 
quoted  would  never  have  been  agreed  to  or  ratified  bv  Congress,  if  it 
had  been  supposed  it  would  result  in  encroachments  "^upon  American 
commerce,  and  the  efforts  to  propagate  British  imperial  confederation, 
such  as  are  now  exhibited  in  the  efforts  of  the  Canadian  Pacific  Rail- 
way Company  and  its  connecting  steamer  line  on  the  western  side  of 
this  continent.    The  difference  in  the  circumstances  and  conditions 


THE    UNITED    STATES    AND    CANADA.  XLV 

which  characterize  the  transit  trade  on  the  eastern  and  western  side 
of  the  continent  are  stated  as  follows,  on  pages  668  and  669  of  the  tes- 
timony : 

First.  The  eastern  domestic  transit  trade  is  across  interjecting  Canadian  territory,  in 
part  over  an  American  line,  the  Canada  Soutliern  Railway.  There  is  no  such  interject- 
ing territory  on  the  western  side  of  the  continent,  and  the  exclusive  privileges  of  rail- 
way construction  granted  to  the  Canadian  Pacitic  do  not  tolerate  such  an  American 
competitor  in  British  Columbia. 

Second.  The  transit  across  this  interjecting  territory  at  the  east,  while  enabling 
some  of  the  principal  railroads  of  Canada  to  participate  in  our  domestic  traffic,  af- 
fords the  reciprocal  advantage  to  American  shippers  of  short  and  direct  lines  between 
our  Northwestern  States  and  our  New  England  States;  but  no  such  advantage  of  a 
shorter  line  is  afforded  by  the  Canadian  Pacitic  on  the  western  side  of  the  continent. 
.  Third.  The  most  populous  and  most  wealthy  portion  of  the  Dominion  of  Canada  is 
for  six  mouths  of  the  year  dependent  upon  transit  across  the  territory  of  the  United 
States  for  free  commercial  intercourse  with  foreign  countries,  from  the  fact  that  the 
St.  Lawrence  River  is  clo-ed  by  ice  from  November  until  May.  But  no  such  disabil- 
ity affects  British  Columbia.  In  common  with  all  the  Pacific  coast  ports  as  far  north- 
as  Sitka,  Alaska,  the  ports  of  British  Columbia  are  open  all  the  year. 

Fourth.  The  eastern  transit  trade  lines  tend  to  bring  trade  to  American  sea-ports, 
while  the  Canadian  Pacific  Railway  with  its  British  steamer  line  adjuncts,  operates 
very  strongly  to  turn  American  commerce  from  American  sea-ports,  a  fact  which  has 
created  great  alarm  on  our  Pacific  coast  and  has  led  the  convention  of  commercial 
and  industrial  organizations  of  that  section  to  utter  an  earnest  appeal  to  Congress  for 
protection  against  the  aggressions  of  the  Canadian  and  British  Governments. 

Fifth.  The  St.  Lawrence  River  and  Canadian  canals  afford  the  competitive  ad- 
vantages of  an  alternative  route  to  the  people  of  our  Western  and  Northwestern 
Slates  for  six  months  of  the  year  ;  but  no  such  natural  advantages  of  water  transpor- 
tation through  Canada  exist  on  the  western  side  of  the  continent.  We  have  no  need 
to  cross  Canadian  territory  there,  even  for  the  purpose  of  gaining  the  advantages  of 
an  alternative  route. 

Sixth.  The  railroads  of  Canada  which  were  allowed  to  engage  in  the  transit  trade 
under  the  privileges  of  the  act  of  July  28,  1866,  and  of  article  29  of  the  treaty  of 
Washington,  were  all  constructed  as  commercial  enterprises,  on  commercial  princi- 
ples, and  to  subserve  merely  commercial  purposes,  but  the  Canadian  Pacific  Rail- 
way, as  I  have  before  shown,  was  constructed  by  the  Dominion  Government  /o?'  politi- 
cal purposes  distasteful  to  and  in  a  measure  inimical  to  the  United  States. 

Seventh.  The  Canadian  Pacific  Railway  has  as  adjuncts  a  steamer  line  to  Asia  so 
heavily  subsidized  by  the  Canadian  government  as  to  threaten  the  ruin  ot  American 
steamer  lines  between  San  Francisco  and  ports  in  Asia,  and  to  divert  our  Asiatic  com- 
merce from  American  sea-ports  to  the  Canadian  port  of  Vancouver.  The  Canadian 
and  British  Governments,  with  the  idea  of  the  imperial  confederation  of  the  British 
Empire  prominently  in  view,  are  now  planning  for  the  establishment  of  a  heavily 
subsidized  British  steamer  line  to  Australia  and  New  Zealand.  This  will  ruin  our 
American  line  to  these  islands  unless  we  adopt  measures  which  will  protect  it  against 
the  efforts  of  the  Dominion  Government  to  destroy  it. 

Those  governments  are  also  planning  for  a  heavily  subsidized  transatlantic  steamer 
line  from  St.  John's  or  Halifax  to  Li  verpool.  This  line  would  tend  to  divert  commerce 
ftom  New  York,  Boston,  and  Portland,  Me.  But  no  schemes  for  diverting  commerce 
from  American  ships,  from  American  sea-ports,  and  from  American  transportation 
lines  characterized  the  railroads  which  were  authorized  to  engage  in  the  transit  trade 
by  the  act  of  July  28,  1866,  or  by  the  treaty  of  Washington  of  1871.  As  I  have  be- 
fore remarked,  that  treaty  would  never  have  been  signed  by  any  sane  commis- 
sioner if  it  had  been  characterized  by  any  such  feature  of  hostility  to  American 
interests. 

Eighth.  The  Canadian  Pacific  Railway  is  closely  identified  with  military  objects, 
which  were  at  the  beginning  urged  with  effect  both  in  Canada  and  Great  Britain  in 
favor  of  the  construction  of  that  road.  This  feature  of  the  enterprise  is  accentuated 
by  the  formidable  fortress  and  naval  station  at  Esquimault  on  the  island  of  Vancou- 
ver, and  it  is  also  indicated  by  the  fact  already  noted  that  the  first  train  which 
passed  over  the  Canadian  Pacific  upon  its  completion  was  loaded  with  material  of 
war.  No  objectionable  feature  of  this  nature  characterized  the  transit  trade  author- 
ized by  the  act  of  July  28,  1866,  and  by  the  treaty  of  Washington,  and  it  is  certain 
that  the  privileges  of  the  transit  trade  should  never  be  granted  to  any  railroad 
which  is  characterized  by  any  such  objectionable  features. 

From    all  this  it  appears   that  on  the   western   side   of  the    con- 
tinent there   is   an  entire  absence  of  those  conditions  upon   which 
•  the  transit  trade  was  originally  based,  and  under  which  it  exists  to- 


XLVI  TRANSPORTATION    INTERESTS    OF 

day  on  the  eastern  side  of  the  continent, -as  a  thing  of  mutual  ad- 
vantage to  the  two  countries.  The  Canadian  Pacific  Kailway,  with 
its  steamer  line  connection,  has  introduced  conditions  inimical  to  the 
interests  of  the  United  States,  and  in  a  political  sense,  offensive  to 
this  country. 

The  formidable  fortress  or  naval  station  at  Esquimault  is  one  of  the 
strongest  on  the  continent.  A  British  authority  in  military  affairs  de- 
clares that  it  "holds  a  pistol  to  the  head  of  San  Francisco." 

As  our  navigation  laws  forbid  foreign  vessels  engaging  in  any  part  of 
our  internal  carrying  trade, an  arrangement  was  made  by  the  Canadian 
Pacitic  Railway  Company  with  an  American  line  forming  connection 
between  Port  Moody  and  the  sea-ports  of  the  present  State  of  Wash- 
ington, the  State  of  Oregon,  and  the  entire  State  of  California  as  far 
south  as  San  Diego,  near  the  extreme  southern  border  of  California. 
In  order  that  the  Canadian  Pacific  Railway  might  participate  in  the 
carrying  trade  between  the  Pacific  coast  ports  and  points  east  of  the 
Rociiy  Mountains  a  bond  was  executed  by  this  American  steamer  line 
for  the  transportation  of  American  goods  through  Canada  without  pay- 
ment of  duty. 

Two  points  in  this  transaction  appear  to  be  worthy  of  special  consid- 
eration : 

First.  The  privileges  accorded  to  the  Canadian  Pacific  Railway 
under  the  bond  given  by  the  Pacific  Coast  Steam-ship  Company  as 
a  common  carrier  under  sections  3000,  3001,  and  3006,  Revised  Sttlt- 
utes.  This  steam-ship  company's  route  is  from  San  Francisco,  Cal.,  to 
Port  Moody,  British  Columbia,  where  connection  is  made  with  the  Ca- 
nadian Pacific.  The  steam-ship  company  is  bonded  for  the  transpor- 
tation of  merchandise  from  and  to  any  of  the  ports  in  the  United  States, 
and  under  cover  of  this  bond  the  Canadian  Pacific  is  engaged  in  the 
transportation  not  only  of  foreign  dutiable  goods,  but  of  domestic  mer- 
chandise from  the  Pacific  coast  to  Eastern  points  and  vice  versa. 

An  application  was  made  by  the  Canadian  Pacific  to  bond  in  its  own 
name  for  the  transportation  of  dutiable  and  non-dutiable  goods,  but  the 
request  was  not  granted  by  the  Treasury  Department,  for  the  reason 
that  it  was  questionable  whether  or  not  under  our  laws  a  foreign  cor- 
poration could  properly  execute  such  a  bond.  The  authority  under  the 
treaty  of  Washington  for  transit  from  one  place  in  the  United  States 
to  another  by  routes  part  of  which  is  by  land  carriage  through  the  Do- 
minion of  Canaida  and  part  by  Canadian  vessels  on  the  Great  Lakes 
and  rivers  connecting  the  same,  or  the  River  St.  Lawrence,  was  abro- 
gated in  1885.  Subsequently,  however,  it  was  ruled  by  the  Treasury 
Department  that  the  privileges  of  such  joint  rail  and  water  transporta- 
tion could  be  permitted  in  cases  where  the  vessels  were  of  American 
ownership. 

Second.  An  officer  is  stationed  at  Vancouver  in  the  capacity  of  an 
inspector  of  customs,  belonging  to  the  customs  collection  district  of 
Puget  Sound,  who  was  originally  assigned  to  Vancouver  to  supervise 
the  transfer  of  bonded  goods  at  that  point  to  and  from  points  in  the 
United  States.  Subsequently  he  was  made  a  consular  agent  by  the 
Department  of  State,  and  in  that  capacity  he  certifies  manifests  and 
seals  cars  containing  Asiatic  merchandise  arriving  at  that  point  and 
destined  for  the  United  States.  He  does  not  certify  the  invoices  upon 
which  entry  is  made  on  the  arrival  of  the  merchandise  at  the  port  of 
destination.  Section  3102,  Revised  Statutes,  under  which  cars  are  ad- 
mitted at  frontier  ports  and  allowed  to  pass  to  destination  under  con- 
sular seals,  evidently  has  reference  to  importations  from  Canada.    That 


THE    UNITED    STATES    AND    CANADA.  XLVII 

section  is  included  in  the  chapter  relating  to  commerce  with  contigu- 
ous countries,  and  it  would  seem,  therefore,  that  it  was  not  intended 
that  merchandise  from  Europe  or  Asia  should  be  imported  in  that  way 
and  duties  assessed  upon  the  European  or  Asiatic  valuations.  It  would  . 
seem  that  all  goods  coming  that  way  should  be  treated  as  imports  from 
Canada  and  duties  assessed  upon  their  value  in  Canada.  If  they  are 
to  be  treated  as  importations  from  beyond  the  sea,  then  they  are  not 
entitled  to  come  in  nnder  consular  seal. 

The  present  arrangement  appears  to  be  an  unwarranted  concession 
to  the  Canadian  Pacific  Railroad,  as  it  enables  that  road  to  bring  in 
Asiatic  merchandise  destined  for  Boston,  New  York,  and  other  princi- 
pal ports  without  detention  at  the  frontier  for  examination,  appraise- 
ment, or  collection  of  duties,  thus  virtually  giving  such  merchandise 
the  privileges  of  immediate  transportation  without  appraisement  and 
without  invoking  the  law  which  governs  such  transportation  within  the 
United  States.  American  transportation  companies  carrying  unap- 
praised  goods  are  required  to  comply  with  the  law  on  that  subject  as  to 
bond,  consular  invoice,  and  entry  at  the  port  of  first  arrival  in  the 
United  States,  bnt  the  Canadian  Pacific,  under  the  machinery  of  the 
consular  seal,  reaches  the  same  end  without  bond,  entry,  or  other  for- 
malities, and  is  thus  enabled  to  take  away  from  American  roads  a  large 
share. of  the  transcontinental  traffic. 

In  the  opinion  of  the  committee  this  arrangement,  devised  by  our 
own  Executive  Departments,  is  without  adequate  authority  of  law  and 
prejudicial  to  American  interests.  The  sum  and  substance  of  the  ar- 
rangement seems  to  be  that  the  Government  has  in  some  way  been 
hoodwinked  into  the  x>roject  of  facilitating  the  work  of  diverting  the 
Asiatic  commerce  of  the  United  States  from  the  port  of  San  Francisco 
and  other  Pacific  sea-ports  of  the  United  States  to  the  great  political 
and  military  railroad  constructed  by  Canadian  subvention,  and  to  the 
British  and  Pacific  Ocean  Steamer  Line,  which  owes  its  existence  al- 
most exclusively  to  the  subsidies  which  it  receives  from  the  Canadian 
and  British  Governments. 

ACTION  TAKEN  BY  THE  COMMERCIAL  AND  INDUSTRIAL  BODIES  OF 
THE  PACIFIC  COAST  IN  REGARD  TO  CANADIAN  PACIFIC  COMPETI- 
TION. 

The  people  of  the  Pacific  coast  States  appear  to  realize  the  fact  that 
the  competition  of  that  line  and  its  ocean  steamer  connections  is  fraught 
with  danger  to  their  present  interests  and  future  development.  In  August 
last  a  conference  of  the  commercial  and  industrial  bodies  of  the  Pacific 
coast  was  held  at  San  Francisco.  Two  general  topics  commanded  the 
attention  of  the  convention. 

(1)  The  competition  of  the  Canadian  Pacific  Railway  in  connection 
with  the  Pacific  Coast  Steam  ship  Line  and  railroad  connections  at  the 
East  for  a  share  of  the  transcontinental  traffic  of  the  Cnited  States. 

(2)  The  competition  of  the  Canadian  Pacific  Railway  with  its  highly 
subsidized  line  of  British  steamers  for  the  commerce  of  the  United 
States  with  China  and  Japan,  in  connection  with  arrangements  being 
made  for  the  establishment  of  other  subsidized  steamer  lines  threaten- 
ing the  entire  commerce  of  the  United  States  on  the  Pacific  Ocean. 

It  was  found  that  considerable  diversity  of  opinion  prevailed  among 
the  members  of  the  convention  in  regard  to  the  first  of  these  general 
topics.  By  virtue  of  the  fact  that  the  Canadian  Pacific  Railway  was 
built  by  subsidies  and  largesses  of  various  sorts  which  it  received  from 


XLVIII  TRANSPORTATION    INTERESTS    OF 

the  Dominion  government,  it  could  afford  to  offer  lower  rates  than  those 
which  prevailed  on  the  American  transportation  lines,  or  which  could 
be  offered  by  those  lines  under  a  general  scheme  of  rates  embracing 
.  through  and  local  rates,  conformed  to  the  requirements  of  the  fourth 
section  of  the  interstate-commerce  act.  Although  the  convention  ap- 
peared to  be  fully  aware  of  the  fact  that  the  commercial  and  industrial 
interests  of  the  Pacific  coast  and  of  the  American  transcontinental 
lines  are  closely  identified,  and  that  tbe  prosperity  of  the  one  implies 
the  prosperity  of  the  other,  still,  particular  individual  interests,  espe- 
cially among  the  merchants  of  the  Pacific  sea-ports,  led  them  to  avail 
themselves  of  the  lower  rates  offered  by  the  Canadian  Pacific  route. 
Others  saw  very  clearly  that  such  a  diversion  of  traffic,  although  tempt- 
ing to  individuals,  was  detrimental  to  the  general  interests  of  our  Pa- 
cific coast,  and  that  its  tendency  was  to  favor  the  concentration  of  trade 
at  the  western  terminus  of  the  Canadian  Pacific  Railway. 

In  regard  to  the  second  general  topi*'-  discussed  by  the  San  Francisco 
convention,  namely,  The  competition  of  the  Canadian  Pacific  Railway  and 
its  connecting  steamer  lines  on  the  Pacific  Ocean  for  the  commerce  of  the 
United  States  tvith  (Jhina  and  Japan  and  other  countries  hordering  on  the 
Pacific  coast,  there  was  a  substantial  consensus  of  opinion.  The  entire 
convention  regarded  such  encroachment,  which  had  its  beginning  and 
ending  in  British  and  Canadian  aid  allied  to  military  expedients,  as  in 
the  highest  degree  detrimental  to  the  commercial  and  industrial  inter- 
ests of  this  country. 

The  public  declarations  made  throughout  Canada  by  the  leader  of  the 
party  now  in  power,  their  boasts  at  the  present  time,  and  their  encroach- 
ments which  now  disturb  the  internal  commerce  of  this  country  and 
threaten  the  domination  of  our  entire  maritime  commerce  on  the  Pacific 
Ocean,  demand  the  earnest  attention  of  Congress  and  of  the  country, 
especially  in  view  of  the  facts  that  the  preparations  for  such  commercial 
conquest  embrace  military  preparations  on  the  Island  of  Vancouver, 
and  a  line  of  steamers  so  built  as  to  be  readily  available  to  the  British 
Government  at  all  times  as  armed  cruisers. 

In  their  report  the  commercial  conference  declare  that — 

With  such  special  advantages  the  Canadian  Pacific  can  aftbrd  to  quote  rates  which 
must  drive  the  American  (steamer)  lines  out  of  the  China  trade  and  inflict  an  almost 
irreparable  injury  upon  San  Francisco. 

The  report  of  the  commercial  conference  also  predicts  the  destruc- 
tion of  the  American  steamer  lines  now  running  on  the  Pacific  Ocean 
to  Australia,  New  Zealand,  the  Hawaiian  Islands,  the  Fiji  and  Samoan 
Islands,  and  to  Mexico  and  Central  America,  by  subsidized  British 
steamer  lines,  forming  part  of  a  general  scheme  for  capturing  the  com- 
merce of  the  seas,  unless  the  United  States  Government  shall  adopt 
vigorous  measures  for  preventing  such  a  national  disaster. 

The  facts  upon  which  this  prediction  is  based  and  which  seem  to 
point  unmistakably  to  the  anticipated  result  are : 

The  United  States  Government  pays  about  $14,000  for  the  transpor- 
tation of  its  mails  to  and  from  China  and  Japan,  by  a  service  making 
thirty-three  round  trips  a  year;  whereas  the  Canadian  and  British 
Governments  have  offered  and  will  soon  pay  to  a  new  line  of  steamers 
from  Vancouver  $500,000  a  year  for  the  transportation  of  mails,  not 
more  than  one-twentieth  the  magnitude  of  those  of  the  United  States, 
and  by  a  service  making  only  twenty-four  round  trips  a  year,  be- 
sides which  the  British  line  is  to  receive  an  admiralty  subsidy,  the 
amount  of  which  is  not  publicly  stated.    In  a  word,  the  British  and 


THE    UNITED    STATES    AND    CANADA.  XLIX 

Canadian  Governments  are  to  pay  nearly  forty  times  as  much  as  the 
United  States  Government  for  a  postal  service  about  one- twentieth  as 
large  as  that  of  this  country,  in  order  to  capture  the  commerce  of  the 
United  States  with  the  countries  of  Asia,  and  with  the  ultimate  object 
in  view  of  securing  commercial  supremacy  on  the  western  coasc  of  North 
America.  It  seems  to  go  without  saying  that  this  conspiracy  against 
the  commercial  interests  of  the  United  States  ought  at  once  and  forever 
to  be  broken  up  by  some  vigorous  act  of  legislation,  and  that  the  com- 
mercial supremacy  of  this  country  on  the  Pacific  coast  of  North  America 
ought  to  be  assured  for  all  time. 

The  report  of  the  commercial  conference  of  the  Pacific  coast  also  sets 
forth  other  facts  of  interest,  as  follows : 

(a)  The  Pacific  Coast  Steam-ship  Company,  an  American  line,  re- 
ceives from  the  Canadian  postal  department  $17,640  per  annum  and 
from  the  United  States  Government  only  $219  per  annum. 

(6)  The  Mexican  Government  pays  to  a  Mexican  steamer,  running 
between  San  Francisco  and  Mexican  ports,  $42,500  a  year,  whereas,  for 
a  more  frequent  service,  the  United  States  Government  pays  an  Amer- 
ican line  only  the  sea  postage,  an  insignificant  sum. 

(c)  The  Australian,  New  Zealand  and  Hawaiian  Line,  an  American 
line,  receives  from  the  Hawaiian  Government  $24,000  a  year,  and  from 
the  governments  of  New  Zealand  and  New  South  Wales,  British  colo- 
nies, $200,000  a  year,  and  from  its  own  Government  only  about  $10,000 
a  year.  But  worse  than  this,  the  United  States,  as  shown  by  the  re- 
port of  the  commercial  conference,  realizes  a  large  net  revenue  from 
this  postal  service,  which  is  likely  to  lapse  in  consequence  of  the  re- 
fusal of  the  United  States  Government  to  bear  its  equitable  share  of 
the  burden  of  a  line  which  already  has  developed  a  large  commerce 
with  Australasia. 

Besides  this  the  parliament  of  the  Dominion  of  Canada,  at  its  last 
session,  appropriated  $125,000  a  year  for  a  line  from  Vancouver,  British 
Columbia,  to  Australia  and  New  Zealand,  and  directed  that  efforts 
should  be  made  for  securing  additional  subsidies  from  those  colonies. 

The  commercial  conference  of  the  Pacific  coast  thus  presented  to  the 
country  the  spectacle  of  the  threatened  destruction  of  American  com- 
merce on  the  Pacific  Ocean,  and  called  upon  Congress  to  adopt  the 
proper  measures  for  preventing  the  threatened  disaster  and  for  securing 
the  establishment  and  maintenance  of  American  steamer  lines  to  and 
from  American  sea-ports  on  the  Pacific  coast. 

UNJUST  DISCRIMINATION  BY  CANADA  IN   THE  MATTER  OF  ENTRANCE 
AND   CLEARANCE  FEES. 

The  settled  policy  of  the  Dominion  government  to  overreach  the 
United  States  in  all  matters  relating  to  the  conduct  of  commerce  is 
strikingly  illustrated  in  the  mannei  in  which  they  succeed  in  I'stablish- 
ing  a  discrimination  against  American  vessels  on  the  lakes  in  the  mat- 
tei  of  entrance  and  clearance  fees.  They  have  provided  by  section  112 
of  their  Eevised  Customs  Act  for  a  license  to  Canadian  vessels  navi- 
gating the  lakes,  for  which  a  fee  of  50  cents  is  required,  also  a  fee  of 
50  cents  for  each  entrance  at,  and  a  fee  of  50  cents  for  each  clearance 
from,  a  Canadian  port.  Then  by  an  "  order- in-council,"  the  Canadian 
mode  of  backing  out  of  a  statutory  requirement,  they  exempt  Canadian 
vessels  from  the  payment  of  entrance  and  clearance  fees,  amounting 
to  $1  for  each  visit  to  a  Canadian  port,  while  such  fees  are  imposed 
S.  Eep.  847 4 


L  TRANSPOETATION    INTERESTS    OF 

upon  Americau  vessels.     This  is  shown  by  the  following  copies  of  the 
Canadian  statute,  order-in-council,  and  license  above  referred  to : 

SECTION    112  OF  THE  REVISED  CUSTOMS   ACT  OF  THE  DOMINION  OF   CANADA. 

The  governor  in  council  may  grant  yearly  coasting  licenses  to  British  vessels  navi- 
gating the  inland  waters  of  Canada  above  Montreal,  and  may  direct  that  a  fee  of  50 
cents  shall  be  jjayable  for  each  such  license,  and  that  the  master  or  person  in  charge 
of  any  vessel  navigating  the  said  waters  and  not  having  a  coasting  license  shall,  on 
entering  any  port  in  Canada  with  such  vessel,  pay  a  fee  of  50  cents  if  such  vessel  is 
not  over  50  tons  burthen,  and  of  |1  if  she  is  more  than  50  tons  burthen,  to  the  col- 
lector on  each  entry  ;  and  a  like  fee  of  50  cents  or  $1,  according  to  the  burthen  of  the 
vessel,  on  each  clearance  of  such  vessel  at  any  port ;  and  such  fee  shall  be  payable 
accordingly  before  such  vessel  shall  be  entered  or  cleared :  Provided,  That  the  gover- 
nor in  council  may  reduce  or  readjust  such  fees,  but  may  not  increase  them  beyond 
the  amount  hereby  fixed :  And  provided  also,  That  vessels  merely  passing  through  any 
of  the  Canadian  canals,  without  breaking  bulk,  shall  not  be  liable  to  such  fees. — 
(46  v.,  c.  12,  s.  234.) 


order  in  council. 

Government  House,  Ottawa, 

Wednesday,  May  22,  1889. 
Present  His  Excellency  the  Governor-General  in  Council. 

His  Excellency,  in  virtue  of  the  powers  vested  in  him  by  "The  Customs  Act," 
chapter  32  of  the  Revised  Statutes  of  Canada,  section  112,  and  by  and  with  the 
advice  of  the  Queen's  Privy  Council  for  Canada,  is  pleased  to  order,  and  it  is  hereby 
ordered,  that  the  fee  to  be  exacted  from  all  vessels  navigating  inland  waters,  when 
entering  or  clearing  at  any  port  above  Montreal,  shall  be  50  cents  for  each  such 
report  inwards,  or  clearance  outwards,  irrespective  of  the  tonnage  of  the  vessels  so 
entering  or  clearing,  except  vessels  holding  coasting  licenses,  and  that  all  orders  or 
regulations  inconsistent  herewith  shall  be  rescinded. 

John  J.  McGee, 

Clerk  Privy  Council. 


DOMINION  OF  CANADA — COASTING  LICENSE  FOR  THE  YEAR  188 — . 

To  all  whom  it  may  concern : 

This  license  is  granted  to  (1) ,  of  (2) ,  master  of  the  (3) , 

of  (4) ,  (5) tons  burthen,  British  registered,  and  wholly  owned  by  British 

subjects,  to  employ  the  said  vessel  until  the  30th  day  of  June,  188 — ,  to  carry  goods — 
always  being  subject  to  entry  or  clearance,  conformably  with  the  coasting  regulations 
of  the  Dominion  of  Canada,  he  having  with  two  sureties,  entered  into  the  necessary 
bonds. 

Given  under  my  hand  this day  of ,  188 — . 


Collector,  Port  of  ■ 


CANADIAN  VIOLATION  OF  THE  PROVISIONS  OF  THE  TREATY  OF 
WASHINGTON  BY  AN  UNJUST  DISCRIMINATION  IN  FAVOR  OF  MON- 
TREAL. 

A  cunning  mode  of  discriminating  against  American  sea-ports  in  the 
interest  of  Montreal  has  been  devised  by  the  Dominion  government. 
Both  American  and  Canadian  vessels  passing  through  the  Welland  Ca- 
nal are  obliged  to  pay  20  cents  a  ton  on  their  cargoes.  If  the  vessel  is 
bound  to  an  American  port  on  Lake  Ontario  or  on  the  St.  Lawrence 
Kiver,  no  deduction  is  made  from  this  charge ;  but  if  her  cargo  is  to  be 
shipped  to  Montreal  from  Kingston,  at  the  head  of  the  St.  Lawrence 
Eiver,  a  rebate  of  18  cents  per  ton  is  made  on  wheat,  Indian  corn,  peas, 


THE    UNITED    STATES    AND    CANADA.  LI 

barley,  and  rye,  which  constitute  the  great  bulk  of  shipments  from  the 
United  States  to  foreign  countries  via  Montreal.  This  practice  is  what 
is  commonly  known  among  railroads  as  cutting  the  rates.  This  mani- 
fest violation  of  the  provisions  of  Article  XXVII  of  the  treaty  of 
Washington,  and  of  the  reciprocal  concessions  upon  which  the  "transit 
trade"  is  based,  is  accomplished  by  means  of  an  "order-in-couucil." 

The  following  is  a  copy  of  the  order-in-council  issued  on  the  20th  of 
April,  1888.  A  similar  order  was  issued  on  the  18th  of  March,  1889, 
and  one  will  undoubtedly  soon  be  issued  for  the  season  of  1890 : 

Inland  Revenue, 
Government  House,  Ottawa, 

Friday,  April  20,  1888. 
Present  His  Excellency  the  Governor-General  in  Council : 

On  the  recommendation  of  the  Minister  of  Railways  and  Canals,  and  under  the 
provisions  of  the  thirteenth  section  of  chapter  37  of  the  Revised  Statutes  of  Canada, 
entitled  "An  act  respecting  the  Department  of  Railways  and  Canals  :  " 

His  Excellency  in  Council  has  been  pleased  to  order,  and  it  is  hereby  ordered,  that 
the  special  rates  of  the  2  cents  per  ton  adopted  last  year  for  the  passage  through  the 
Welland  and  St.  Lawrence  Canals  of  certain  cereals,  wheat,  Indian  coru,  peas,  bar- 
ley, and  rye,  when  shipped  for  Montreal,  or  for  any  other  port  east  of  Montreal,,  be 
continued  during  the  forthcoming  season  of  navigation  and  no  longer,  such  toll  cov- 
ering the  Welland  and  the  St.  Lawrence  Canals. 

His  Excellency  has  been  further  pleased  to  order  the  continuance,  for  the  same 
period  only,  of  the  arrangement  under  which  the  said  food  products,  if  they  have  paid 
the  ordinary  full  tolls  for  passage  through  the  Welland  Canal,  shall  be  entitled  to 
exemption  from  payment  of  any  further  toll  for  passage  through  any  portion  of  the 
St.  Lawrence  Canal  system,  even  if  not  traversing  the  whole  distance  to   Montreal. 

John  J.  McGee, 
Cleric  Privy  Council. 

THE  IMPORT  OF  THE  QUESTION  WHICH  CONFRONTS  US  AS  A  NATION 

In  order  to  form  a  clear  conception  of  the  nature  and  effect  of  the 
encroachment  upon  American  interests  caused  by  the  Canadian  Pacific 
system,  including  the  railroad  and  its  connecting  ocean  steamer  lines, 
and  of  the  disturbances  produced  by  such  encroachments,  let  us  sup- 
pose, for  the  purpose  of  illustration,  that  the  State  of  New  York  should 
use  its  power  of  taxation  to  construct  a  railroad  from  the  Atlantic  to 
the  Pacific,  with  branch  lines  to  all  the  principal  cities  of  the  country, 
and  then  subsidize  a  line  of  steamers  across  the  Atlantic,  and  another 
across  the  Pacific  running  in  connection  with  the  railroad.  The  State 
of  New  York  could,  by  virtue  of  its  enormous  wealth,  do  that  much 
more  easily  than  the  Dominion  of  Canada  has  built  its  political  railroad 
with  connecting  ocean  steamer  lines. 

If,  then,  the  State  of  New  York  should  back  up  this  supposed  combi- 
nation up  so  that  it  could  reduce  all  competitive  rates  below  the  rates 
necessary  in  order  that  private  roads  could  pay  interest  charges,  is  it 
not  evident  that  private  enterprise  in  the  railroad  business  would  be  par- 
alyzed and  that  the  commerce  of  cities  competing  with  New  York  would 
be  paralyzed  ?  Our  interstate-commerce  law  would  become  a  dead 
letter  from  its  very  inapplicability  to  the  new  state  of  affairs.  But 
that  is  just  what  is  now  being  done  by  the  Dominion  Government 
through  its  Canadian  Pacific  combination.  To  be  sure,  this  foreign  ag- 
gressor has  not  so  much  power  as  the  supposed  New  York  combination 
would  have  to  revolutionize  the  commerce  of  the  country,  but  that  is 
simply  due  to  the  inferior  geographical  location  of  the  great  govern- 
ment railroad  of  Canada.    To  a  very  great  extent,  however,  that  rail- 


LII  TRANSPORTATION    INTERESTS    OF 

road  is  doing  the  very  thiug  here  supposed,  aud,of  course,  to  a  much 
greater  extent  west  of  Chicago  than  east  of  that  city.  The  success  of 
this  Canadian  enteri)rise  is  one  of  the  most  efficient  means  of  holding 
the  present  Canadian  administration  in  power  through  the  #-clat  which 
it  wins  by  its  audacit}^  and  by  its  encroachments  upon  American  in- 
terests. 

This  comparison  serves  to  illustrate  another  important  consideration, 
which  lies  at  the  foundation  of  the  whole  subject  which  this  committee 
has  been  appointed  to  investigate.  Keference  is  had  to  the  fact  that  such 
governmental  participation  in  transportation  and  in  navigation  as  that 
here  referred  to  is  out  of  the  question  in  the  United  States,  but  that  in 
Canada  it  is  made  a  fundamental  feature  of  governmental  policy.  It  gains 
approbation  and  support  from  one  end  of  the  Dominion  to  the  other. 
The  word  subsidy  seems  to  possess  a  charm  to  the  British  people  and 
to  the  people  of  Canada,  while  our  own  people  have  for  many  years 
exhibited  a  decided  aversion  to  subsidies  and  now  are  considering  the 
propriety  of  having  recourse  to  subsidies  simply  as  a  means  of  defend- 
ing the  maritime  interests  of  the  United  States  against  the  injurious 
effects  of  the  subsidies  granted  bji  foreign  nations  to  their  own  vessels 
engaged  in  international  commerce. 

Besides  all  this  the  British  people  have  for  centuries  been  accus- 
tomed to  associate  the  military  and  financial  strength  of  their  govern- 
ment with  the  success  of  British  commercial  enterprise,  and  to  regard 
that  association  as  an  essential  condition  to  success.  The  history  of 
British  commerce  seems  to  prove  the  power  and  efficiency  of  the  com- 
bination. 

This  line  of  thought  leads  directly  to  the  practical  business  consid- 
eration upon  which  the  persistent  encroachment  of  British  and  Cana- 
dian governmental  i3ower  upon  American  commerce  is  based.  The 
.  competition  between  American  vessels  on  the  ocean  and  on  the  lakes  is 
a  sharp  competition.  It  leaves  only  a  narrow  margin  of  profit.  Amer- 
ican railroads,  from  the  Atlantic  to  the  Pacific,  are  also  sharply  com- 
peting with  each  other  and  holding  profits  to  a  narrow  margin.  The 
same  thing  is  true  in  commerce.  Eival  merchants  and  rival  cities  are 
competing  on  narrow  margins  of  profit.  The  whole  tendency  of  the 
transportation  and  commercial  facilities  of  the  age  is  towards  a  parity 
of  values.  The  constraint  is  terrific.  Some  one  is  all  the  while  being 
squeezed  out.  In  this  state  of  affairs  Great  Britain  and  Canada  find 
their  opportunity.  So  does  every  nation  which  is  inclined  to  hitch  its 
financial  power  to  the  wheels  of  its  own  commerce.  Thus  it  is  that, 
by  attacking  the  narrow  margins  of  profit  in  the  transportation  busi- 
ness here  and  there,  our  competitor  at  the  north  has  been  exploiting 
upon  American  commerce  for  many  years.  It  is  doing  that  very  thing 
to-day,  in  a  more  high-handed  and  exultant  way  than  ever  before.  All 
that  is  necessary  for  the  governments  of  Great  Britain  or  Canada  to 
do  is  to  throw  a  sufficient  advantage  in  favor  of  British  steamers,  Cana- 
dian fishing  vessels,  and  Canadian  railroads  to  turn  our  commerce  from 
American  ocean  steamers,  American  fishing  vessels,  American  railroads, 
and  American  sea- ports.  This,  as  already  shown,  is  being  done,  not  only 
by  subvention,  but  also  by  enabling  statutory  provisions,  which  go  in 
the  face  of  the  interstate-commerce  act  of  the  United  States. 


THE    UNITED    STATES    AND    CANADA.  LIII 


CONCLUSIONS  AND  RECOMMENDATIONS. 

While  the  committee  has  not  felt  itself  called  upon  to  enter  upon  any 
special  investigation  of  the  fisheries'  question,  it  nevertheless  appears 
to  be  within  the  scope  of  the  authority  given  it  by  the  Senate  to  ex- 
press its  opinion  on  the  commercial  aspects  of  the  question. 

The  denial  of  the  privileges  of  the  transit  trade  to  fish  caught  by 
American  fishermen,  the  refusal  to  allow  American  fishing-vessels  to 
seek  shelter  from  storms  when  in  distress  in  Canadian  ports  and  har- 
bors of  refuge,  the  refusal  to  allow  American  fishing- vessels  to  trade  in 
Canadian  ports  as  freely  as  Canadian  vessels  are  allowed  to  trade  in 
American  ports,  is  in  open  violation  of  Article  3  of  the  Treaty  of  Peace 
concluded  between  the  United  States  and  Great  Britain  in  1783,  Arti- 
cle 23  of  the  treaty  of  1794,  the  reciprocal  maritime  legislation  of  1830, 
and  the  comity  of  nations. 

The  late  Daniel  Manning,  Secretary  of  the  Treasury,  characterized 
the  denial  of  the  humanities  of  the  sea  to  American  fishermen  by  the 
authorities  of  Canada  and  Newfoundland  as  "  an  act  of  barbarism  fit 
only  for  savages." 

None  of  the  above  mentioned  disabilities  attach  to  Canadian  vessels 
in  American  sea-ports. 

The  diversion  of  our  commerce  from  American  steamer  lines  on  the 
Pacific  Ocean  and  from  the  Pacific  sea-ports  of  the  United  States  seem 
to  demand  special  attention  and  such  action  by  Congress  as  will  give 
protection  to  our  Pacific  sea-ports  and  Pacific  steamer  lines. 

During  the  early  history  of  our  Government  the  attention  of  Ameri- 
can statesmen  was  especially  directed  to  the  duty  of  jjrotecting  the 
shipping  and  commercial  interests  of  the  United  States  against  Gov- 
ernmental policies  adopted  by  foreign  countries  in  favor  of  their  own 
interests. 

The  first  protest  of  this  character  by  the  people  of  this  country  is  em- 
bodied in  the  Declaration  of  Independence,  wherein  it  was  declared  that 
the  King  of  Great  Britain  had  given  his  assent  to  laws  "for  cutting  off 
our  trade  with  all  parts  of  the  world."  At  no  period  ill  our  history 
have  the  American  people  been  called  upon  to  consider  a  scheme  of 
encroachment  upon  American  commercial  interests  more  injurious  than 
the  scheme  by  the  Dominion  of  Canada  in  the  construction  of  the 
Canadian  Pacific  Railway,  the  subsidizing  of  British  steamer  lines  on 
the  Pacific  Ocean  in  connection  with  such  railway,  and  finally  by  an 
arraugement  by  the  Canadian  Pacific  Railway  Company  with  an  Ameri- 
can steam-ship  company  by  which  goods  are  carried  in  bond  between 
Port  Moody  and  the  seaports  of  Washington,  Oregon,  and  California 
to  and  from  the  East  via  the  Canadian  Pacific  Railway,  rendering  cer- 
tain the  destruction  of  American  steamer  lines  dow  engaged  in  our 
foreign  commerce  and  the  diversion  of  our  Asiatic  commerce  from 
American  sea-ports  to  the  ports  of  British  Columbia. 

The  fact  that  the  steamers  of  the  British  lines  are  so  constructed  as 
to  be  available  as  war  ships,  and  the  further  fact  of  the  existence  of  the 
military  establishment  on  Vancouver  Island  emphasize  the  importance 
of  adopting  remedies  for  the  prevention  of  the  diversion  of  American 
commerce,  which  shall  be  both  certain  and  immediately  available. 

The  difficulty  to  be  met  is  not  alone  one  simply  of  commercial  compe- 
tion,  but,  on  the  part  of  the  United  States,  it  is  a  defense  against  a 
Governmental  policy  having  in  view  the  wresting  of  commerce  from 
American  ships,  American  sea-ports,  and  American  transportation  lines. 


LIV  TRANSPORTATION    INTERESTS    OF 

While  the  committee,  under  the  authority  conferred  upon  it  by  the 
resolution  of  the  Senate  providing  for  the  investigation,  does  not  feel 
justified  in  reporting  legislation  in  relation  to  the  subjects  just  mentioned, 
yet  they  are  so  closely  allied  to  the  questions  which  the  committee  was 
directed  to  inquire  into  that  it  regards  it  a  duty  to  make  the  suggestions 
it  has  for  such  action  by  Congress  as  may  be  deemed  wise  and  proper. 

(1)  The  entrance  fee  of  50  cents  and  clearance  fee  of  50  cents  or 
$1  every  time  an  American  vessel  visits  a  Canadian  port  on  the 
inland  waters  of  the  Great  Lakes  and  their  tributary  bays,  rivers,  and 
straits  constitute  an  unjust  discrimination  against  American  vessels, 
Canadian  vessels  being  exempt  from  such  charges  by  a  license  fee  of 
50  cents  payable  once  a  year.  Such  discrimination  is  in  violation  of 
the  spirit  if' not  the  letter  of  the  Treaty  of  Washington  of  1871.  The 
laws  of  the  Dominion  of  Canada  place  American  and  Canadian  vessels 
upon  the  same  terms  as  to  entrance  and  clearance  fees,  but  the  dis- 
crimination is  made  through  the  expedient  of  an  order  in  council. 

The  committee  recommend  that  so  long  as  such  discrimination  in 
entrance  and  clearance  fees  in  Canadian  ports  continues  all  Canadian 
vessels  should  be  required  to  pay  entrance  and  clearance  fees  of  equal 
amount  on  entering  and  clearing  the  ports  of  the  United  States,  on  the 
Great  Lakes  or  their  tributary  navigable  waters. 

(2)  The  rebate  of  18  cents  per  ton  in  tolls  on  certain  products  of  the 
United  States  passing  through  the  Welland  Canal,  if  bound  to  Mon- 
treal, constitutes  an  unjust  discrimination  against  ports  of  the  United 
States  on  Lake  Ontario  and  the  St.  Lawrence  Eiver.  This  discrimi- 
nation is  an  open  violation  both  of  the  spirit  and  letter  of  the  Treaty  of 
Washington.  This  was  clearly  explained  by  the  Hon.  Nelson  Dingley,^ 
jr.,  in  the  House  of  Representatives  in  a  speech  delivered  in  Jan- 
uary, 1888. 

The  committee  recommend  that  so  long  as  the  discrimination  in  tolls 
of  18  cents  per  ton  on  products  of  the  United  States  in  favor  of  Mon- 
treal or  ports  below  that  city  on  the  St.  Lawrence  River  is  made  by  the 
Dominion  Government  a  discriminating  toll  on  the  tonnage  of  all  Can- 
adian vessels,  shall  be  imposed  upon  all  such  vessels  every  time  they 
pass  through  the  Sault  Ste.  Marie  Canal. 

(3)  The  question  as  to  the  proper  regulations  which  shall  be  imposed 
upon  Canadian  railroads  upon  their  engaging  as  common  carriers  in 
comjietition  with  American  railroads  in  the  transportation  business  of 
the  United  States  has  engaged  the  earnest  consideration  of  the  com- 
mittee. The  general  proposition  that  Canadian  railroads  which  compete 
with  American  railroads  for  traffic  between  different  points  of  the  United 
States  should  be  subjected  to  the  same  requirements  of  law  and  of  reg- 
ulations in  pursuance  of  law  which  apply  or  may  hereafter  apply  to 
American  railroads,  is  so  clearly  marked  by  principles  of  justice  and 
equity  that  it  must  command  the  assent  of  every  fair-minded  person. 

There  is  now  much  discussion  throughout  the  country  as  to  whether 
the  fourth  section  of  the  act  to  regulate  commerce  shall  or  shall  not  be 
modified  or  repealed.  Whatever  conclusion  the  committee  may  reach 
hereafter  on  that  question  as  the  result  of  investigation  it  seems,  in 
the  judgment  of  the  committee,  to  be  the  duty  of  Congress  to  take  such 
action  as  will  give  American  railroads  an  even  chance  in  comjietition 
with  the  roads  of  Canada  doing  business  in  the  United  States. 

The  justice  of  such  action  becomes  more  apparent  in  view  of  the  ex- 
istence of  sections  226  and  232  of  the  Canadian  statute  for  the  regula- 
tion of  traffic.  Those  sections  are  regarded  as  manifest  suggestions  of 
unjust  discrimination  by  the  Canadian  railroads  against  competing 


THE    UNITED    STATES    AND    CANADA.  LV 

Americau  railroads,  and  in  terms  justify  Canadian  railroads  as  to  all 
traffic  secured  from  the  United  States  in  disregarding  the  rule  estab- 
lished by  the  fourth  section  of  our  act  to  regulate  commerce  and  known 
as  the  long  and  short  haul  rule. 

The  committee  therefore  recommend  that  either  such  a  license  sys- 
tem shall  be  established  as  will  be  applicable  to  the  Canadian  railroads 
doing  business  in  the  United  States,  or  that  some  other  plan,  not  inju- 
rious to  the  general  trade  and  commerce  of  the  country,  be  adopted 
which  shall  secure  to  American  railroads  an  equal  chance  in  competition 
with  Canadian  railroads.  Such  action,  in  the  judgment  of  the  com- 
mittee, is  in  the  interest  not  only  of  American  railroads  and  especially 
American  transcontinental  lines,  but  in  the  interest  of  American  com- 
merce and  of  the  general  prosperity  of  the  American  people. 


TRANSPORTATION  INTERESTS  OF  THE   UNITED  STATES  AND 

CANADA. 


STATEMENTS  TAKEN  BEFORE  THE  COMMITTEE  ON  INTERSTATE 
COMMERCE  OF  THE  UNITED  STATES  SENATE  WITH  RESPECT 
TO  THE  TRANSPORTATION  INTERESTS  OF  THE  UNITED  STATES 
AND  CANADA. 


New  York,  May  6,  1889. 

The  committee  met  at  11  o'clock  a.  m.  Present,  Senators  Cullom 
(chairman),  Phitt,  Blair,  Hiscock,  Harris,  Gorman,  and  Reagan. 

The  Chairman.  The  committee  will  come  to  order.  The  clerk  will 
read  the  original  resolution,  which  explains  the  purposes  generally  of 
the  committee's  sitting  here. 

The  clerk,  Clarence  R.  Paul,  read  as  follows : 

Ih'solred,  That  the  Coaiimttee  ou  Interstate  Conurierce  be,  and  it  is  hereby,  di- 
rected to  ascertain  and  report  to  the  Senate  whether  any  railroad  lines  located  in  the 
United  States  are  owned,  operated,  or  controlled  by  the  Grand  Trunk  Railwa,^  Com- 
pany, the  Canadian  Pacific  Railway  Company,  or  any  other  Canadian  railroad  cor- 
poration;  whether  commerce  originating  in  the  United  States  is  diverted  from 
American  to  Canadia.n  lines  of  transportation,  and,  if  so,  to  what  extent  and  by  what 
means;  and  whether  there  is  any  discrimination  in  the  charges  made  for  tolls  or 
otherwise  against  American  vessels  which  pass  through  the  VVelland  and  St.  Law- 
rence Canals. 

Said  committee  is  further  directed  to  inquire  fully  into  the  question  of  the  regula- 
tion of  the  commerce  carried  ou  by  railroad  or  water  routes  between  the  United 
States  and  the  Dominion  of  Canada,  and  to  report  what  legislation  ou  the  subject,  if 
any,  is  necessary  for  the  protection  of  the  couunercial  interests  of  the  United  States 
or  to  promote  the  enforcement  of  the  "  act  to  regulate  commerce,"  approved  February 
4,  1867. 

In  making  the  inquiries  required  by  this  resolution  said  committee  shall  have 
power  to  send  for  persons  and  papers,  to  administer  oaths,  to  employ  a  clerk  and  a 
stenographer,  to  sit  during  the  recess  of  Congress,  and  to  do  whatever  is  necessary 
for  a  thorough  investigation  of  the  subject.  Any  subcommittee  may  exercise  the 
powers  hereby  granted  to  said  committee,  and  the  expenses  of  said  investigatiou 
shall  be  paid  from  the  contingent  fund  of  the  Senate  upon  vouchers  duly  approved. 

The  Chairman.  There  is  a  subsequent  resolution  to  the  one  which 
has  just  been  read,  the  original  resolution  having  been  adopted  at  the 
regular  session  and  at  a  time  when  we  su[)posed  we  would  have  some 
vacation.  The  clerk,  therefore,  will  read  the  resolution  passed  during 
the  last  session  of  Congress. 

The  clerk  read  as  follows  : 

Besolved,  That  the  Committee  ou  Interstate  Commerce  be,  and  it  is  hereby,  directed 
to  continue  the  investigation  ordered  to  be  made  by  the  resolution  of  the"  Senate  of 
Aiigust  3,  1888,  and  such  committee  is  hereby  given  all  the  authority  couferred  by 
said  resolution,  and  power  to  sit  during  any  recess  of  the  Senate  prior  to  December, 
1889,  the  necessary  expenses  of  such  investigation  to  be  paid  from  the  contingent 
fund  of  the  Senate. 

1 

6543 1 


2  TRANSPORTATION   INTERESTS   OF 

Mr.  Albert  Fiuk,  commissiouer  of  the  Trunk  Lines  Association,  ap- 
peared. 

The  Chairman.  The  puri^ose  of  the  reading  of  these  resolutions  was 
to  let  them  go  in  the  record  as  the  basis  of  our  work,  and,  in  addition, 
to  call  the  attention  of  Mr.  Fink,  who  is  now  before  us,  to  the  line  of 
investigation  which  the  committee  is  here  to  pursue.  Will  you  be  kind 
enough,  Mr.  Fink,  to  state  what  your  present  relation  is  to  the  railroads 
of  the  country  ? 

STATEMENT  OF  ALBERT  FINK. 

Mr.  Fink.  I  am  at  the  head  of  a  bureau  or  an  an  association  of  rail- 
roads whose  object  is  to  arrange  with  each  other  the  joint  tariffs  and 
competitive  tariffs,  to  secure  uniformity  of  charges  as  well  as  the  uni- 
formity of  classification,  and  for  the  purpose  of  maintaining  the  estab- 
lished tariffs. 

The  Chairman.  Established  under  the  interstate  act  ? 

Mr.  Fink.  The  tariffs  are  established  by  the  railroads  in  accordance 
with  the  interstate  law. 

The  Chairman.  You  mean  subject  to  the  interstate  law  ? 

Mr.  Fink.  Yes,  sir;  in  accordance  with  the  interstate  law,  and  the 
object  of  the  association — and  that  was  its  object  before  there  was  any 
interstate  law — is  to  make  uniform  and  reasonable  tariffs  and  to  main- 
tain them  alike  with  respect  to  all  shii)pers.  In  fact,  the  association  was 
intended  to  accomplish  in  this  respect  what  it  is  designed  to  accomplish 
by  the  iuterstate  law. 

Senator  UisoocK.  If  it  is  in  order  in  this  connection,  I  would  sug- 
gest, Mr.  Chairman,  that  Mr.  Fink  state  the  trunk  lines  that  are  in  this 
association,  and  let  him  define  them. 

The  Chairman.  I  was  about  to  ask  him  questions  in  the  line  sug- 
gested. 

Senator  Blair.  The  concluding  remark  of  Mr.  Fink  was  that  the 
object  in  arranging  the  tariffs  was  the  same  before  the  enactment  of 
the  interstate  law  as  it  is  now. 

Mr.  Fink.  Yes,  sir. 

Seuator  Blair.  Were  the  tariffs  arranged  in  accordance  with  the 
provisions  of  the  interstate  law  before  that  law  was  enacted  ? 

Mr.  Fink.  In  accordance  with  the  general  principles  of  the  inter- 
state law,  viz,  that  the  tariffs  should  be  reasonable  and  just.  There  is 
one  provision  of  the  law  now  that  was  not  obligatory  at  that  time,  and 
it  is  now  only  carried  out  with  certain  proper  exceptions.  That  is  the 
long  and  short  haul  clause.  But  as  far  as  the  lines  with  which  I  am 
associated  are  concerued  this  priuciple  was  generally  recognized  in 
makiug  tariffs. 

Senator  Harris.  I  want  to  suggest  to  the  committee,  with  a  view  to 
the  economizing  of  time  and  the  making  of  systematic  inquiry  into  the 
questions  that  we  are  required  to  inquire  into,  that  the  chairman  shall 
conduct  an  examin^ition  until  he  is  through,  and  then  give  each  member 
of  the  committee  an  opportunity  to  ask  any  questions  he  may  desire  to 
ask.  By  pursuing  that  method  we  will  have  at  least  a  systematic 
statement  originally,  and  then  every  member  of  the  committee  can  in- 
terrogate Mr.  Fiuk  in  regard  to  any  particular  matter  he  may  have  in 
mind. 

The  Chairman.  I  think  it  would  result  in  the  economy  of  time  if  the 
mode  of  procedure  suggested  by  Senator  Harris  be  followed,    Still  I 


THE    UNITED    STATES    AND    CANADA.  3 

think  that  there  is  no  serious  objection  to  the  members  of  the  committee 
asking  questions  when  the  statements  of  Mr.  Fink  suggest  them. 

Senator  Harris.  I  make  that  motion. 

The  Chairman.  I  do  not  suppose  it  is  necessary  to  put  the  motion  ; 
I  suppose  it  will  be  understood  that  the  examanition  will  be  conducted 
in  the  usual  manner. 

Senator  Blair.  I  think  that  this  examination  will  be  conducted  like 
the  usual  investigations  conducted  by  Senate  committees. 

The  Chairman.  While  it  is  for  the  committee  to  determine  the  line 
of  investigation  with  a  view  to  economizing  the  time  we  have  withiu 
which  to  do  the  same,  I  should  prefer  to  go  through  with  some  ques- 
tions myself,  if  agreeable  to  the  other  members  of  the  committee,  and 
then  liave  the  witness  questioned  by  such  members  of  the  committee  as 
wish  to  do  so.  I  think  if  we  follow  that  method  it  will  result  in  the 
economy  of  time  and  in  the  thoroughness  of  this  inquiry. 

Senator  Blatr.  That  is  quite  proper,  and  the  usual  custom. 

The  Chairman.  \ou  say,  Mr.  Fink,  you  represent  the  trunk  lines 
handling  the  traffic  between  the  Mississippi  Biver  and  the  East? 

Mr.  Fink.  Yes,  the  lines  running  from  the  seaboard  cities  to  the  Mis- 
sissippi Eiver  and  to  Chicago. 

The  Chairman.  Will  you  name  the  lines  ! 

Mr.  Fink.  The  trunk  lines  in  the  association  commencing  on  the  north 
are  the  Grand  Trunk  Eailway 

The  Chairman.  The  Grand  Trunk  Eailway  of  Canada  ? 

Mr.  Fink.  Yes  ;  the  Grand  Trunk  Eailway  of  Canada.  I  will  men- 
tion the  trunk  lines  first.  We  make  a  distinction  between  the  trunk 
lines  and  their  western  connections.  The  latter  reach  from  the  west- 
ern termini  of  the  trunk  lines  to  the  Mississippi  Eiver  and  the  Ohio 
Eiver.  I  have  mentioned  first  the  Grand  Trunk  of  Canada.  Next 
comes  the  New  York  Central. 

The  Chairman.  You  refer  to  the  Grand  Trunk  Line.  Now  will  you 
give  its  terminals  ? 

THE  GRAND  TRUNK  SYSTEM. 

Mr.  Fink.  The  main  line  of  the  Grand  Trunk  system  runs  from 
Chicago,  111.,  to  Portland,  Me.,  through  Port  Huron,  Toronto,  and  Mon- 
treal. The  road  from  Chicago  to  Port  Huron  is  called  the  Chicago  and 
Grand  Trunk.  It  is  an  American  corporation,  but  it  is  altogether  owned 
by  the  Grand  Trunk  Eailway  Company  as  far  as  I  know.  At  Port 
Huron  it  connects  with  the  main  line  of  the  Grand  Trunk  proper,  ])ass- 
iug  through  Toronto  and  Montreal  and  then  into  the  United  States,  into 
Maine  to  Portland. 

The  Chairman.  That  is  the  eastern  terminus? 

Mr.  Fink.  Yes,  sir;  the  eastern  terminus  of  the  main  line.  Then 
it  controls  or  owns  a  road  from  Port  Huron  to  Suspension  Bridge,  and 
also  a  road  from  Detroit  to  Buffalo  through  Canada,  connecting  at  Buf- 
falo and  Suspension  Bridge  with  the  American  system  of  railroads.  It 
has  a  number  of  branch  lines  in  Michigan. 

The  Chairman.  Perhaps  it  would  be  just  as  well  to  give,  in  connec- 
tion with  your  description  of  the  Grand  Trunk,  all  the  roads  which  it 
controls  by  lease  or  otherwise. 

Mr.  Fink.  The  Grand  Haven  and  Detroit  Eailroad  is  another  line.  It 
controls  also  a  road  in  Michigan,  called  the  Toledo,  Saginaw  and  Muske- 
gon Eailway,  which  it  has  lately  acquired. 

Senator  Eeag  AN.  There  is  a  branch  down  to  Detroit  from  Port  Huron, 
I  believe  1 


4  TRANSPORTATION    INTERESTS    OF 

Mr.  Fink.  They  have  a  biauch  to  Detroit. 

The  Chaiuman.  Have  you  given  all  the  roads  of  that  system  iu  the 
United  States? 

Mr.  Fink.  I  have  given  the  main  roads.  I  can  not  specify  all  its 
branch  roads. 

Senator  Reagan.  Describe  the  points  of  distribution  of  traffic  by  the 
Graud  Trunk  down  to  New  York,  Portland,  etc. 

Mr.  Fink.  Its  main  line  runs  to  Portland,  Me.,  but  to  Boston  and 
New  England  points  it  connects  at  St.  John  with  the  Central  Vermont, 
and  the  Central  Vermont  connects  with  the  Boston  and  Maine  and  the 
Fitchbiirg  railroads  reaching  Boston.  It  connects  through  these  roads 
with  all  or  nearly  all  of  t!ie  New  England  roads.  The  Central  Vermont 
runs  to  New  London  on  the  sound,  and  the  Grand  Trunk  gets  business 
from  New  York  by  way  of  New  London  and  St.  John  and  Montreal 
and  to  all  points  in  the  West,  even  as  far  south  as  Memphis. 

The  Chairman.  Where  do  they  connect  with  the  New  York  Central  ? 

Mr.  Fink.  At  Buffalo.  I  mentioned  the  Central  Vermont  as  the  chief 
connection  of  the  Grand  Trunk  iu  New  England  5  but  it  has  also  con- 
nections via  its  main  line  in  Maine,  at  Sherbrook,  with  other  New  Eng- 
land roads.  At  Buffalo  its  branch  roads,  that  run  from  Port  Huron  and 
Detroit  to  Buffalo  and  Niagara  Falls,  connect  with  the  New  York  Cen- 
tral,with  theErie,and  with  the  Delaware,  Lackawanna  and  Western,  and 
with  the  Lehigh  Valley  and  the  West  Shore.  It  also  has  a  connection 
with  New  York  through  the  Eome,  Watertown  and  Ogdensburgh  Eail- 
road,  which  runs  from  Niagara  Falls  to  Oswego,  where  it  connects  with 
the  Ontario  and  Western  to  New  York. 

The  Chairman.  And  it  has  no  control  over  many  of  these  roads  you 
have  mentioned  ? 

Mr.  Fink.  No,  sir. 

The  Chairman.  It  has  simply  business  connections  with  them,  just 
like  the  roads  in  the  United  States  have  business  connections  among 
themselves  ? 

Mr.  Fink.  Yes,  sir.  The  Canada  Southern  is  a  Canada  road,  but  is 
leased  by  the  Michigan  Central  Railroad  Comjiany,  and  is  acomi^eting 
road  with  the  Grand  Trunk. 

The  Chairman.  How  many  roads  are  there,  and  which  are  they, 
actually  owned  by  the  Grand  Trunk  which  do  business  in  the  United 
States  ? 

Mr.  Fink.  There  is  the  Chicago  and  Grand  Trunk,  and  that  part  of 
the  main  line  iu  the  State  of  Maine  terminating  at  Portland;  the  De- 
troit, Graud  Haven  and  Milwaukee  Railroad,  and  the  other  roads  in 
Michigan  already  mentioned. 

The  Chairman.  Let  me  call  your  attention  to  this  list  I  have  before 
me,  and  let  us  see  whether  it  is  correct.  There  is  the  Atlantic  and  St. 
Lawrence  Railroad  Company,  extending  from  Portland,  Me.,  through 
New  Hampshire  and  Vermont,  to  the  national  boundary;  mileage,  1G0.58. 
Do  I  hey  owu  that  I 

Mr.  Fink.  1  do  not  know  it  by  that  name. 

The  Chairman.  It  runs  from  Portland,  Me.,  through  New  Hamp- 
shire and  Vermont,  to  the  national  boundary. 

Mr.  Fink.  Yes,  and  to  Montreal,  does  it  not  *? 

The  Chairman.  Yes. 

Mr.  Fink.  That  is  the  American  portion  of  the  Grand  Trunk  Rail- 
road, of  the  main  line,  but  it  goes  under  the  name  of  the  Grand  Trunk 
Railioad.  I  suppose,  however,  that  the  road  originally  was  named  as 
you  call  it. 


THE   UNITED   STATES   AND   CANADA.  5 

The  Chairman.  Then  there  is  the  Detroit,  Grand  Haven  and  Mil- 
waukee Eailway,  extending  from  Detroit  to  Grand  Haven,  in  the  State 
of  Michigan.     Is  that  another  of  their  connections  ? 

Mr.  Fink.  Yes. 

The  Chairman.  And  the  Chicago  and  Grand  Trunk  Eailway  Com- 
pany, including  two  short  terminal  lines  to  enter  Chicago,  extending 
from  Port  Huron,  Mich.,  through  Indiana  to  Chicago.  I  believe  you 
mentioned  that  line. 

Mr.  Fink.  Yes,  sir. 

The  Chairman.  And  then  the  Lewiston  and  Auburn  Eailway,  run- 
ning from  Lewiston,  Me.,  to  Lewiston  Junction. 

Mr.  Fink.  I  do  not  know  anything  about  that  road. 

The  Chairman.  You  do  not  know  whether  they  own  that  or  not  ? 

Mr.  Fink.  ISTo,  sir. 

The  Chairman.  It  is  a  very  short  road,  only  5  or  5J  miles  long. 

Mr.  Fink.  I  never  had  anything  to  do  with  it. 

The  Chairman.  Then  there  is  the  Michigan  Air  Line  Eailway,  ex- 
tending from  Lennox  to  Jackson,  Mich. 

Mr.  Fink.  I  have  mentioned  that. 

The  Chairman.  Then  there  is  the  Chicago,  Detroit  and  Canada 
Grand  Trunk  Junction  Eailway,  extending  from  Detroit  Junction  to 
Fort  Gratiot,  59.37  miles  long.  Do  you  understand  that  to  be  one  of 
them? 

Mr.  Fink.  Yes,  sir. 

The  Chairman.  Then  there  is  the  Toledo,  Saginaw  and  Muskegon 
Eailway,  extending  from  Muskegon  to  Ashley,  Mich. 

Mr.  Fink.  Yes  ;  that  is  one  I  mentioned. 

The  Chairman.  These  roads  I  have  mentioned  make  a  mileage,  ac- 
cording to  this  document  I  have  before  me,  of  857.22  miles. 

Mr.  Fink.  In  the  United  States,  yes. 

The  Chairman.  These  roads,  the  first  one  for  instance,  the  Atlantic 
and  St.  Lawrence  Eailroad,  extending  from  Portland,  M(>.,  through  New 
Hampshire  and  Vermont  to  the  national  boundary,  beirg  1UG.58  miles, 
seems  to  have  a  capital  of  $8,443,000,  with  gross  earnings  from  opera- 
tion of  $1,107,704.77,  with  a  total  freight  tonnage  of  836,152  tons.  The 
Detroit,  Grand  Haven  and  Milwaukee  Eailway,  being  189  miles  long, 
has  a  capital  of  $0,995,347.92,  with  gross  earnings  from  operation  of 
$1,148,310.70,  and  total  freight  tonnage  of  618,012  tons. 

The  Cliicago  and  Grand  Trunk  Eailway,  including  two  short  terminal 
lines  to  enter  Cuicago,  extending  from  Pore  Huron,  IMich.,  through 
Indiana,  to  Chicago,  ill.,  has  a  mileage  of  a  little  over  335  miles  and  a 
capital  of  $22,601,316.83,  with  gross  earning  of  $3,487,589.08,  and  total 
freight  tonnage  of  1,540,659  tons. 

I  am  calling  your  attention  to  these  roads  so  that  if  I  am  mistaken  iu 
stating  these  figures,  and  you  have  the  data  with  you,  you  may  correct 
me. 

Mr.  Fink.  I  have  brought  no  such  data  with  me. 

The  Chairman.  Then  there  is  the  Lewiston  and  Auhnrn  Eailway, 
extending  from  Lewiston,  Me.,  to  Lewiston  Junction,  with  about  5.}  miles 
of  rail,  having  a  capital  of  $300,000,  with  gross  earnings  of  $35,685.22, 
and  a  total  freight  tonnage  of  52,536  tons. 

Also  the  Michigan  Air-Line  Railway  Company,  extending  from  Lenox 
to  Jackson,  Mich. ;  mileage,  105.59;  capital,  $l,S08.6ii6.<)7,  with  gross 
earnings  of  $169,176,  and  total  freight  tonnage  of  26-',79l  tons. 

Also  the  (yhicago,  Detioit  and  Canada  Grand  Trunk  Junction  Eail- 
way, extending  from  Detroit  Junction  to  Fort  Gratiot,  Mich.;  mileage, 


6  TRANSPORTATION   INTERESTS   OP 

59.37;  capital,  $2,881,141.46,  with  gross  earnings  of  $248,123.52,  and 
total  freight  tonnage  of  375,1)04  tons. 

The  Toledo,  Saginaw  and  Mnskegon  Railway,  extending  from  Mus- 
kegon to  Ashley,  Mich.,  96  miles,  with  a  capital  of  $3,248,000 ;  earnings 
and  tonnage  not  reported. 

The  totals  of  these  statistics  are:  Mileage,  857.22  miles;  capital, 
$46,277,472.88  ;  gross  earnings,  $0,196,655.29 ;  tonnage,  3,687,054.  All 
these  roads  seem  to  be  in  some  way  connected  with  the  Grand  Trunk. 

Mr.  Fink.  Are  these  data  taken*^from  testimony  before  the  Interstate 
Commerce  Commission  ! 

The  Chaikman.  Yes,  sir. 

Mr.  Fink.  That  is  very  much  more  reliable  that  anything  in  that 
connection  that  you  could  get  from  me. 

The  Chairman.  Have  you  the  mileage  of  the  Grand  Trunk  proper 
from  Portland  to  Chicago  ? 

JVIr.  Fink.  No,  sir ;  1  have  not.  I  refer  you  to  the  Eailway  Guide,  if 
you  wish  that.  I  do  not  remember  all  these  figures.  The  distance  be- 
tween Portland  and  Chicago,  via  the  Grand  Trunk,  is  1,134  miles. 

Senator  Eeagan-  If  you  will  allow  me  to  make  the  suggestion,  Mr. 
Chairman,  the  number  of  branch  lines  controlled  by  each  of  these  trunk 
routes  is  given  fully  in  Poor's  Manual.  We  can  get  it  from  that  as  well 
as  from  Mr.  Fink.  "  I  was  thinking  whether  it  would  not  be  better  for 
us  to  let  Mr.  Fink  make  any  general  statmeut  he  wants  to,  and  then  to 
go  into  details  afterward.  Mr.  Fink  probably  knows  better  than  any 
other  individual  we  can  get  before  us  the  amount  of  commerce  that 
goes  off  all  the  American  portions  of  these  lines  on  to  the  Grand  Trunk, 
or  that  goes  from  the  Grand  Trunk  to  New  York,  Boston,  and  Portland, 
and  the  reverse,  and  what  goes  by  water  and  what  by  rail. 

The  Chairman.  Allow  me  to  get  through  with  some  questions  be- 
fore we  go  into  these  matters  in  detail.  Now,  Mr.  Fink,  give  the  other 
trunk  lines  that  you  are  agent  of  and  their  names  and  lengths. 

THE  TRUNK  LINES  AND   CONNECTIONS. 

Mr.  Fink.  Commencing  from  the  north  I  have  mentioned  this  Grand 
Trunk  Railway  as  the  first  trunk  lino,  then  the  New  York  Central  and 
Hudson  River  Railroad  as  the  second,  the  Erie  as  the  third. 

The  Chairman.  The  New  York  Central  proper  is  a  road  within  the 
State  of  New  York  ? 

Mr,  Fink.  Yes,  sir;  and  connects  with  the  Grand  Trunk  at  Buffalo. 

The  Chairman.  What  is  its  line,  for  instance,  from  the  Mississippi 
River  to  New  York ;  it  has  a  line,  I  suppose,  which  it  controls,  m  a 
sense,  that  distance  ? 

Mr.  Fink.  No  ;  the  New  York  Central  proper  extends  only  from  New 
York  to  Buffalo.  It  has  then  connecting  roads  which  are  controlled  by 
the  same  parties  who  control  the  New  York  Central.  The  New  York 
Central  is  a  corporation  within  the  State  of  New  York,  and  has  no  con- 
trol of  any  road  west  of  Buffalo. 

The  Chairman.  What  are  the  roads  forming  connecting  lines  with 
the  New  York  Central  ? 

Mr.  Fink.  The  Michigan  Central  and  Canada  Southern  form  one 
line,  and  the  Lake  Shore  is  another;  those  are  its  main  connections; 
then  there  is  the  lake. 

The  Chairman.  Do  the  same  men  who  control  the  New  York  Cen- 
tral also  control  those  lines  ? 

Mr.  Fink.  No,  sir;  thereis  a  different  management  of  the  western  roads, 


THE  UNITED  STATES  AND  CANADA.  7 

altbougb,  to  a  great  extent,  the  proprietors  are  the  same.    The  Vander- 
bilt  interest  is  the  controlling-  interest  in  the  roads  I  have  mentioned. 

The  Chairman.  Does  the  New  York  Central  do  business  between 
here  and  Chicago  with  any  other  road  just  as  it  does  with  the  Michigan 
Central  and  the  Canada  Southern  and  the  Lake  Shore? 

Mr.  Fink.  The  main  connections  of  the  New  York  Central  are  those 
three  roads. 

The  Chairman.  Is  not  that  substantially  a  common  ownership. 

Mr.  Fink.  There  are  different  stockholders  and  there  is  a  different 
management.  You  could  not  say  they  were  under  one  control  and 
ownership. 

The  Chairman.  Do  these  roads  over  which  the  New  York  Central 
exercises  ownership  do  business  with  roads  running  into  Canada? 

Mr.  Fink.  The  New  York  Central  does  business  with  the  Grand 
Trunk  into  Canada. 

The  Chairman.  And  does  it  not  give  it  to  any  other  road  running 
into  Canada? 

Mr.  Fink.  It  gives  business  to  the  Canada  Southern  to  roads  reached 
by  that  road  in  Canada. 

vSenator  Reag-an.  When  you  speak  of  the  trunk  lines  under  your 
control,  you  refer,  I  suppose,  to  the  system  being  under  your  control? 

Mr.  Fink.  I  do  not  say  that  they  are  under  my  "control." 

The  Chairman.  Allow  me  to  follow  out  what  I  am  trying  to  get  at. 
What  is  the  connection,  Mr.  Fink,  between  the  New  York  Central  and 
the  Michigan  Central? 

Mr.  Fink.  Do  you  mean  the  physical  connection  or  the  financial  con- 
nection ? 

The  Chairman.  I  will  get  at  it  in  this  way:  The  New  York  Central, 
in  doing  business  between  here  and  Chicago,  will  do  it  over  the  Michi- 
gan Central  or  the  Lake  Shore? 

Mr,  Fink.  Yes,  sir;  they  are  the  main  connections  of  the  New  York 
Central. 

The  Chairman.  And  they  are  regarded,  are  they  not,  as  the  New 
York  Central  line  between  here  and  Chicago? 

Mr.  Fink.  Yes,  sir ;  and  generally  called  the  Vanderbilt  system. 

The  Chairman.  That  is  the  Michigan  Central  and  the  Lake  Shore? 

Mr.  Fink.  Yes,  sir. 

The  Chairman.  Now,  what  are  the  other  roads  that  you  mentioned  f 
.  Mr.  Fink.  I  had  got  as  far  as  the  Erie.  I  named  it  as  the  third  trunk 
line.  Then,  there  is  the  West  Shore,  which  is  really  a  part  of  the  New 
York  Central.  It  is  leased  by  the  New  York  Central,  although  it  is 
operated  as  an  independent  trunk  line.  Then  comes  the  Ontario  and 
Western. 

The  Chairman.  Where  is  that  located  ? 

Mr,  Fink.  That  runs  from  New  York  over  a  part  of  the  West  Shore 
Eailroad,  and  then  it  runs  to  Oswego,  and  at  Oswego  it  connects  with 
the  Rome,  Watertown  and  Ogdensburg  Eailroad  to  Niagara  Falls,  and 
there  it  connects  with  the  Western  roads.  One  of  its  principal  con- 
nections is  the  Grand  Trunk. 

The  Chairman.  Does  it  do  business  on  the  Grand  Trunk  from  there 
west  as  far  as  Chicago  ? 

Mr.  Fink.  Yes.  Then  there  are  the  Lehigh  Valley  and  the  New  Jersey 
Central ;  although  they  are  not  direct  trunk  lines  they  connect  again 
with  some  of  the  other  trunk  lines.  Then,  there  are  the  Pennsylvania 
Railroad,  the  Philadelphia  and  Reading,  and  the  Baltimore  and  Ohio. 


8  TRANSPORTATION   INTERESTS   OF 

The  Chairman.  You  did  not  describe  the  Erie  counectious. 

Mr.  Fink.  They  couuect  at  Buflalo  with  the  Graud  Trunk,  also  with 
the  Lake  Shore  and  Canada  Southern  and  Michigan  Central  Roads. 

The  Chairman.  And  do  business  with  them  from  there  west? 

Mr.  Fink.  Yes;  west  and  east.  Then  the  Erie  has  a  line  to  Sala- 
manca and  via  the  New  York,  Pennsylvania  and  Ohio  and  the  Chicago 
and  Atlantic  to  Chicago,  these  roads  together  forming  one  line  from 
New  York  to  Chicago. 

The  Chairman.  Have  you  described  all  the  trunk  lines  and  their 
connections'? 

Mr.  Fink.  Yes,  sir. 

The  Chairman.  What  are  the  Pennsylvania  connections  between 
New  York  and  Chicago"? 

Mr.  Fink.  It  has  two  lines  under  its  own  control,  one  by  way  of 
Pittsburgh  and  Fort  Wayne  direct  to  Chicago,  and  the  other  via  the 
Pittsburgh,  Cincinnati  and  St.  Louis  Eailroad  from  Pittsburgh  by  way 
of  Columbus,  Ohio,  which  also  runs  to  Chicago.  Neither  the  Baltimore 
and  Ohio  nor  the  Pennsylvaniii  connects  with  the  Graud  Trunk.  The 
Baltimore  and  Ohio  Chicago  line  runs  by  way  of  Wheeling  and  Parkers- 
burg  to  Chicago,  the  whole  line  being  under  its  own  control. 

The  trunk  lines  at  their  western  termini,  or  at  least  those  which 
do  not  control  any  lines  beyond  by  lease  or  ownership  connect 
with  a  number  of  western  roads,  such  as  the, Lake  Shore,  Michigan 
Central,  Canada  Southern,  Nickel  Plate,  and  Grand  Trunk,  and  those 
roads  connect  with  a  large  system  of  western  roads  located  west  of  the 
western  termini  of  the  trunk  lines,  east  of  the  Mississippi,  and  north 
of  the  Ohio  Eiver,  which  roads  form  the  Central  Traflic  Association. 
The  Trunk  Line  Association,  New  England  roads,  and  the  Central 
Traffic  Association  form  together  what  is  called  the  joint  committee, 
for  the  purpose  of  establishing  joint  tariffs  upon  the  roads  represented 
in  both  associations,  and  in  dealing  with  other  trafiic  associations  in 
establishing  tarifls  beyond  the  territory  of  the  joint  committee  each 
association  deals  with  the  matters  local  to  itself,  and  iu  matters  in 
which  they  are  mutually  interested  they  act  under  the  organization  of 
the  joint  committee. 

OBSERVANCE   OF   THE  INTERSTATE  COMMERCE  ACT. 

The  Chairman.  All  these  dealings  by  you  and  your  associates  are, 
as  you  think,  in  harmony  with  the  provisions  of  the  interstate  com- 
merce act  ? 

Mr.  Fink.  They  are  not  only  in  harmony  with  the  interstate  com- 
merce act,  but  I  tliink  they  are  absolutely  necessary  in  order  to  carry 
out  its  object  and  intent.  The  interstate  commerce  law  makes  no 
provision  for  the  establishments  of  tariffs.  It  merely  demands  that  the 
tariffs  shall  be  reasonable  and  just,  and  shall  be  enforced  and  main- 
tained. It  leaves  the  work  of  making  the  tariffs  to  the  railroad  com- 
panies; and  to  establish  reasonable  and  just  tariffs  on  loO,000  miles  of 
railroad  is  the  problem  which  has  first  to  be  solved  by  the  railroads. 
Any  one  who  is  i'amiliar  with  the  subject  will  a[)preciate  the  difficulties 
of  that  problem.  It  is  for  the  i)urpose  of  solving  this  problem  that 
these  associations  of  railroad  companies  are  formed.  They  are  abso- 
lutely necessary  to  establish  proper  tariffs,  classifications,  etc.  The 
interstate  commerce  law  would  be  entirely  ineffective  in  securing  its 
object  without  their  aid,  and,  as  I  have  said  belbre,  they  existed  prior  to 
the  interstate  commerce  act. 


THE  UNITED  .STATES  AND  CANADA.  9' 

The  Chairman.  Your  organization  is  not  exactly  the  same  since  the 
passage  of  the  interstate  act  as  it  was  before,  is  it  ? 

Mr.  Fink.  The  orgauizatioa  is  the  same. 

The  Chairman.  Do  you  carry  out  the  same  purposes  now  ? 

Mr.  Fink.  The  same  purposes  and  intentions. 

The  Chairman.  Do  you  classify  freight  ? 

Mr.  Fink.  Yes ;  we  agree  upon  a  uniform  classification. 

The  Chairman.  Do  you  direct  freight  to  be  sent  on  one  line  and  not 
on  another? 

Mr.  Fink.  "We  do  not  do  that. 

The  Chairman.  Do  you  divide  the  earnings  ? 

Mr.  Fink.  Xot  since  the  interstate  act  took  effect. 

The  Chairman.  That  is  what  I  am  trying  to  find  out,  whether  yon 
are  doing  the  same  thing  now  that  you  did  before  the  passage  of  the 
act.  What  is  the  difference,  in  your  opinion,  between  what  you  are 
doing  now  and  what  you  were  doing  before  the  act  was  passed  i 

Mr.  Fink.  Nothing,  except  we  do  not  make  any  division  ot  competi- 
tive traflBc.     We  stopped  what  some  people  called  pooling. 

The  Chairman.  You  are  not  pooling  now,  is  that  the  idea  ? 

Mr.  Fink.  Yes,  sir;  that  is  the  effect. 

The  Chairman.  Are  you  making  contracts  with  each  other  or  allow- 
ing your  roads  to  do  so  ? 

Mr.  Fink.  With  respect  to  the  division  of  traftic,  do  you  mean  ? 

The  Chairman.  For  the  fixing  of  rates  and  all  that  sort  of  thing. 

Mr.  Fink.  The  roads  make  agreements  with  each  other  for  the  es- 
tablishment of  tariffs  and  the  classification  of  freight.  They  did  this 
before  the  interstate  commerce  act  was  in  force,  and  have  continued  to 
do  so  since.  The  popular  impression  seemed  to  be  that  our  association 
was  merely  for  the  purpose  of  pooling,  but  that  is  a  mistaken  idea. 
The  object  of  our  association  was  to  establish  proper  tariffs  and  to 
maintain  them,  and  the  pooling  was  merely  incidental.  It  was  applied 
to  only  a  comparatively  small  amount  of  traffic,  and  was  resorted  to 
merely  as  a  means  of  maintaining  the  established  tariffs,  and  to  remove 
the  motive  for  their  viohition,  preventing  the  payment  of  rebates  and 
other  devices  resulting  in  unjust  discriminations. 

The  Chairman.  You  are  now  doing  what  you  did  before,  except  that 
you  are  not  dividing  earnings  and  diverting  the  shipment  of  freight,  is 
that  it  ? 

Mr.  Fink.  Yes,  sir ;  otherwise  the  operation  of  the  organization  is 
the  same. 

The  Chairman.  You  seem  to  have  the  Grand  Trunk  of  Canada  in 
this  association  just  as  you  have  the  other  roads. 

Mr.  Fink.  Yes,  sir ;  the  Grand  Trunk  has  been  in  the  association 
from  the  beginning ;  for  the  last  seven  or  eight  years. 

DIFFERENTIAL    RATES. 

The  Chairman.  Will  you  tell  the  committee  what  the  facts  are  with 
reference  to  diflerentials?  State  if  there  are  any  between  the  Grand 
Trunk  and  the  American  roads. 

Mr.  Fink.  The  Grand  Trunk,  in  connection  with  the  Central  Vermont, 
on  west-bound  traffic  from  Boston  have  differential  rates;  that  is  to  say, 
lower  rates  than  are  charged  by  some  of  the  other  lines. 

The  Chairman.  How  much  lower? 

Mr.  Fink.  From  Boston  the  rate  via  the  Central  Vermont — an  Ameri- 
can road— and  the  Grand  Trunk  to  Chicago  via  the  all-rail  route  are 


10 


TRANSPORTATION   INTERESTS   OP 


the  followiug  amounts  less  than  the  highest  rates  charged  by  the  other 
roads  on  the  respective  classes,  viz : 


Classes. 


First.. 
Secoud 
Third  . 


Per  100 
pounds. 


Cents 
10 
8 
6 


Classes. 


Fourth 
Fifth  . 
Sixth  . 


Per  100 
pounds. 


Cents. 


The  Chairman.  Aggregating  about  what  per  cent.? 

Mr.  Fink.  Aggregating,  1  suppose,  about  12  per  cent. 

The  Chairman.  Do  they  have  an  advantage,  if  you  know,  over  and 
above  the  American  roads  in  the  trans^^ortation  of  treight  from  west  to 
east,  or  vice  versa  ? 

Mr.  Fink.  It  is  not  so  considered.  Differential  rates  are  allowed  to 
certain  roads  because  they  labor  under  certain  disadvantages  which 
prevent  them  from  obtaining  a  fair  share  of  the  competitive  traffic  at 
equal  rates  with  superior  lines. 

The  Chairman.  As  between  the  American  roads  and  the  Canadian 
roads,  Canada  being  a  foreign  government,  do  you  think  it  is  right  that 
a  discrimination  in  their  favor  should  be  made  ? 

Mr.  Fink.  In  the  matter  of  differential  rates  we  make  no  distinction 
between  the  American  and  Canadian  roads.  The  Canadian  roads  have 
not  exclusively  any  differential  rates;  they  have  them  in  connection 
with  the  American  roads,  and  they  a])ply  to  all,  regardless  of  the  fact 
that  one  road  is  located  in  Canada  and  the  others  in  the  United  States. 

The  Chairman.  Suppose  the  Grand  Trunk  charged  the  same  between 
Boston  and  Chicago  as  the  other  trunk  lines? 

Mr.  Fink.  Then  they  would  have  to  go  out  of  business,  that  is  all. 

The  Chairman.  Who  would  have  to  go  out  of  business  1 

Mr.  Fink.  The  Grand  Trunk  and  its  American  connecting  roads  j  in 
this  case  the  Central  Vermont. 

The  Chairman.  You  think  they  would  have  to  quit? 

Mr.  Fink.  I  do  not  say  they  would  have  to  stop  altogether,  but  they 
would  have  to  be  satisfied  with  less  business. 

The  Chairman.  Why  do  you  think  so  ? 

Mr.  Fink.  Because  their  line  is  longer.  They  have  been  working  so 
long  under  low  rates  that  nobody  would  be  willing  to  pay  them  more, 
and  as  soon  as  they  advanced  the  rates  a  great  many  shippers  would 
doubtless  leave  them.  The  shippers  want  some  inducement  in  the  way 
of  lower  rates  to  ship  over  that  road. 

The  Chairman.  How  much  longer  is  that  route  than  the  route  of  the 
Pennsylvania  or  the  route  of  the  New  York  Central  between  Boston 
and  Chicago  ? 

Mr.  Fink.  The  shortest  line  between  Boston  and  Chicago  is  via  the 
Fitchburg,  West  Shore,  and  Kickle  Plate  Eailroads,  1,004  miles.  The 
distance  via  the  Central  Vermont,  Grand  Trunk,  and  Chicago  and 
Grand  Trunk  roads  is  1,175  miles,  or  about  170  miles  longer  than  via 
the  direct  route  between  Boston  and  Chicago. 

The  Chairman.  Do  you  understand  that  the  Grand  Trunk  is  operated, 
so  far  as  concerns  its  business  that  goes  out  of  the  United  States  into 
Canada  and  comes  into  the  United  States  again,  or  goes  out  of  the 
United  States  into  Canada,  or  comes  from  Canada  into  the  United 
States,  under  the  interstate  act  ? 


THE   UNITED    STATES   AND   CANADA.  11 

Mr.  Fink.  The  Grand  Trunk  Company  professes  to  be  operating 
under  the  act  as  it  understands  it.  I  suppose  you  are  all  familiar  with 
the  recent  case  before  the  Interstate  Commerce  Commission,  in  which 
they  were  accused  of  not  complying  with  the  law  ? 

The  Chairman.  What  is  the  fact — do  they  publish  their  rates? 

Mr.  Fink.  I  think  they  profess  to  do  so,  and  as  far  as  I  know  they 
intend  to  comply  with  the  interstate  act! 

The  Chairman.  In  this  case  you  referred  to,  they  published  their 
rates  on  coal,  for  instance,  from  points  in  the  United  States  to  certain 
points  in  Canada  at  $1  a  ton,  but  having  made  a  rebate,  they  charged 
really  only  75  cents  ? 

Mr.  Fink.  Yes. 

The  Chairman.  Do  they  publish  their  rates  according  to  the  differ- 
entials made  by  agreement  between  these  trunk  lines? 

Mr,  Fink.  Yes,  as  far  as  I  know. 

The  Chairman.  1  understand  you  to  say  that  the  Grand  Trunk  does 
business  between  Chicago  and  New  York  ? 

Mr.  Fink.  Yes,  sir;  in  connection  with  American  roads. 

Tbe  Chatr]man.  Does  the  Grand  Trunk  get  a  differential  as  between 
it  and  the  Pennsylvania  or  the  Erie  ? 

Mr.  Fink.  Not  on  east  bound  business,  except  on  dressed  beef.  On 
general  merchandise  and  on  grain  coming  from  the  West  to  the  East 
there  are  no  differentials  by  any  road  at  present. 

The  Chairman.  Is  there  not,  from  Chicago  to  Boston,  a  differential 
in  favor  of  that  road  ? 

jMr.  Fink.  No,  sir;  on  west-bound  trafiflc  from  Boston  and  New 
York  the  Grand  Trunk  is  a  party  to  differential  rates  in  connection 
with  American  lines,  as  already  stated. 

The  Chairman.  Does  your  observation  justify  you  in  saying  that 
the  Grand  Trunk  publishes  its  rates  between  the  East  and  the  West, 
and  that  it  adheres  to  them,  or  not? 

Mr.  Fink.  My  understanding  is  that  they  publish  all  their  rates, 
and  intend  to  act  under  the  interstate  law.  I  have  no  guaranty  that 
any  road  maintains  the  rates. 

The  Chairman.  You  believe  that  they  do  maintain  the  rates,  the 
Canadian  roads  as  well  as  the  other  roads  of  the  United  States  I 

Mr.  Fink.  That  is  a  difficult  question  to  answer.  It  is  impossible  to 
tell  who  maintains  the  rates  and  who  does  not,  because  there  are  ten 
thousand  ways  in  which  rates  can  be  cut  without  the  possibility  of 
proving  it.  Generally  speaking,  I  believe  rates  are  maintained.  There 
arc  a  great  many  difficulties  connected  with  this  problem  of  establish- 
ing and  maintaining  rates.  I  do  not  know  that  I  could  here  fully  ex- 
plain them.  It  is  a  very  complicated  subject.  The  Grand  Trunk,  for 
example,  has  a  line  by  way  of  Portland  for  export  traffic  and  has  a 
different  arrangement  with  the  steam-ship  lines  there  than  the  other 
trunk  lines  have  with  steam-ship  lines  from  New  York  and  other  sea- 
ports. 

The  Chairman.  I  would  like  to  have  you  tell  us  as  to  that. 

EXPORT   RATES. 

Mr.  Fink.  The  law  in  regard  to  this  export  business  is  not  very  ex- 
plicit. There  is  a  doubt  about  whether  the  law  intended,  and  I  believe 
it  did  not,  that  the  through  rates  from  interior  Anierican  points  to 
places  in  foreign  countries — say,  for  exam[)le,  Liverpool — should  bereg- 


12  TRANSPORTATION  INTERESTS  OF 

ulated  by  the  law.  If  it  was  so  iuteudetl,  it  would  be  impossible  to 
carry  it  out.  There  has  beeu  a  fjood  deal  of  dissension  between  the 
roads  as  to  the  luauner  in  which  tlie  export  rates  should  be  made  and 
publisheil  under  the  law.  The  Interstate  Commerce  Commission  has 
had  the  matter  before  it.  It  is  a  most  complicated  and,  I  fear,  insolu- 
ble question  to  be  regulated  by  law. 

The  CHAIRM:A^^  1  believe  the  Commission  holds  that  under  the  law 
a  common  carrier  can  be  compelled  to  state  its  rates  from  Chicago,  for 
instance,  to  Boston  or  to  New  \ork,  separate  aud  distinct  from  the 
rate  from  here  to  Liverpool  ? 

Mr.  Fink.  Yes,  sir ;  that  is  their  position,  aud  I  think  it  is  a  correct 
one. 

The  Chairman.  If  this  Canadian  Grank  Trunk  runs  through  any 
portion  of  the  United  States,  and  the  proper  construction  of  the  inter- 
state act  is  that  they  shall  be  required  to  publish  and  adhere  to  their 
rates,  and  that  all  the  roads,  American  as  well  as  Canadian,  which  do 
business  in  this  country  shall  be  required  to  imblish  their  rates  from 
the  ]»oint  from  which  the  freight  starts  to  the  seaboard  point,  separate 
and  distinct  from  the  ocean  rate,  is  not  tiiat  part  of  the  lawenlbrceable? 

Mr.  Fink.  It  is  enforceable;  but  whether  by  enforcing  it  justice  will 
be  done  to  all  interests  is  a  question. 

The  Chairman.  If  the  law  be  enforced  in  that  respect  I  can  not  see 
where  injustice  would  be  done  anybody. 

Mr.  Fink.  The  Grand  Trunk  maintains  that  if  it  makes  the  same  in- 
land rate  on  export  business  via  Portland  as  the  other  roads  make  via 
the  other  ports,  it  could  not  get  any  steamers  to  come  to  Portland. 
In  other  words,  they  have  to  subsidize  steamers  to  come  to  Port- 
land. There  is  no  competition  then;  between  steam  ship  lines.  Only 
one  line  runs  from  that  i)ort  during  a  portion  of  the  year,  and  if 
they  want  business  via  Portland  they  have  ti»  enter  into  special  agree- 
ments with  the  steam-shi])  line  that  will  induce  them  to  run  their  ves- 
sels to  P(.rtland.  If  they  charge  the  same  inland  rate  as  is  charged  to 
Boston,  where  they  have  the  bencht  of  coini)etition  between  the  ocean 
lines,  they  could  not  aftbrdtodo  the  busiuesstlirough  Portland  atthesame 
inland  rate.  There  is  no  trade  at  Portland,  and  they  can  not,  as  they 
do  in  Xew  York,  fill  up  their  ships  with  what  is  called  s})ot  freight. 
They  are  therefore  in  a  peculiar  position.  If  they  fix  the  inland  rate 
too  high,  they  may  not  get  any  business  at  all,  and  they  are  prohibited 
by  law  from  changing  the  inland  rate  except  on  previous  notice,  to  meet 
the  competition  via  other  ports.  Thesamei)ositiouis  held-by  the  South- 
ern railroads.  At  Norfolk  and  Newport  News  the  conditions  are  sim- 
ilar to  those  at  Portland,  and  entirely  difierent  from  what  they  are  at 
New  York  and  Boston.  They  have  no  steam-ship  competition  at  those 
ports. 

The  Chairman.  How  about  Baltimore? 

Mr.  Fink.  Baltimore  is  very  much  the  same  as  New  York  and  Phila- 
delphia, though  I*hiladelpha  has  only  a  few  steam-ship  lines.  So  there 
is  son)ething  to  be  said  on  both  sides  of  the  question,  and  one  common 
rule  does  not  cover  all  the  various  conditions  that  have  to  be  met  and 
dealt  with.  Of  course  you  can  shut  uj)  Norfolk  and  Newport  News  and 
Portland  as  export  ])oints  by  making  a  cast-iron  rule  that  shall  apply 
alike  to  every  ])ort  on  the  Atlantic  and  I 'aci tic  coasts  ;  but  what  is  to  be 
gained  tliereby  ?  The  efiect  of  such  legislation  is  neither  in  the  interest 
of  commerce  nor  fair  to  the  c<)m|)eting  transjiortation  com[)anies.  While 
its  object  is  to  prevent  unjust  discrimination,  it  in  fact  creates  it. 

The  Chairman.  Have  you  any  suggestions  with  respect  to  amend- 


THE  UNITED  STATES  AND  CANADA.  13 

ment  of  the  interstate  act  tbat  would  be  a  relief  to  commerce  and  im- 
prove tlie  situation  over  wliat  it  is  now  ? 

Mr.  Fink.  The  difficulty  is  to  reguhite  commercial  transactions  by  fixed 
laws.  Questions  of  the  nature  above  referred  to  have  to  be  dealt  with 
according  to  the  conditions  prevailing  in  each  case,  and  the  proper 
means  have  to  be  adapted  to  the  end,  in  accordance  with  said  condi- 
tions. The  only  remedy  I  can  suggest  is  to  give  discretion  to  the  Com- 
mission to  deal  with  these  questions  and  to  make  excei)tions  where  they 
ought  to  be  made,  in  their  judgment.  Many  of  these  questions  have  to 
be  settled  by  the  railroad  companies  themselves,  and  that  has  been  the 
practice  heretofore;  but,  as  they  have  had  no  power  to  enforce  their 
agreements,  their  settlement  has  not  been  ])ermanent.  The  Interstate 
Commerce  Commission  should  act  as  a  board  of  arbitration  as  between 
the  railroad  companies  themselves  and  as  between  the  railroad  com- 
panies and  the  i»ublic,  and  see  that  the  proper  measures  devised  and 
agreed  upon  are  carried  into  practical  effect.  Of  course  it  is  easier  to 
suggest  this  than  to  carry  it  out,  but  the  only  alternative  is  to  put  up 
with  the  evils  which  must  necessarily  result  from  the  enactment  of  rigid 
laws  to  govern  commercial  affairs,  or  to  adopt  some  such  plan  as  sug- 
gested, imperfect  though  it  may  be. 

TRAFFIC   CARRIED  BY  CANADIAN  LINES. 

The  Chairman.  I  will  ask  .you  whether  you  can  furnish  us  a  state- 
ment of  the  traffic  carried  over  the  Grand  Trunk  and  Canadian  Pacific 
liailwavs  from  and  to  the  United  States  ? 

Mr.  t'lNK.  1  can  give  you  a  general  idea.  Take  a  line  running 
from  I'arkersburg,  Wheeling,  Erie,  Buffalo,  Salamanca,  and  Toronto, 
through  the  western  termini  of  the  trunk  lines;  we  have  tfie  statistics 
of  the  tonnage  that  is  carried  from  the  sea  board  cities  to  these  termini 
and  to  points  west  thereof;  and  also  the  statistics  of  tlie  tonnage 
coming  from  these  points  and  points  west  thereof  to  points  east  of 
that  line.  Of  the  east-bound  trathc  just  referred  to,  which  amounts  to 
about  11,000,000  tons  per  annum,  the  Grand  Trunk  carries  over  its 
main  line  to  Toronto  and  points  east  thereof  about  8  per  cent,  of  the 
whole.  This  traffic  comes  from  all  points  west  of  Toronto  and  goes 
to  all  points  east  of  Toronto.  Of  this  8  per  cent.  3.1  per  cent.,  amount- 
ing to  346,000  tons,  goes  to  points  in  (Canada.  The  remainder,  538,000 
tons,  goes  into  the  New  England  States.  The  Grand  Trunk  brings 
also  to  the  trunk  lines  at  Buffalo  and  Suspension  Bridge  Gi  per  cent, 
of  these  11,000,000  tons.  This  tonnage  mainly  comes  from  points  in 
the  United  States,  and  reaches  the  Grand  Trunk  at  Detroit  or  Port 
Huron,  and  passes  back  into  the  United  States  at  the  Niagara  frontier. 
It,  however,  includes  a  small  portion  of  Ontario  traffic  coming  into  the 
United  States.  From  New  York  City  the  West  Shore,  Delaware, 
Lackawanna  and  Western,  and  New  York,  Lake  Erie  and  Western  Pail- 
roads  deliver  to  the  Grand  Trunk  about  17  per  cent,  of  the  tonnage, 
and  the  Grand  Trunk  receives  from  the  Central  Vermont  Kailroad,  via 
New  London,  about  3  per  cent,  of  the  New  York  tonnage  which  reaches 
the  Grand  Trunk  at  St.  elohn  ;  so  they  get  about  17  per  cent,  at  the  Ni- 
agara frontier  and  3  i>er  cent,  at  St.  John  of  the  New  lork  business. 
The  total  tonnage  from  New  York  City  annually  amounts  to  about 
1,300,000.  In  this  statement  is  not  included  the  tonnage  from  interior 
points  in  New^  York  State  and  Pennsylvauia  which  may  reach  the  Grand 
Trunk  at  Buffalo, 


14  TRANSPORTATION   INTERESTS    OP 

From  Boston  aiulsomeotber New  England  points,  the  tonnage  of  wbich 
amounts  to  about  ,}8(),()()0  tons  ])er  annum,  tlie  Grand  Trunk  receives 
about  13  i)er  cent,  by  way  of  the  Central  Vermont  Kailroad  and  St. 
John,  and  about  7.4  i)er  cent,  is  carried  from  Boston  and  New  England 
by  the  Fitchburg  and  West  Shore  to  Buffalo  and  there  given  to  the 
Grand  Trunk,  so  that  they  get  about  20.4  ])er  cent,  of  this  business,  13 
per  cent,  of  which  strikes  them  at  St.  John  and  about  7.4  per  cent,  at 
the  Niagara  frontier. 

The  Chairman.  Are  there  any  differentials  ou  that  tonnage"? 

Mr.  Fink.  Yes;  some  of  the  American  lines  from  New  York  City 
connecting  with  the  Grank  Trunk  at  Niagara  Falls,  and  the  Central  Ver- 
mont from  Boston  and  New  England,  connecting  with  the  Grank  Trunk 
at  St.  John,  have  differential  rates.  The  Erie,  the  New  York,  Ontario 
and  Western,  the  Lehigh  Valley,  the  Delaware,  Lackawanna  and 
Western',  and  the  West  Shore  Railroads,  have  differential  rates  out  of 
New  York  as  against  the  New  York  Central,  the  Pennsylvania,  and  the 
Baltimore  and  Ohio  llailroads. 

The  Chairman.  ,Is  that  differential  based  on  the  length  of  the 
roads  ? 

Mr.  Fink.  No,  sir;  it  is  based  on  the  general  idea  that  these  roads 
can  not  get  a  fair  share  of  the  business  unless  they  charge  less  than 
the  roads  which  have  no  differential. 

The  Chairman.  Is  the  differential  indicated  in  the  published  tariff? 

Mr.  Fink.  The  published  tariffs  show  the  actual  rates  charged  ;  they 
do  not  show  the  difference  in  the  rates,  but  they  show  the  actual  rates 
after  deducting  the  allowed  differentials  from  the  full  tariff'. 

Senator  HiscocK.  Is  there  an  increased  differential  on  the  Grand 
Trunk  in  addition  to  what  is  given  the  American  roads  ? 

Mr.  Fink.  The  differentials  on  west-bound  traffic  originating  on 
American  roads  are  not  given  to  the  Grand  Trunk  or  with  any  refer- 
ence to  the  Grand  Trunk,  but  are  given  altogether  to  the  American 
roads,  the  Grand  Trunk,  being  a  connection  of  those  American  roads, 
only  happens  to  get  the  benelit  of  the  lower  rate. 

Senator  HiscocK.  And  the  amount  of  benefit  that  the  Grand  Trunk 
receives  from  it  depends  upon  its  division  of  rate  with  its  American 
connection'? 

Mr.  Fink.  Yes,  sir;  they  incidentally  get  the  benefit.  So  do  the 
American  roads  connecting  with  the  trunk  lines  which  have  differen- 
tials. For  example,  the  Nickel  Plate,  being  a  connection  of  the  Lacka- 
wanna, gets  the  benefit  of  the  differential  rate. 

The  Chairman.  Can  you  give  us  a  succinct  statement  of  the  amount 
of  differentials  on  these  lines,  both  east  and  west? 

Mr.  Fink.  Yes  ;  1  can  give  you  the  exact  figures.  I  have  not  them 
with  me,  but  will  furnish  them  hereafter. 

The  following  is  a  statement  of  the  differentials  now  in  use  subse- 
quently furnished  by  Mr.  Fink : 


HI 


THE    UNITED    STATES    AND    CANADA. 

West-bound  diffvrentials. 
[Cents  per  100  poancls.  ] 


15 


From  New  York : 

New  York,  Lake  Erie  and  "Western  ;  Wrst  Shore  ;  Delaware,  Lacka- 
wanna and  Western ;  Lebigli  Valley,  and  connections,  including  Grand 
Trunk  Kail  way 

New  York.  Ontario  and  "Western,  and  connections,  including  Grand 
Trniili  Railway '. 

Chesajieake  and  Ohio 

New  London  Route,  via  Central  Vermont  and  Grand  Trunk  Railway  . .. 
From  Boston,  all  rail : 

Coiitial  Vermont  ) 

Chesapeako  and  Ohio ) 

From  Boston,  rail  and  lake: 

Central  Vermont 

Fitcbburgh ) 

New  York  and  New  England 3 


Classes. 


East-hound  differentials. 
[Cents  per  100  pounds.  ] 


Classes. 

a 

S 
*^ 
o 
O 

2 

6 

u 

1 
8 

2 

3 
4. 

4 

5 

6 
2 

si 

o 
H 

f 

On  dressed  beef  from  Chicago  to  Boston,  via  Chicago  and  Grand 

Scent^nprinnnnnnda 

AGREEMENTS  AS  TO  RATES. 

The  Chairman.  Is  not  the  object  of  the  dififerentials  to  enable  the 
roads  to  reach  an  agreement  as  to  the  amount  of  traflBc  that  each  shall 
secure  ? 

Mr.  Fink.  The  object  of  making  difierentials — that  is  to  say,  making 
an  agreement  for  certain  roads  to  charge  less  rates  than  others  on 
freight  carried  between  the  same  points — is  to  bring  about  a  fair  dis- 
tribution of  the  traffic  between  competing  roads.  Assuming  a  number 
of  roads  to  be  competing  for  business  between  the  same  points,  some 
of  which  aftbid  inferior  facilities  to  the  shipper,  it  is  evident  that  if 
these  roads  were  compelled  to  charge  the  same  rates  as  the  roads  af- 
iording  better  facilities  they  could  not  obtain  any  traffic.  They  there- 
fore offer  an  inducement  to  the  shippers  by  making  lower  rates  to  com- 
pensate them  for  accepting  an  inferior  service. 

The  Chairman.  The  continuance  of  the  differential  plan  results  in 
an  agreement  as  to  what  the  rates  shall  be,  and  in  effect  results  in 
keeping  the  rates  up  on  all  the  roads,  does  it  not  f 

Mr.  Fink.  Differential  rates  are  agreed  upon  to  prevent  wars  of 
rates.  If  one  road  makes  lower  rates  than  its  competitors  and  secnres 
an  undue  amount  of  business  the  competing  roads  will  necessarily  make 
a  similar  reduction,  and  this  process  might  be  repeated  until  the  rates 
became  unremunerative.  If  the  rates  are  fixed  by  mutual  agreement 
or  by  arbitration  and  are  adhered  to,  and  if  statistics  are  kept  showing 


16  TRANSPORTATION    INTERESTS    OF 

what  the  business  of  each  road  is  under  a  certain  adjustment  of  rates, 
and  it  is  shown  that  each  road  secures  a  satisfactory  share  of  the  traffic, 
there  is  no  cause  for  fighting  or  for  wars  of  rates. 

The  Chairman.  Have  you  any  knowledge  of  the  Canadian  Pacific 
Kailroad? 

Mr.  Fink.  Only  a  general  knowledge. 

The  Chairman.  Are  they  making  any  progress  toward  conihig  in 
competition  with  the  Grand  Trunk  in  the  East? 

Mr.  Fink.  They  are  in  competition  with  the  Grand  Trunk  in  Canada 
and  they  are  coming  into  competition  with  the  railroads  in  the  United 
States.  Tliey  reach  Boston  and  New  York,  but  so  far  we  have  not  felt 
their  competition  to  a  great  extent.  1  sui)pose  that  in  the  course  of  time 
the  Canadian  Pacific  will  be  a  much  stronger  competitor. 

Senator  Hiscock.  I  would  like  to  ask,  Mr.  Chairman,  whether  if  these 
differentials  were  prohibited  would  Canada  profit  by  their  prohibition? 

Mr.  Fink.  I  do  not  think  the  prohibition  of  differentials,  which  means 
the  enforcement  of  the  same  rates  for  like  service  on  all  roads,  would 
have  any  other  effect  than  to  draw  business  from  the  wealcer  roads  and 
give  it  to  the  stronger  ones,  regardless  of  their  location  in  this  country 
or  in  Canada.  At  present  there  is  no  law  prohibiting  any  road  making 
as  low  rates  as  it  j)leases,  if  it  otherwise  complies  with  the  interstate 
commerce  law.  There  can  be  no  prohibition  of  differential  rates  unless 
the  Government  prescribes  the  rates  aud  makes  them  alike  for  like 
service  on  all  roads,  American  and  Canadian. 

The  Chairman.  When  the  Canadian  Pacific  completes  its  eastern 
connections  it  will  be  a  pretty  strong  competitor  with  the  Grand  Trunk, 
will  it  not  ? 

Mr.  Fink.  With  all  the  trunk  lines. 

The  Chairman.  In  doing  business  in  New  England  and  in  the  West? 

Mr.  Fink.  Yes;  with  all  the  lines.  They  can  not  help  but  be  a  com- 
petitor of  all  the  lines,  as  they  are  all  so  closely  connected. 

The  Chairman.  Have  they  any  connection  now  with  your  organiza- 
tion? 

Mr.  Fink.  No. 

CANADIAN   CARS  IN  THE  UNITED  STATES. 

The  Chairman.  What,  in  your  judgment,  is  the  feeling  of  the  rail- 
road companies  of  the  United  States  in  regai  d  to  the  practice  of  allow- 
ing Canadian  cars  to  pass  to  and  fro  over  their  lines  ;  that  is,  do  you 
think  the  railroad  companies  of  the  United  States  would  favor  the  plan 
of  forbidding  Canadian  cars  from  coming  beyond  the  national  bound- 
ary? 

Mr.  Fink.  The  roads  thut  now  connect  with  the  Grand  Trunk  and 
exchange  traffic  with  that  road  would  not  favor  it;  their  competitors, 
however,  might.  There  are  so  many  American  roads  exchanging  traffic 
with  the  Grand  Trunk  that  it  would  affect  the  business  of  these  roads 
and  their  patrons  very  seriously  if  the  exchange  of  cars  was  discon- 
tinued. 

The  Chairman.  What  is  the  practice  now  as  regards  American  cars 
and  Canadian  cars;  do  thej'  go  back  and  forth  interchangeably? 

Mr.  Fink.  Yes,  sir ;  they  go  back  and  forth  without  any  hindrance 
and  without  being  disturbed,  so  far  as  i  know. 

The  Chairman.  Are  there  many  Canadian  cars  in  this  country  ? 

Mr.  Fink.  1  can  not  tell  you  how  many  there  are. 

The  Chairman.  And  when  these  cars  get  into  the  United  States  what, 
becomes  of  them  ? 


THE    UNITED    STATES    AND    CANADA.  17 

Mr.  Fink.  They  are  treated  like  tlie  cars  of  any  American  connecting 
railroad. 

The  Chairman.  Are  they  taken  and  used  by  other  companies  ? 

Mr.  Fink.  Yes,  sir;  when  they  come  here  they  load  them  and  send 
back  with  freight  over  the  same  line.  That  is  the  rule  and  understand- 
ing between  the  railroads. 

The  CnAiRMAN.  So  there  is  really  no  line  between  the  United  States 
and  Canada  that  is  observed  in  the  transportation  of  cars  from  one 
country  to  the  other"? 

iMr.  Fink.  Both  countries  are  just  like  one  country,  except,  I  suppose, 
there  are  certain  custom-house  regulations  which  have  to  be  observed 
regarding  freight  jiassing  in  and  out  of  Canada. 

The  Chaieman.  Do  you  know  of  any  law  by  which  a  Canadian  car 
can  come  into  this  country  at  allf 

Mr.  Fink.  'No,  sir.  1  am  not  familiar  with  the  law  in  regard  to  pay- 
ing duty  on  cars  that  come  to  this  country.  I  have  never  had  any 
interest  in  it,  and  so  far  as  I  know  it  has  not  been  enforced  if  there  be 
any  such  law. 

The  Chairman.  What  do  the  railroad  men  of  the  United  States  pre- 
fer in  the  matter*?  What  is  their  wish  about  it ;  that  their  cars  shall 
go  into  Canada  and  Canadian  cars  come  here  and  be  used  promis- 
cuously ? 

My.  Fink.  I  supjjosc  that  they  are  in  favor  of  continuing  the  present 
practice  without  any  obstruction  being  put  in  the  way  of  free  inter- 
change. 

The  Chairman.  The  roads  of  which  country  have  the  larger  number 
of  cars? 

Mr  Fink.  Of  course  the  American  roads  have  more  cars  than  the 
Canadian  roads. 

The  Chairman.  Does  this  country  have  more  cars  in  Canada  than 
Canada  has  in  this  country,  or  how  is  that? 

Mr.  Fink.  I  can  not  tell"  you,  but  perhaps  the  Grand  Trunk  people 
can  ;  they,  no  doubt,  keep  the  statistics. 

The  Chairman.  What  is  the  rate  per  mile  for  the  use  of  cars? 

Mr.  Fink.  Three  quarters  of  a  cent  a  mile  for  the  ordinary  freight 
cars  and  1  cent  a  mile  lor  refrigerator  cars. 

The  Chairman.  1  suppose  you  are  in  favor  of  requiring  the  Canadian 
roads,  if  they  do  business  in  the  United  States,  to  obey  the  law  of  the 
United  States,  like  our  own  roads'? 

Mr.  Fink.  Most  certainly. 

The  Chairman.  What  is  the  feeling  of  the  representative  men  of 
these  olher  American  trunk  lines'?  I  believe  you  indicated  that  the 
Grank  Trunk  was  getting  the  advantage. 

Mr.  Fink.  Yes,  sir;  !hat  is  the  feeling  of  a  great  many;  especially 
of  the  Western  direct  comi)etitors  of  the  Grand  Trunk.  Its  Chicago 
compelitois  maintain  that  the  Grand  Trunk  gets  more  of  the  traffic  than 
it  ought  to  have. 

Senator  JiEAGAN.  Could  they  not  correct  that  by  reducing  the  diller- 
ential  ? 

Mr.  Fink.  The  Grand  Trunk  has  no  differential  on  east-bound  busi- 
ness. Pooling,  that  is,  an  agreement  to  restrict  each  road  1o  a  certain 
amount  of  business,  would  be  the  propter  remedy. 

Senator  Reagan.  You  may  call  it  ])ooling  or  allowing  ditterentials; 
but  I  say  by  reducing  the  advantage,  can  they  not  correct  that  ? 

Mr.  Fink.  It  is  very  diilicult  to  accomjjlish  it  by  differentials.     Pool- 
ing w'ould  be  a  much  more  direct  method. 
054:3 2 


18  TRANSPORTATION    INTERESTS    OP 

Senator  Eeagan.  If  tbe  Aiuoricaii  lines  arc  forbidden  to  charge  a 
lower  rate  for  a  lonji:er  than  a  shorter  haul  over  their  routes,  then  the 
Canadian  lines  should  be  required  to  do  the  same  thing,  should  they 
not?  What  I  mean  is  this:  If  we  require  the  American  roads  to  ob- 
serve what  we  call  the  long  and  short  haul  provision  in  the  interstate 
act,  there  ought  to  be  some  means  by  which  the  Canadian  roads  which 
do  that  business  in  the  United  States  should  be  required  to  do  the  same 
thing  as  our  roads  are  required  to  do,  should  thei-e  not? 

Mr.  TiNK.  By  all  means. 

Senator  IIiscock.  Let  me  understand  you.  I  do  not  understand 
that  these  dillerential  rates  interfere  with  that  in  any  way. 

]\Jr.  Fink.  Xo,  sir;  they  have  no  connection  with  the  long  and  short 
haul  requirement.    • 

The  Chairman.  We  will  probably  hear  from  railroad  men  before  we 
get  through  with  this  investigation,  that  under  the  operation  of  the 
long  and  short  haul  provision  of  the  interstate  act  the  Canadian  roads 
get  an  advantage  in  some  way.  I  do  not  know  whether  we  will  or  not, 
but  am  inclined  to  think  we  will. 

Mr.  Fink.  They  have  an  advantage  only  in  so  far  as  they  need  not 
observe  the  law  in  Canada.  The  Canadian  roads  can  make  low  rates 
in  competition  with  the  American  roads,  and  need  not  reduce  their 
local  rates  under  the  long  and  short  haul  clause,  while  the  low  com- 
petitive rates  on  American  roads  force  a  reduction  in  rates  on  all  local 
traffic. 

The  Chairman.  Has  your  attention  been  directed  to  the  recent  large 
diversion  of  traffic  from  the  New  England  States  and  New  York  City 
over  the  Ontario  and  Western  road  to  Prescott,  Canada,  thence  over  the 
Canadian  Pacific  and  the  Canadian  Steam-ship  Lines  to  Vancouver,  to 
China,  and  Japan"?  It  appears  from  reports  of  the  Chief  of  the  I3u- 
reau  of  Statistics  at  Washington  that  this  consists  chiefly  of  cotton 
goods.  Do  you  know  whether  the  goods  from  New  York  and  New  Eng- 
land are  carried  through  and  strike  the  Canadian  Line  and  then  go  on 
the  Canadian  Pacific,  thence  to  China  and  Japan,  on  their  line  of 
steamers  I 

Mr.  Fink.  I  have  not  seen  these  reports. 

The  Chairman.  It  is  reported  that  New  England  goods  go  over  that 
line  very  largely. 

Mr.  Fink.  The  Ontario  and  Western  does  not  get  a  large  amount  of 
business  from  New  York  via  the  Canadian  Pacific.  No  doubt  that  busi- 
ness will  increase  hereafter.  At  present  the  Canadian  Pacific  competition 
is  not  felt  in  New  York.  In  New  England  I  have  not  heard  any  com- 
plaints that  that  road  has  taken  any  undue  amount  of  business  so  far. 

The  Chairman.  Have  you  any  general  knowledge  of  the  business  of 
the  Canadian  Pacific  in  its  shipments  into  our  markets? 

Mr.  Fink.  I  know  very  little  about  it.  I  have  no  business  relations 
with  them. 

The  Chairman.  Do  you  think  that  this  amount  of  traffic  that  the 
Grand  Trunk  road  has  been  getting,  according  to  your  statement,  would 
be  got  by  them  if  they  actually  observed  the  interstate  act,  and  sim- 
ply relied  upon  the  differential  that  you  agreed  upon  ? 

THE  policy   of  THE   GRAND  TRUNK. 

Mr.  Fink.  The  Grand  Trunk  has  recently,  within  the  last  two  or  three 
months,  got  a  large  amount  of  business ;  but  I  could  not  say  that  it  was 
because  of  a  violation  of  the  interstate  law,  nor  could  I  tell  by  what 


THE  UNITED  STATES  AND  CANADA.  19' 

means  they  obtained  this  nndue  amount.  Until  recently  the  amount  of 
business  carried  by  the  Grand  Trunk  after  the  enactment  of  the  inter- 
state law  did  not  materially  differ  from  that  carried  before.  There  are 
a  great  many  ways  in  which  this  recent  increase  might  be  accounted 
for,  but  I  could  not  speak  positively  on  that  subject.  So  far  as  my  inter- 
course with  the  Grand  Trunk  is  concerned,  it  conforms  to  our  rules  and 
tariffs  about  as  well  as  other  roads  do.  I  believe  the  Grand  Trunk  is  a 
little  more  aggresive  (to  use  a  mild  term)  in  securing  business  and  tak- 
ing every  advantage  they  can.  I  think  they  have  been  more  conserva- 
tive since  the  interstate  law  has  been  in  effect.  They  do  not  want  to 
be  disturbers,  and  I  thiuk  they  have  sense  enough  to  know  that  if  they 
get  too  much  business  the  American  lines  will  not  stand  it.  The  Grand 
Trunk  will  go  for  all  that  is  within  reach,  but  at  the  same  time  they  will 
not  do  anything  that  will  cause  a  disruption.  That  is  the  policy  they 
pursue,  and  that  is  the  policy  of  most  roads. 

WHAT  DIFFERENTIAL  RATES  ARE. 

Senator  Blair.  Will  you  not  explain  to  me,  assuming  that  I  do  not 
understand  them,  and  the  sixty  or  sixty-five  million  i)eople  in  this 
country  do  not  understand  any  more  about  them  than  I  do,  what  you 
mean  by  "differential  rates"? 

Mr.  Fink.  "  Diflerential  rates"  is  perhaps  not  a  proi)er  expression. 
What  is  meant  by  it  is  a  difference  in  the  rates  charged  by  the  differ- 
ent lines  between  the  same  competitive  points.  For  example,  the  reg- 
ular tariff"  rate  from  New  York  to  Chicago  is  75  cents  on  first-class 
freight.  This  rate  is  charged  by  the  New  York  Central,  the  Pennsyl- 
vania, and  the  Baltimore  and  Ohio  Eailroads.  By  agreement  the  rate 
charged  by  the  Erie,  the  Lackawanna,  the  West  Shore,  the  Ontario  and 
Western,  and  the  Lehigh  Valley  Railroads,  on  the  same  class  of  freight 
between  the  same  points  is  70  cents  per  hundred  pounds.  The  70-cent 
rate  is  called  a  difierential  rate;  and  the  difference  between  70  and  75 
cents,  namely  5  cents,  is  called  a  "differential." 

Senator  Blair.  As  1  understand  you,  the  inferior  road  is  permitted. 
to  charge  the  cheai)er  rate"? 

Mr.  Fink.  Y'es. 

Senator  Blair.  And  all  the  roads  agree  to  that  1 

Mr.  Fink.  Yes,  sir;  all  the  roads  consent  to  that,  or  if  they  do  not 
they  may  meet;  the  lower  rate. 

Senator  Blair.  What  do  you  mean  by  meeting  it? 

Mr.  Fink.  By  meeting  it  I  mean  to  make  the  same  lower  rate,  and 
then  it  is  likely  that  the  other  road  will  make  a  further  reduction. 

Senator  Blair.  That  is,  the  inferior  road  may  drop  again  1 

Mr.  Fink.  Yes,  and  then  the  others  may  drop  again,  and  that  leads 
to  rate  wars. 

Senator  Blair.  Now,  according  to  this,  it  is  arranged  so  that  the 
New  York  Central  may  charge  75  cents  and  the  Erie  may  charge  70  cents 
per  hundred  ])ounds  on  first-class  freight  from  New  York  to  Chicago? 

Mr.  Fink.  Yes. 

The  Chairman.  And  there  are  different  rates  on  different  classes  of 
freight "? 

Mr.  Fink.  Yes,  sir;  as  the  rate  grows  less  than  75  cents  the  differ- 
entials become  less. 

Senator  Blair.  Now,  these  differentials  having  been  agreed  ui)on, 
each  road  takes  its  chance  in  dealing  with  the  shipper  and  gets  what 
business  it  can. 


20  TRANSPORTATION    INTERESTS    OF 

Mr.  Fink.  Yes,  sir.  The  shipper  has  the  choice  of  siiipping  at  the 
higher  or  the  lower  rate. 

THE  PRACTICE  OF  POOLING. 

Senator  Blair.  Exijlain  tlie  former  practice,  now  discontinued,  of 
dividiiif]^  tlie  business  between  the  roads. 

^Ir.  Fink.  Formerly  an  agreeuieut  was  made  that  each  road  should 
have  a  certain  amount  of  the  total  competitive  tonnage — a  certain  per- 
centage of  it. 

Senator  Blair.  Sui)i)ose  the  shipper  would  not  send  his  Ireight  ac- 
coi'ding  to  that  agreement? 

Mr.  Fink.  The  shipper  had  nothing  to  do  with  it.  If  at  the  end  of 
the  month  one  road  had  received  a  greater  i)roportion  than  agreed  upon, 
it  would  pay  over  a  certain  ainount  of  money  equal  to  the  i)rofit  on  the 
excess  of  tonnage  it  had  carried  to  the  roads  which  had  not  carried 
their  proportion.     The  public  had  nothing  to  do  with  this  matter. 

Senator  Blair.  And  that  is  pooling  "? 

Mr.  Fink.  That  is  called  pooling,  unfortunately. 

Senator  Blair.  What  should  it  be  called  1 

Mr.  Fink.  "Division  of  traffic"  would  be  the  proper  term.  It  is 
sim])ly  an  agreement  by  which  each  company  limits  itself  to  carry  a 
certain  amount  of  competitive  traffic.  If  it  carries  more  than  that 
amount,  it  agrees  to  i)ay  over  the  net  earnings  which  it  has  made  on  the 
excess  to  the  roads  which  have  not  secured  the  agreed  share.  The  ob- 
ject is  not  to  prevent  comi)etition,  but  to  prevent  the  strife  between  com- 
peting railroad  companies  to  secure  an  indefinite  amount  of  traffic  by 
means  of  rate  cutting,  rebates,  and  other  secret  devices. 

Senator  Blair.  Has  that  practice  of  i)ooling  any  tendency  to  in- 
crease the  cost  of  transportation  to  the  public? 

Mr.  Fink.  It  has  not  a  tendency  to  increase  the  cost  of  transporta- 
tion over  what  is  a  reasouable  conijKMisation  to  the  railroad  comi)anies. 
It  has  the  tendency  and  the  object  of  preventing  unreasonably  low  rates. 
It  has  no  more  tendency  to  increase  the  cost  of  transi)ortation  than  the 
interstate  law  has,  because  the  interstate  law  requires  the  maintenance 
of  the  tariffs  established  by  the  railroads,  and  forbids  the  payment  of 
rebates  and  other  devices  which  are  the  sourceof  unjust  discrimination. 
The  railroads  are  now  making  their  tariffs  just  as  they  did  before  the 
interstate  law  was  passed,  which  requires  that  these  tariffs  shall  be 
strictly  maintained.  The  pool  had  the  same  effect;  but  it  was  a  more 
direct  method  of  carrying  out  the  object  of  the  law,  and  I  am  sorry  that 
we  are  deprived  of  it,  for  it  leads  to  a  great  many  difficulties,  of  which 
tliis  Canadian  conji)etitioii  is  an  example.  If  the  Grand  Truidv  roads 
were  in  a  i)ool  with  the  American  roads,  or  if  the  Canadian  roads  were, 
we  might  do  away  with  this  quarreling  about  getting  more  or  less  busi- 
ness. 

Senator  Blair.  How  can  there  be  competition  among  these  various 
railroads  in  the  transaction  of  the  business  of  the  country  when  they 
agree  among  thems(ilves  what  shall  be  charged  for  it? 

Mr.  Fink.  The  railroads  agree  among  themselves  what  the  tariffs 
shall  be;  they  take  into  consideration  all  the  elements  of  competition, 
such  as  water  competition,  and  competition  between  the  different  mar- 
kets ;  they  take  into  consideration  all  the  conditions  of  trade  and  com- 
merce before  they  establish  the  tariff".  When  the  tariff'  is  once  properly 
established,  then  it  is  in  the  interest  of  the  railroads  and  in  the  interest 
of  the  public  to  have  these  tariffs  strictly  maintained.    In  fact,  the  ia- 


THE  UNITED  STATES  AND  CANADA.  2t 

terstate  law  provides  that  this  shall  be  done.  The  tariffs  of  the  rail- 
roads in  this  country  are  subject  to  limitations.  There  is  no  longer  any 
danger  that  unreasonable  raies  may  bo  charged.  The  difficulty  now  is 
for  the  railroads  to  secure  a  reasonable  remuneration  for  their  services. 

The  Chairman.  Your  idea  is  that  the  railroads  are  forced  down  to 
a  ])oint  below  what  ought  to  be  charged  in  the  making  of  these  agree- 
ments as  to  prices  f 

Mr.  Fink.  There  is  scarcely  an  article  transported  over  the  rail- 
roads of  the  United  States  on  which  the  charges  for  trans[)ortati()n  are 
not  limited  by  competition.  The  officers  charged  with  making  the 
tariffs  have  to  consider  all  these  conditions. 

INCREASE   OF   TRAFFIC   ON   THE   GRAND   TRUNK. 

Senator  Blair.  The  witness  says  that  he  understands  there  is  a  great 
increase  in  the  volume  of  business  going  over  ;.ae  Grand  Trunk,  and  tells 
us  there  are  various  ways  of  accounting  for  it.  I  would  like  to  get  your 
idea,  Mr.  Fink,  of  how  to  account  for  this  recent  extraordinary  increase 
in  their  business. 

Mr.  Fink.  I  can  not  account  for  it.  I  have  no  evidence  that  the 
Grand  Trunk  has  manipulated  the  rates,  although  it  is  thought  by 
others  that  they  have  taken  some  advantages.  They  have  lately  done 
a  larger  amount  of  business  than  is  rheir  usual  share. 

Senator  Blair.  I  thought  you  had  some  theory  of  explanation. 

Mr.  Fink.  There  are  so  many  elements  that  control  this  matter  that  if 
would  be  very  difficult  to  explain  it. 

Senator  Blair.  Can  you  not  suggest  something  ?  If  you  do  not  know, 
how  are  we  going  to  find  out  ? 

Mr.  Fink.  I  suppose  that  the  Grand  Trunk  people  know  best. 

At  1.30  o'clock  the  committee  took  a  recess  until  2  o'clock. 

At  the  ex])iration  of  the  recess  the  committee  resumed  its  session. 

Senator  Blair.  I  wanted  to  get  a  suggestion,  Mr.  Fink,  from  some 
source,  and  I  thought  if  went  to  the  liighest  authority  we  could  get 
it  (if  it  were  to  be  had  anywhere),  by  way  of  explanation  of  this  fact 
that  we  hear  of  and  see  in  the  newspapers.  It  seems  to  be  conceded 
that  the  Grand  Trunk  is  all  at  once  getting  a  vast  amount  of  freight 
that  it  did  not  get  heretofore.  Perhaps  you  can  state  the  explanations 
which  the  otticials  of  these  other  roads  make,  or  the  suggestions  which 
you  have  heard  them  advance  for  losing  this  traffic,  and  the  reasons  or 
supposed  reasons  why  the  Grand  Trunk  gets  it. 

Mr.  Fink.  It  would  be  better  to  examine  some  of  the  rejn-esentatives 
of  these  roads  on  this  subject.  The  Lake  Shore  and  Michigan  Central 
roads  come  more  directly  in  contact  with  the  Grand  Trunk,  and  1  sup- 
pose the  officials  of  those  roads  would  have  their  theories  about  it,  and 
I  prefer  that  you  ask  them  in  refr^rence  to  it.  It  is  a  matter  that  I  can 
hardly  exjjlain.  1  only  know  the  iact  that  they  are  getting  more  busi- 
ness than  it  is  claimed  they  are  entitled  to.  One  side  claims  that  they 
do  it  by  taking  some  sort  of  advantage  of  the  interstate  act.  I  have  tio 
evidence  showing  this  fact,  but  the  supicion  is  entertained  by  the  com- 
petitors of  the  Grand  Trunk.  The  Grand  Trunk  people  claim  that  it  is 
due  to  Iheir  su])erior  facilities.  If  you  will  examine  the  officials  of  the 
Western  roads  that  come  in  direct  contact  with  the  (riand  Trunk  you 
will  find  out  more  with  regard  to  this  matter  than  1  can  tell  you,  and  I 
prefer  not  to  express  any  views  on  the  subject.    In  the  matter  of  export 


22  TEANSPORTATION   INTERESTS   OP 

bu.siness  they  may  have  some  advantage  over  the  American  trunk 
lines. 

Senator  liLAiR.  In  what  way  ? 

Mt.  Fink.  They  have  special  arrangements  with  steam-ship  lines  via 
Portland,  which  enable  them  to  make  lower  through  rates. 

Senator  Blair.  Would  you  consider  an  American  line  of  railroad 
which  owns  a  steam  ship  line  subject  to  the  interstate  law  in  the  mak- 
ing of  the  rate  on  the  ocean  as  well  as  on  land  ? 

Mr.  Fink.  I  would  consider  it  in  the  same  position  as  the  Grand 
Trunk  Line. 

Senator  Blair.  And  you  would  not  consider  the  ocean,  part  of  its 
rate  as  subject  to  the  interstate  law  "? 

Mr.  Fink.  I  do  not  see  how  it  is  j)ossible. 

Senator  Blair.  Then  all  these  roads  could  entirely  evade  the  opera- 
tion of  the  interstate  law,  so  far  as  foreign  traffic  is  concerned,  by 
making  contracts  with  stoam-ship  lines,  could  they  not? 

Mr.  Fink.  Yes ;  they  can  quote  through  rates  to  foreign  ports  that 
are  not  under  the  control  of  the  interstate  law.  If  a  railroad  company 
owns  a  steam-ship'line  and  makes  a  through  rate,  say  from  Chicago  to 
Liverpool,  it  can  divide  that  through  rate  in  such  a  way  as  to  allow  for 
the  land  carriage  to  the  ])Oint  of  export  any  fixed  sum,  say  the  domes- 
tic rate,  and  take  a  loss  rate  than  the  current  ocean  rate  for  the  ocean 
carriage.  A  railroad  company  owning  a  steam-ship  line  can  therefore 
comply  with  the  interstate  law  and  yet  get  an  advantage  over  its  com- 
petitors who  control  no  steam-ship  line  and  have  to  adhere  to  a  fixed 
rule,  making  the  through  rate  the  sum  of  the  domestic  inland  rate  plus 
the  current  ocean  rate. 

LEGISLATIYE  EEGULATION. 

Senator  Blair.  Do  yon  think  that  there  is  any  complication  or  any 
diflSculty  existing  between  the  transportation  interests  of  this  country 
and  those  of  Canada  which  can  be  reached  and  regulated  by  legislation  ? 

Mr.  Fink.  I  do  not  think  that  you  can  regulate  anything  in  Canada 
by  American  legislation.  It  seems  to  me  self-evident  that  you  can  not 
control  Canadian  transportation  by  American  legislation. 

Senator  Blatr.  What  if  the  Chicago  connection  of  the  Grand  Trunk 
were  destroyed  unless  the  Grand  Trunk  agreed  to  follow  the  require- 
ments of  the  interstate  act  f 

]Mr.  Fink.  You  could  do  that,  but  it  would  hurt  the  American  con- 
necting roads  of  the  Grand  Trunk  as  much  as  it  would  hurt  the  Grand 
Trunk,  and  it  would  also  be  injurious  to  American  .shi[)pers. 

Senator  Blair.  Suppose  that  the  law  sliould  be  made  so  that  no 
traffic  should  be  delivere  1  across  the  border  to  the  Grank  Trunk  road 
unless  upon  condition  of  full  and  faithful  coini)liance  with  the  require- 
ments of  the  interstate  law?    That  might  be  done,  might  it  not  ? 

Mr.  Fink.  You  could  make  such  a  law,  but  I  do  not  see  how  you 
could  enforce  it. 

Senator  Blair.  Could  not  the  traffic  be  sent  and  received  without 
the  co-operation  of  the  Grand  Trunk? 

Mr.  Fink.  Some  of  the  traffic  could  be  reached  without  the  co-opera- 
tion of  the  Grand  Trunk,  but  the  American  roads  now  interchanging 
traffic  with  the  Grand  Trunk  would  also  be  excluded  from  it.  I  think, 
however,  the  Grand  Trunk  would  eomply  with  the  law.  If  they  were 
prohibited  from  doing  any  business  in  the  United  States  unless  they 
complied  with  the  law  in  Canada,  they  w  ould  carry  out  the  law. 


THE   UNITED    STATES    AND   CANADA.  23 

Senator  Blaib.  As  I  judge  from  this  map,  all  communications,  with 
the  exception  of  the  Canadian  Pacific,  which  passes  by  its  regular  line 
to  the  north  of  the  lakes,  and  all  the  railroads  between  the  Canadian 
Pacific  line  by  way  of  North  Bay  and  along  the  north  of  Lake  Huron  and 
on  the  south  of  Lake  Superior  to  Duluth,  and  all  the  Canadian  lines 
between  that  and  Lake  Erie,  are  owned  and  the  entire  transportation 
through  Canada  is  controlled  by  the  Grand  Trunk  and  its  branches. 
Is  not  that  so  ? 

Mr.  Fink.  No  ;  there  are  other  lines.  The  Canada  Southern  road 
passes  through  Canada  and  is  leased  by  an  American  road. 

Senator  Blair.  Is  that  north  of  Lake  Erie  ? 

Mr.  Fink.  It  i^asses  through  Ontario  from  Detroit  to  Buffalo. 

Senator  Blair.  They  are  all  put  down  here  on  this  map  as  the  Grand 
Trunk  system. 

Mr.  Fink.  The  mai)  which  you  refer  to  does  not  show  the  other  com- 
peting lines. 

Senator  Blair.  What  routes  have  connection  with  this  Canada 
Southern  line  ? 

Mr.  Fink.  The  Michigan  Central  has  leased  it,  and  it  forms  part  of  its 
line  from  Chicago  to  Buffalo. 

Senator  Blair.  Does  it  do  business  in  competition  with  the  Grand 
Trunk  ? 

Mr.  Fink.  Yes;  if  you  shut  out  the  Grand  Trunk  you  will  have  to 
shut  out  the  Canada  Southern. 

Senator  Gorman.  Would  the  enforcement  of  the  interstate  law — I 
mean  if  it  were  rigidly  enforced — on  our  American  roads,  and  a  strict 
compliance  with  the  interstate  law  be  required  on  the  part  of  the  Cana- 
dian roads,  correct  the  difficulties  now  complained  of?  But  I  under- 
stand you  to  say  that  bcause  of  the  contracts  now  existing  between 
our  American  roads  and  the  Grand 'Trunk  there  is  no  serious  interfer- 
ence with  the  traffic  over  American  roads  up  to  this  time? 

THE  SITUATION  AS  TO  THE  GRAND  TRUNK. 

Mr.  Fink.  Referring  to  the  Grand  Trunk  Railroad,  that  road  has 
been  working  with  the  other  trunk  lines  under  agreements  as  to  rates, 
etc.  It  has  observed  the  agreements  as  well  as  other  trunk  lines.  They 
try  to  work  with  us  in  the  establishment  and  maintenance  of  tariffs. 

Senator  Gorman.  That  has  been  brought  about  by  the  concessions 
made  by  the  American  roads  by  giving  the  Grand  Trunk  a  differential 
on  the  westbound  traffic,  has  it  not? 

Mr.  Fink.  Differential  rates  are  used  to  keep  the  peace  between  Amer- 
ican as  well  as  between  American  and  Canadian  roads.  Those  differ- 
entials were  in  force  many  years  before  there  was  any  organized  system 
of  co-operation.    They  were  in  force  as  early  as  1870. 

Senator  Gorman.  So  long  as  you  have  peace  I  understand  you  to 
say  there  is  no  danger  of  trouble  on  account  of  competition  between  the 
Grand  Trunk  and  the  American  roads;  but  suppose  you  are  at  war 
(which  is  not  at  all  unlikely  with  railroads  at  any  time  on  each  side  of 
the  line)  with  the  long  and  sliort  haul  clause  in  force,  and  they  free  on 
the  other  side  to  charge  what  they  please,  what  advantage,  if  any,  have 
we  under  that  condition  of  affairs? 

Mr.  Fink.  We  would  suffer  more  comparatively  than  the  Grand 
Trunk. 

Senator  Gorman.  Would  it  amount  to  much? 

Mr.  Fink.  The  long  and  short  haul  clause  requiring  the  local  rates 


24  TRANSPORTATION  INTERESTS  OF 

to  conform  to  the  throup^h  rates,  makes  a  very  serious  inroad  into  the 
revenues  of  tbe  companies  in  case  of  a  rate  war,  while  the  Canadian 
roads  could  Iceep  up  their  local  rates. 

Senato-r  Gorman.  So  tliat  you  think  the  safety  of  our  lines  depends 
very  largely  u])on  making  the  Canadian  roads  conform  to  the  same 
conditions  all  the  way  tlirough,  especially  as  to  tlui  Grand  Trunk  ? 

JMr.  Fink.  I  do.  1  think  it  is  altogether  a  voluntary  tiling  with  the 
Grand  Trunk  to  obey  the  law  or  not.  It  is  a  matter  of  policy  with 
them.  I  think  their  policy  is  to  obey  it.  I  think  they  find  that  this  is 
the  wisest  and  most  i)rotitable  course;  but  it  is  voluntary  with  them. 
I  do  not  think  we  can  enforce  the  law  upon  them. 

Senator  Gorman.  Do  you  think  the  conditions  that  might  be  en- 
forced with  resi)ect  to  the  insi)ection  of  cars  are  sufficient  to  keep  the 
Grand  Trunk  in  line  with  our  roads  I 

Mr.  Fink.  1  think  the  expectation  that  you  may  take  that  course  is 
a  strong  element  in  their  trying  to  obey  the  law. 

Senator  Gorman.  Is  not  that  the  only  hold  you  have  upon  them  ? 

Mr.  Fink.  No;  I  think  they  have  always  shown  a  disposition  toco- 
operate  under  the  general  principles  on  which  the  trunk  lines  cooper- 
ate.  They  have  always  been  a  party  to  that  agreement.  I  think  they 
understand  it,  and  feel  that  that  is  the  only  way  they  can  manage  their 
property  properly.  They  are  very  much  opposed  to  war  and  low  rates. 
Their  existence  depends  on  getting  something  for  the  work  they  do. 
They  can  not  affoixl  to  go  to  war. 

Senator  Gorman.  So  you  do  not  apprehend  any  trouble  with  the 
Grand  Trunk  ? 

Mr.  Fink.  No,  sir;  no  more  than  with  American  roads. 

THE  situation  AS  TO  THE   CANADIAN  PACIFIC. 

Senator  Gorman.  Now  we  come  to  the  other  road,  the  Canadian  Pa- 
cific, which  begins  at  Puget  Sound  and  runs  through  Canada  and 
reaches  Halifax  without  coming  through  any  part  of  our  territory. 
The  statement  is  made  that  it  is  a  road  which  is  practically  built  up  by 
public  money — a  subsidized  road — and  statements  have  been  published 
that  they  are  already  taking  through  freight  from  Cheyenne  and  else- 
where and  delivering  it  at  Liverpool  at  a  rate  with  which  our  roads  can 
not  compete.     Can  you  tell  us  something  about  that  I 

Mr.  Fink.  I  can  only  speak  in  a  general  way  of  the  Canadian  Pa- 
cific. So  far  it  has  not  been  felt  seriously,  l)ut  it  has  the  power  of  dis- 
turbing the  whole  American  system,  and  in  a  measure  reducing  the 
profit  and  the  income  of  the  American  railroad  s.'vstem.  It  can  do  a 
great  deal  of  harm,  but  I  cannot  say  whether  it  will  do  it  or  not.  There 
is  less  restraint  upon  the  Canadian  Pacific  than  upon  the  Grand  Trunk. 
They  are  almost  altogether  in  Canadian  territory  and  have  a  long  line 
tapping  the  American  railroads  at  many  points,  and  can  be  an  element 
of  great  disturbance  in  American  railroad  operations.  They  have  per- 
hai)S  not  the  same  reason  to  be  conservative  as  the  Grand  Trunk.  The 
Canadian  Pacific  was  created  by  the  Canadian  Government,  in  a  great 
measure,  and  they  can  better  afford  to  fight  than  can  the  Grand  Trunk. 
I  do  not  say  that  that  would  be  their  policy,  but'wc  have  less  control 
over  them  by  agreements  than  we  have  over  the  Grand  Trunk. 

Senator  Gorman.  Assuming  that  the  statements  are  true  to  which 
your  attention  has  been  called,  that  they  have  a  line  of  steamships  sub- 
sidized coming  to  Canadian  territory  at  Halifax  in  connection  with  the 
rail  line,  and,  as  I  understand,  a  trip  of  two  days  less  time  is  made  by 
this  rail  and  steam-ship  line  between  Liverpool  and  Japan  or  China  than 


THE    UNITED    STATES    AND    CANADA.  25 

by  any  other  rail-aDtl-water  route,  and  they  are  without  any  restric- 
tions whatever,  such  as  are  imposed  upon  our  raih-oads,  with  those  con- 
ditions in  view,  if  they  are  leit  free  to  act  as  they  please,  woukl  it  not 
be  equivalent  to  a  monopolization  of  the  entire  through  traftic? 

Mr.  Fink.  I  think  it  would  have  tliat  effect.  I  can  illustrate  it  by  a 
single  fact.  We  have  heretofore  made  very  low  rates  on  tea  from  China 
and  the  Eastern  countries — import  rates — in  competition  with  the  Suez 
Canal,  bringing  the  freight  by  way  of  San  Francisco.  If  the  Americau 
roads  carry  out  the  interstate  law,  or  carry  out  the  orders  of  the  Inter- 
state Commerce  Commission,  which  require  that  all  import  business 
must  pay  the  same  rate  as  the  local  rate  from  the  port  of  import,  the 
Asiatic  trahic  in  competition  with  the  Suez  Canal  is  ruled  out  and  goes 
to  the  Canadian  Pacific,  and  that  is  why  I  remarked  some  time  ago 
that  the  Commission  ought  to  have  discretion  to  vary  the  cast-iron  rule 
so  as  to  allow  the  railroads  to  adapt  themselves  to  the  various  condi- 
tions of  competition  that  may  exist. 

To  illustrate:  Under  the  law  the  Americau  roads,  particularly  the 
Pacific  routes,  would  be  shut  out  of  the  whole  Asiatic  business,  and  it 
would  be  concentrated  on  the  Canadian  Pacific  roads,  with  the  facili- 
ties and  subsidies  they  have  in  establishing  a  through  route  between 
China  and  Japan  and  Liverpool.  We  are  not  left  free — and  I  believe  I 
made  this  argument  before  the  Congressioiml  committee  when  it  first 
had  the  present  law  under  consideration — we  are  not  left  free  to  com- 
pete with  these  roads.  If  we  enforce  the  strict  letter  of  the  law  we  are 
at  a  disadvantage  with  the  Canadian  roads,  except  in  so  far  as  they  are 
willing  and  find  it  to  their  interest  to  voluntarily  submit  to  the  restric- 
tions put  upon  us. 

Senator  Gorman.  You  mean  by  that,  I  suppose,  that  they  would  act 
in  harmony  with  the  American  roads  ? 

Mr.  Fink.  That  they  would  restrict  themselves  in  not  taking  advan- 
tage of  their  position,  which  they  could  do  under  the  interstate  law,  to 
secure  privileges  that  the  American  roads  could  not  secure. 

Senator  Gorman.  In  other  words,  they  require  you  to  give  them 
freight  that  ordinarily  and  naturally  would  go  over  the  American  roads  "? 

Mr.  Fink.  I  could  not  say  that.  They  would  not  ask  anything  more 
than  was  legitimate,  I  should  think.  Understand  they  have  to  work 
with  the  American  roads  in  order  to  secure  remunerative  rates  for  them- 
selves. They  fintl  that  to  be  to  their  interest.  Any  advantage  they 
take  will  naturally  be  resented  and  followed  by  a  rate  war. 

Senator  Gorman.  That  does  not  apply  with  the  same  force  to  the 
Canadian  Pacific  as  it  does  to  the  Grand  Trunk,  does  it "? 

Mr.  Fink.  Yes,  sir;  it  applies  to  both,  but  at  present,  ])erhaps, more 
to  the  Grand  Trunk.  The  Grand  Trunk  knows  that  it  needs  the  co-op- 
eration of  the  American  roads  to  get  business  at  remunerative  rates, 
and  has  to  co-operate  with  them  no  matter  whether  there  is  or  is  not 
an  interstate  law. 

Senator  Gorman.  So  that  in  your  opinion,  as  I  understand  you,  it  is 
absolutely  necessary  that  by  some  negotiation  or  otherwise  these  Can- 
adian roads  should  come  under  the  same  restrictions  that  are  placed 
upon  our  own  roads,  or  else  our  iron  rule  is  to  be  relaxed  and  the  rules 
ffeft  free  to  meet  these  complications  ? 

Mr.  FtNK.  Yes,  sir. 

THE   CANADIAN  WATER  WAYS. 

Senator  Gorman.  The  other  branch  of  this  resolution  refers  to  the 
competition  by  water.     How  sharp  and  what  effect  has  the  competitioa 


26  TRANSPORTATION   INTERESTS   OP 

by  water  at  various  points,  by  lake  and  by  canal,  with  the  American 
roads  ? 

Mr.  Fink.  You  mean  the  Canadian  system  of  water-ways  ? 

Senator  Gorman.  Yes. 

Mr.  Fink.  I  am  not  posted  as  to  that,  excei)t  in  a  general  way.  I  can 
not  tell  you  the  effect  of  it,  as  I  have  not  the  statistics  of  the  tonnage. 
I  think  3'ou  will  have  to  get  your  information  on  that  subject  from  some 
other  source. 

Senator  Gorman.  Then,  that  is  a  matter  that  does  not  come  under 
your  supervision  ? 

Mr.  Fink.  No,  sir. 

Senator  Gorman.  In  fixing  your  rates  on  grain  on  through  shipments 
from  Chicago  to  Liverpool,  by  rail  from  Chicago  to  the  port  of  export, 
are  you  not  necessarily  during  seven  months  of  the  year  governed  by 
the  rates  fixed  by  the  Canadian  water  routes  and  the  Erie  Canal  ? 

Mr.  Fink.  Yes,  sir. 

Senator  Gorman.  How  has  it  affected  you  in  the  last  two  years  *? 
Have  you  found  that  in  their  discrimination  the  charges  have  been  so 
as  to  seriously  affect  the  American  transportation  lines  ? 

Mr.  Fink.  From  my  own  observation,  the  Canadian  competition  has 
not  been  felt.  We  feel  more  directly  the  competition  of  the  Erie  Canal. 
I  do  not  think  the  Canadian  canals  have  accomplished  what  they  were 
expected  to  when  built.  The  traffic  can  not  well  be  diverted  from  the 
old  routes.  At  least,  it  will  take  some  time  before  that  can  be  accom- 
plished. I  do  not  thiiik  there  has  been  a  new  phase  of  things  since  the 
completion  of  the  Welland  Canal. 

Senator  Gorman.  Then,  to  sum  it  up,  I  understand  your  suggestion 
is  that  as  a  remedy  for  these  difficulties  we  should  give  the  Interstate 
Commerce  Commission  power  to  permit  the  railroads  to  meet  any  ex- 
traordinary competition  on  the  part  of  the  Canadian  lines  that  may  come 
hereafter. 

Mr.  Fink.  That  would  be  one  of  the  relief  measures. 

Senator  Gorman.  Is  that  the  only  one  you  can  suggest? 

Mr.  Fink.  I  think  it  would  improve  the  situation  if  you  were  to  strike 
out  the  fifth  section  of  the  act,  and  let  us  make  arrangements  with  those 
Pacific  roads  to  keep  the  peace. 

Senator  Gorman.  Permit  you  to  pool? 

Mr.  Fink.  Yes.  Pooling  is  a  remedy  for  a  great  many  of  the  diffi- 
culties and  contentions  which  arise  between  the  railroads.  If  we  can 
agree  with  the  Canadian  roads  so  that  they  will  only  have  a  certain 
percentage  of  business,  then  all  this  talk  of  tlie  Canadian  roads  getting 
an  undue  proi)ortion  of  the  business  would  not  exist. 

CANADIAN  competition. 

Senator  Gorman.  Suppose  nothing  is  done  and  the  law  is  allowed  to 
stand  as  it  Is  today,  do  you  view  the  future  with  any  alarm,  as  far  as 
the  American  roads  are  concerned  ?  I  am  taking  into  consideration  all 
the  Canadian  roads. 

Mr.  Fink.  I  can  not  tell  what  would  be  the  effect  of  Canadian  com- 
petition if  it  were  fully  developed.  The  redeeming  feature  is  that  tjie 
Canadian  roads  have  to  co-operate  in  the  establishment  of  competitive 
tariffs  with  the  American  roads,  as  a  matter  of  self-interest.  However, 
the  situation  is  greatly  complicated,  and  we  may  have  to  pass  through 
some  rate  wars  before  we  reach  a  permanent  agreement. 

Senator  Gorman.  Then  you  have  no  very  serious  apprehensions  ot 
trouble  or  disaster  to  us  ? 


THE  UNITED  STATES  AND  CANADA  27 

Mr.  Fine:.  No  ;  I  think  the  Canadian  railroads  will  co-operate  with 
us  on  reasonable  terms  from  motives  of  self  interest. 

The  Chairman.  You  talk  about  the  Grand  Trunk  having  an  advan- 
tage over  our  roads  in  foreign  transportation,  in  the  making  of  through 
rates  to  Liverpool.  Does  not  some  of  the  advantage  that  they  get  in 
that  respect  result  from  subsidized  lines  of  steam  ships  ? 

Mr.  Fink.  The  steamers  which  run  to  Portland  in  connection  with 
the  Grand  Trunk  are  not  now  subsidized,  so  far  as  I  know. 

The  Chairman.  They  are  on  the  other  side — those  running  to  China 
and  Japan. 

Mr.  Fink.  Yes ;  those  that  run  in  connection  with  the  Canadian  Pa- 
cific are  subsidized. 

Senator  Reagan.  Did  I  understand  you  to  say  that  we  had  no  remedy 
that  you  know  of  for  the  Canadian  roads  obtaining  traffic  by  making 
lower  rates  than  our  roads  make,  except  their  voluntary  action  in  the 
matter  of  acting  in  harmony  with  our  railroads  ? 

Mr.  Fink.  I  said  they  could  observe  the  interstate  law  if  they  chose 
to,  but  that  we  could  not  enforce  it  if  they  did  not  choose  to  act  under 
it. 

Senator  Eeagan.  Are  you  aware  of  the  provision  of  our  law  author- 
izing the  withholding  of  freights  from  roads  where  they  come  into  our 
territory  and  refuse  to  comply  with  the  terms  of  our  law  "? 

Mr.  Fink.  I  take  it  for  granted  you  can  control  them  by  stopping  the 
traffic;  but  without  taking  those  extreme  measures  you  have  no  remedy, 
and  those  extreme  measures  would  hurt  American  interests  as  much  as 
Canadian. 

Senator  Reagan.  From  the  lakes  east  to  Kew  York,  Philadelphia, 
and  Baltimore  we  have  shorter  lines  on  the  southern  border  of  our  lakes 
than  the  lines  running  through  Canada,  have  we  not! 

Mr.  Fink.  The  American  lines  to  those  cities  are  shorter. 

Senator  Reagan.  And  our  railroads  run  through  a  much  more  pros- 
perous country  where  more  business  is  to  be  had,  do  they  not? 

Mr.  Fink.  Yes,  they  do 

Senator  Reagan.  Taking  all  the  commerce  passing  through  the 
Canatlian  routes  to  China  and  Japan,  and  our  roads  being  placed  at  a 
disadvantage  by  the  subsidized  steam-ship  lines  on  the  Pacific,  and  taking 
into  consideration  the  supposed  shorter  time  between  Liverpool,  for  in- 
stance, and  the  Asiatic  country,  on  the  part  of  the  Canadian  routes,  is 
the  advantage  on  their  part  as  great  as  is  popularly  supposed "?  Is  it 
a  fact  that  they  can  make  that  trip  from  Liverpool  to  Hong-Kong  in 
two  days'  less  time,  or  in  any  less  time,  than  by  coming  by  wav  of  New 
York  ? 

Mr.  Fink.  I  could  not  tell  you.  I  have  not  examined  into  that  mat- 
ter sufficiently  to  give  an  opinion.    They  have  a  shorter  ocean  route. 

Senator  Reagan.  Is  there  anything  that  would  contribute  to  equal- 
ize matters  as  between  the  Canadian  and  the  American  roads  ?  Would 
not  this  seeming  advantage  be  somewhat  nullified  by  the  fact  that  an 
absence  of  business  along  the  line  of  the  Canadian  roads  almost  all  the 
way  from  Montreal  west  to  the  Pacific  coast — I  refer  to  the  Canadian 
Pacific — would  not  the  fact  of  its  not  possessing  way  business  to  help 
to  sustain  the  road  be  an  element  in  favor  of  our  roads  securing  the 
carrying  business  across  the  continent  ? 

]\Ir.  Fink.  No,  sir;  I  think  not.  The  less  local  business  they  have 
the  stronger  they  will  fight  for  through  business. 

Senator  Reagan.  If  they  do  not  have  a  local  business  to  sustain 
them,  would  they  not  have  to  put  up  the  price  ou  the  through  traffic  to 
sustain  them  ? 


28  TRANSPORTATION   INTERESTS   OF 

]\Tr.  FiNiv.  No.  The  question  of  cost  lias  very  little  to  do  with  the 
competition  between  roads. 

Senator  Reagan.  I  speak  of  running  a  road  without  the  ordinary 
l)ro{its.  They  must  Inive  their  profits  from  somewliere,  and  if  they  can 
not  get  them  from  tlie  local  business  they  must  be  maintained  by  the 
through  business. 

Mr.  Fink.  They  may  not  get  tliem  from  either. 

Senator  Reagan.  Then  the  road  is  not  a  success  ? 

Mr.  Fink.  The  road  still  runs  after  it  has  gone  into  bafdcruptcy. 
That  is  the  worst  feature  of  railroad  competition — a  railroad  runs  all 
the  time,  and  the  poorer  it  is  the  stronger  competitor  it  may  be. 

Senator  Reagan.  Of  course,  if  they  obtain  money  outside  to  sustain 
them  they  might  keep  running  their  road. 

The  Chairman.  Suppose  they  do  not  make  money  enough  to  pay 
running  expenses,  how  then  ? 

Mr.  Fink.  That  is  hardly  possible;  they  generally  make  enough 
money  to  pay  expenses. 

Senator  Reagan.  Is  it  not  the  truth  that  a  populous  and  wealthy 
country  running  to  the  west  of  the  Mississipju  River  and  furnishing 
profit  by  its  freight  and  passenger  business  through  to  California,  will 
enable  roads  tra\'ersing  that  country  to  do  business  cheaper  than  the 
Canadian  Pacific  1 

Mr.  Fink.  The  cost  has  very  little  to  do  with  competitive  rates. 
The  freight  is  taken  at  the  rates  which  competition  makes  necessary. 

Senator  Reagan.  How  is  it  that  the  Pennsylvania  Railroad  carries 
freight  so  much  less  than  the  Western  roads  which  do  not  do  one-tentb 
of  tlie  business  the  Pennsylvania  road  does? 

Mr.  Fink.  The  Pennsylvania  Road  can  operate  cheaper  than  the 
Western  roads  because  it  has  a  larger  business  ;  but  that  does  not  influ- 
ence the  competitive  rates  over  that  road.  These  rates  are  determined 
by  competition  and  the  necesities  of  the  trade. 

Senator  IIauris.  Then  the  rates  are  made  according  to  the  competi- 
tion and  not  according  to  the  cost  of  the  plant  and  the  operating"? 

Mr.  Fink.  Practicallj^.  There  is  very  little  attention  paid  to  the  cost. 
It  is  a  question  of  competition.  Of  course  the  cost  has  some  bearing  ui:)on 
it.  Certainlj^  the  roads  do  not  want  to  carr^'  anything  below  cost,  and 
they  try  not  to  do  so,  except  in  a  rate  war,  when  they  often  take  busi- 
ness below  cost. 

Senator  Reagan.  Can  you  tell  to  what  extent  the  transportation  over 
the  Canadian  Pacific  is  obstructed  by  the  snows  of  winter,  etc.? 

I\Ir.  Fink.  They  claim  they  have  an  open  country  ;  but  this  question 
has  nothing  to  do  with  the  matter  of  competition. 

Senator  JliscocK.  As  far  as  the  Asiatic  trade  is  concerned,  the  Cana- 
dian Pacific  is  going  to  be  operated  and  will  take  that  Asiatic  trade 
whether  there  is  any  money  made  out  of  it  or  not.  Is  not  that  the 
fact? 

Mr.  Fink.  Yes,  and  perhaps  they  make  money  out  of  it.  We  take  it 
ourselves  at  a  very  low  rate. 

Senator  Reagan.  Have  you  any  map  which  shows  how  the  Cana- 
dian roads  cross  our  border  and  connect  with  our  roads  ? 

Mr.  Fink.  We  have  a  general  map,  but  it  does  not  show  anything 
more  than  these  folding  maps  you  have  before  you.  We  have  an 
atlas. 

Senator  Reagan.  You  sj)oke  of  the  Baltimore  and  Ohio  getting 
some  of  this  traflBc  from  the  Canadian  roads.  The  Baltimore  and  Ohio 
has  no  connection  with  the  Grand  Trunk,  has  it  ? 


THE  UNITED  STATES  AND  CANADA.  29 

Mr.  Fink.  It  has  not ;  but  it  has  connectiou  with  Chicago.  They 
have  a  Hue  uuder  their  coutrol  from  Baltimore  to  Chicago. 

Seuator  Keagan.  You  spoke  of  our  trunk  roads  making  an  agree- 
meut  with  the  Grand  Trunk  road  as  to  rates. 

Mr.  Fink.    Yes. 

AGREEMENTS  AS  TO  RATES. 

Senator  Eeagan.  I  do  not  understand  exactly  the  extent  and  char- 
acter of  the  agreement  that  you  refer  to  as  now  existing.  Will  you 
please  state  it  ? 

Mr.  Fink.  The  agreement  is  that  the  tariffs  of  all  roads  whose  tarifls 
are  interdependent  shall  be  established  by  mutual  agreement,  and  this 
is  done  through  the  association  to  which  the  Grand  Trunk  Eailway  Com- 
l)any  belongs.  No  changes  are  to  be  made  in  the  established  tariff's 
unless  they  are  first  submitted  to  all  the  competing  railroads  whose  tar- 
iffs are  affected  by  such  changes. 

It  is  necessary  that  this  should  be  done  in  order  that  the  tariffs  shall 
be  kept  in  line  and  that  there  shall  be  no  discrimination  between  the 
different  localities.  Thus  if  the  Grand  Trunk  were  to  change  its  tariff 
between  Boston  and  Chicago  it  would  necesitate  a  re-adjustment  of  the 
tariffs  all  over  the  country,  to  St.  Louis,  Cincinnati,  Indianapolis,  and 
nearly  all  intermediate  points.  The  agreement  therefore  is  that  the 
roads  in  the  association  shall  give  previous  notice  to  each  other  of  any 
proposed  change;  a  vote  is  taken,  and  if  that  is  not  unanimous  the 
question  may  be  submitted  to  arbitration ;  but  the  right  is  reserved  to 
each  member  of  the  association  to  make  as  low  a  tariff  as  it  sees  fit. 
The  rules  only  i:)rovide  that  previous  notice  shall  be  given  so  that  all 
the  other  companies,  of  which  there  are  about  fifty  or  sixty  in  the  terri- 
tory of  the  joint  committee,  can  adjust  their  tariffs  accordingly  and  give 
the  benefit  of  the  lower  tariff's  to  the  localities  served  by  them.  The 
same  procedure  is  followed  in  agreeing  upou  or  changing  the  classifica- 
tion. If  there  were  no  organizations  to  attend  to  this  adjustment  of 
tariff's  there  could  be  no  uniformity,  and  there  would  be  nothing  but 
chaos  and  unjust  discrimination  between  localities  and  shippers.  In 
fact,  the  intent  and  spirit  of  the  interstate  commerce  law  could  not  be 
carried  out  without  the  cooperation  of  the  railroads  in  the  manner  de- 
scribed. 

Senator  Reagan.  How  do  they  enforce  an  agreement  among  them- 
selves? 

Mr.  Fink.  We  can  not  enforce  it  except  by  mutual  consent. 

Senator  Eeagan.  Dave  they  no  arrangement  for  apportioning  the 
ainouut  of  freight  to  each  road  ? 

Mr.  Fink.  Not  now. 

Senator  Reagan.  And  no  arrangement  for  refunding  money  where  a 
road  gets  over  its  share  of  the  business  ? 

Mr.  Fink.  Not  since  you  stopped  it  on  the  first  of  April,  1887. 

Senator  Blair.  You  remember  the  date  ? 

Mr.  Fink.  I  remember  the  date. 

Senator  Heagan.  The  roads  that  you  represent  furnish  their  freight 
rates  to  the  Commission  ;  do  they  ? 

Mr.  Fink.  Yes ;  they  are  filed  with  the  Commission. 

THE   prohibition   OF  POOLING. 

Senator  Hiscock.  So  far  as  regulating  the  freight  rates  are  concerned, 
this  arrangement  of  yours  in  agreeing  upon  them  is  precisely  as  effect- 
ual as  the  pooling! 


30  TRANSPORTATION    INTERESTS    OF 

Mr.  Fink.  That  is  iudei)eii(leut  of  pooling.  An  ajjcreement  for  mak- 
ing  tariffs,  of  course,  precedes  the  pooling,  and  is  entirely  independent 
of  it.  The  object  of  pooling  is  to  maintain  the  tariffs  so  agreed  upon, 
by  removing  the  motive  lor  rate-cutting,  rebates,  etc. 

Senator  LIiscock.  Thatl  understand;  but  is  not  the  fixing  of  through 
rates  precisely  as  effectual  under  your  present  procedure  as  it  was  under 
the  pooling  arrangement  f 

Mr.  Fink.  Yes ;  and  after  we  fix  the  rates  and  file  them  with  the  Com- 
mission, the  interstate  law  provides  that  they  shall  be  maintained. 
Before  the  interstate  law  was  enacted  we  called  in  the  aid  of  the  pool 
to  sustain  the  rates. 

Senator  HiscocK.  What  1  want  to  get  at  is  this :  Pooling  was  pro- 
hibited, as  I  understand  it,  merely  because  it  wiis  supposed  that  it  was 
a  means  of  manipulating  the  rates  and  of  charging  unreasonably  high 
rates. 

Mr.  Fink.  That  was  the  public  notion. 

Senator  IIiscgck.  Now,  so  far  as  the  maintenance  of  rates  is  con- 
cerned, the  rates  are  maintained  as  effectually  as  they  ever  were,  are 
they  not  ? 

Mr.  Fink.  At  the  present  time  I  think  they  are. 

Senator  Hiscock.  So  far  as  the  vice  is  concerned — if  it  is  a  vice — of 
pooling,  and  which  it  is  aimed  to  prevent  by  prohibiting  pooling,  does 
it  not  exist  as  much  to-day  as  it  did  before  tie  act  was  passed? 

Mr.  Fink.  If  it  is  a  vice  to  maintain  the  tariffs  established  by  the 
railroads  and  filed  with  the  Commission,  then,  of  course,  the  interstate 
commerce  law  is  as  great  a  vice  as  pooling. 

Senator  Hiscock.  And  with  this  further  disadvantage,  that  you  are 
not  able,  without  pooling,  to  make  these  arrangements  with  reference 
to  the  divisions  of  traffic,  etc.,  between  the  different  railroads  or  the 
share  each  one  should  carry  ? 

Mr.  Fink.  The  evil  effect  of  preventing  pooling  is  that  it  leads  to  rate 
wars  between  competing  companies,  and  rate  wars  lead  to  unjust  dis- 
crimination, and  thus  the  effect  of  this  provision  of  the  law  is  to  make 
it  more  difficult  to  carry  out  its  intent  and  spirit. 

Senator  Hiscock.  And  the  evils  that  were  supposed  to  be  corrected 
by  prohibiting  pooling  exist  as  much  as  ever,  and  the  roads  are  shut  off 
from  doing  things  that  would  have  the  effect  of  remedying  existing 
evils  all  over  the  country? 

Mr.  Fink.  Yes,  sir. 

THE   SHORT-HAUL  CLAUSE. 

Senator  Blair.  Is  not  this  true,  that  since  the  enactment  of  the  inter- 
state law,  you  are  not  at  liberty  to  arrange  rates  and  fix  tariff's  as  you 
formerly  did  ?  That  is  to  say,  instead  of  diminishing  the  longer  rate  at 
the  expense  of  the  shorter  rate,  you  are  now  obliged  to  favor  the  local 
traffic  at  the  expense  of,  or  an  increased  charge  to,  the  longer  traffic  ; 
so  that  the  interstate  law  modifies  your  action  in  that  regard  in  making 
your  tariffs,  does  it  not  ? 

INIr.  Fink.  That  is  different  on  different  systems  of  roails.  In  the 
trunk  line  system  we  do  not  feel  it,  because  we  always  followed  the  long 
and  short  haul  principle.  The  business  is  so  large  that  whenever  the 
through  rates  are  reasonably  remunerative,  the  local  rates  can  be  fixed 
on  that  basis.  The  transcontinental  lines  and  the  Southern  lines  are 
not  in  that  position. 

Senator  Blair.  That  is,  they  have  not  the  volume  of  local  traffic? 

Mr.  Fink.  No,  sir ;  and  they  have  to  charge  higher  rates  on  local 


THE    UNITED    STATES    AND    CANADA.  31 

than  on  through  business.  They  have  to  meet  the  competition  with 
water  routes. 

Senator  Keagan.  I  believe  you  spoke  of  the  provisions  of  the  inter- 
state-commerce law  being  one  of  the  preventives  of  our  transcontinental 
roads  competing  on  equal  terms  with  the  Canadian  Pacific'? 

Mr.  Fink.  Yes,  sir. 

Senator  Eeagan.  Are  you  aware  that  the  Commission  holds  that  un- 
der that  law  they  have  a  right  to  consider,  and  do  consider,  the  cir- 
cumstances and  conditions,  and  that  if  the  circumstances  and  conditions 
are  such  as  to  justify  it  the  transcontinental  roads  may  disregard  the 
long  and  short  haul  clause ;  otherwise,  not  ? 

Mr,  Fink.  Yes ;  to  some  extent  the  Commission  recognizes  that  in 
case  of  water  competition  the  long  and  short  haul  clause  may  be  disre- 
garded. When  1  referred  to  the  Asiatic  traffic  I  had  in  mind  the  rul- 
ing of  the  Commission  that  upon  import  traffic  the  rates  charged  from 
X)Oint  of  import  to  the  interior  points  should  be  the  same  as  upon  domes- 
tic traffic.  Under  this  ruling  the  importation  and  carriage  of  Asiatic 
traffic  in  competition  with  the  Canadian  roads  would  be  impossible,  the 
Canadian  roads  not  being  restricted  by  said  ruling. 

Senator  Reagan.  You  mean  that  they  must  not  discriminate  in  favor 
of  the  Asiatic  trade,  but  put  it  on  the  general  basis. 

Mr.  Fink.  Yes. 

Senator  Eeagan.  But  still  you  recognize  that  they  do  hold  that  the 
long  and  short  haul  principle  does  not  apply  to  traffic  passing  across 
the  continent  ? 

Mr.  Fink.  That  is  true,  but  the  ruling  to  which  I  referred  as  exclud- 
ing the  Asiatic  traffic  has  nothing  to  do  with  the  long  and  short  haul 
provision.  It  was  made  in  carrying  out  the  provision  of  the  law  that 
there  shall  be  no  unjust  discrimination  between  shippers — in  this  case, 
between  import  and  domestic  traffic. 

Senator  Keagan.  All  I  desire  to  call  attention  to  is  the  fact  that  the 
Interstate  Commerce  Commission  has  already  adopted  a  principle  that 
relieves  our  roads  when  in  a  situation  similar  to  this  competition  by  the 
Canadian  Pacific. 

Mr.  Fink.  To  some  extent ;  but  so  far  the  Commission  have  confined 
themselves  to  the  recognition  of  competition  by  water  as  a  proper  cause 
for  exemption  from  the  long  and  short  haul  clause,  but  tbey  have  not 
recognized  competition  by  rail.  They  ought  to  recognize  all  competi- 
tion, whether  by  water  or  by  rail,  or  from  any  other  source. 

Senator  Eeagan.  Is  not  that  a  recognition  of  competition  by  rail 
when  they  say,  as  they  do,  that  they  would  not  regard  the  long  and  short 
haul  clause  as  binding  upon  a  road  as  to  commerce  passing  between 
the  Atlantic  and  Pacific  Oceans  ?  If  they  do  that,  then  that  modifies  the 
idea  that  the  railroads  can  not  compete  because  of  the  interstate  law. 

Mr.  Fink.  Yes;  the  long  and  short  haul  provision, as  interpreted  by 
the  Commission,  does  not  exclude  Asiatic  traffic  across  the  continent; 
but  the  ruling  of  the  Commission  that  the  railroads  shall  not  charge 
less  for  the  inland  carriage  of  import  business  from  the  i)ort  of  import 
to  destination  than  is  charged  on  domestic  business  would  prevent  the 
American  transcontinental  lines  from  carrying  Asiatic  traffic  in  compe- 
tition with  the  Canadian  lines. 

THE   trunk-line   AGREEMENTS. 

The  Chairman.  You  spoke  of  an  agreement  between  the  Grand 
Trunk  and  these  other  trunk  lines.  Are  all  the  agreements  that  were 
proposed  to  be  made  signed  by  the  Grand  Trunk,  do  you  know  ? 


32  TRANSPORTATION  INTERESTS  OP 

Mr.  Fink.  Yes,  sir ;  they  signed  the  articles  of  association,  which  are 
in  the  nature  of  a  constitution.  We  pass  a  great  many  statute  laws, 
but  we  have  a  constitution  under  which  we  operate. 

The  Chairman,  lla vc  you  in  your  possession  all  the  agreements  made 
between  the  Grand  Trunk  and  the  several  other  trunk  lines  ? 

Mr.  Fink.  Yes,  sir;  but  they  are  scattered  through  twenty  volumes. 

The  Chairman.  1  refer  to  agreements  made  within  the  last  two  years. 

Mr.  Fink.  They  are  all  printed;  every  agreement  made  between 
trunk  lines  is  published  and  printed  and  at  your  service ;  it  is  not,  how- 
ever, very  interesting  reading. 

The  Chairman.  Were  the  agreements  signed  promptly  by  the  dif- 
ferent roads  1 

Mr.  Fink.  Yes  ;  the  Grand  Trunk  signed  promptly. 

The  Chairman.  Before  the  other  roads  signed  I 

Mr.  Fink.  In  their  turn. 

The  Chairman.  Did  they  do  it  at  the  same  time  that  the  other  roads 
did,  or  did  they  hesitate  and  delay  the  signing  ? 

Mr.  Fink.  We  sent  the  agreement  first  to  one  road  and  then  to  an- 
other for  signature ;'  and  t«he  Grand  Trunk  signed  in  its  turn. 

Mr.  King.  What  the  Senator  wants  to  get  at  is  whether  when  the 
agreement  was  first  made,  the  Grand  Trunk  came  in  and  signed  the 
contract. 

Mr.  Fink.  What  agreement  ? 

Mr.  King.  Say,  two  years  ago. 

Mr.  Fink.  They  did  not  sign  that  agreement  at  all ;  I  had  reference 
to  the  last  agreement. 

reasons  for  giving  differentials. 

Senator  Blair.  Have  not  these  Canadian  roads  natural  advantages 
so  that  they  can  aiford  to  carry  freight  cheaper  than  the  American 
roads  f 

Mr.  Fink.  No,  sir ;  I  think  not ;  they  have  to  struggle  for  existence ; 
I  do  not  think  they  can  work  any  cheaper  than  the  Erie  Road  or  the 
I^ew  York  Central. 

Senator  Blair.  Then  why  do  they  want  these  differential  rates  ? 

Mr.  Fink.  In  order  to  get  business. 

Senator  Blair.  And  the  differential  indicates  that  they  are  under 
disadvantages. 

Mr.  Fink.  It  indicates  that  they  have  not  as  good  a  line  as  some 
other  companies. 

Senator  Blair.  And  they  have  to  take  less  rates  in  order  to  get  the 
business  ? 

Mr.  Fink.  Yes,  sir;  on  some  kinds  of  traffic. 

Senator  Blair.  Is  that  owing  to  the  nature  of  the  country  ?  That  is 
to  say,  IS  it  owing  to  the  grades  and  climatic  conditions  that  affect  trans- 
portation, oris  it  owing  to  the  fact  that  the  country  through  which  the 
road  passes  is  as  yet  undeveloped  ?  If  that  country  were  developed, 
would  they  not  do  this  business  cheaper  than  we,  because  their  grades  are 
less  and  the  distance  shorter  ? 

Mr.  Fink.  None  of  these  conditions  have  anything  to  do  with  difter- 
ential  rates.  They  are  given  to  certain  roads  simply  to  induce  shippers 
to  ship  by  them,  which  they  would  not  do  if  they  made  higher  charges. 
A  shipper  decides  by  what  road  he  will  ship,  taking  into  account  the 
difference  in  the  rates  and  the  advantages  each  road  possesses  in  doing 
the  work.    The  question  of  grades,  climatic  conditions,  and  the  cost  of 


THE  UNITED  STATES  AND  CANADA.  33 

the  service  as  affected  by  the  uature  of  the  couutry  has  nothing  to  do 
with  this  matter.     It  is  siini)ly  a  corauiorcial  question. 

Senator  Blair.  They  olier  transportation  as  people  offer  a  commodity, 
and  tlie  shipi)er  buys  at  the  lowest  rate,  and  the  man  who  can  do  the 
transportation  at  tlie  cheapest  rate  can  sell  the  commodity  at  the  cheap- 
est price,  can  he  not  f 

Mr.  Fink.  That  is  not  exactly  the  case.  The  road  which  is  the  most 
expensive  to  operate  may  have  to  charge  less  than  one  which  is  more 
cheaply  operated,  because  it  could  not  otherwise  secure  any  customers. 

HOW  TRANSPORTATION  RATES  ARE  DETERMINED. 

Senator  Blair.  Why  should  not  railway  transportation  men  sell 
transportation  just  as  other  men  sell  wheat  and  corn  ? 

Mr.  Fink.  That  can  not  be  done  so.  In  selling  wheat,  corn,  and 
other  articles  of  commerce  there  is  no  such  law  as  tliat  governing  trans- 
portation, requiring  that  the  rates  shall  be  reasonable  and  just;  that 
there  shall  be  no  discrimination  between  the  purchasers  of  transportation; 
that  there  shall  be  no  discrimination  between  localities  ;  that  tlie  rates 
and  fares  shall  be  adjusted  thoughout  the  country  in  such  a  manner 
that  no  more  shall  be  charged  tor  a  short  haul  than  for  along  haul,  and 
hundreds  of  other  conditions  which  are  imposed  u[)on  the  parties  selling 
railroad  transportation  which  are  not  imposed  upon  parties  selling 
wheat,  corn,  or  other  merchandise.  The  conditions  which  I  have  nametl 
as  affecting  the  transportation  business  render  it  necessary  that  fixed 
tariffs  should  be  established  by  a  great  many  independent  railroad 
companies  so  that  the  tariffs  of  one  will  not  unjustly  discriminate 
against  the  tariffs  of  another.  For  this  reason  the  roads  are  obliged  to 
come  togetlier  and  establish  their  tariffs  as  a  unit,  and  not  by  piece- 
meal, if  the  other  plan  were  adopted,  to  sell  railroad  transpoitation 
the  same  as  corn  or  wheat,  there  would  be  no  reasonable  and  just  tar- 
iffs. There  would  be  nothing  but  chaos  and  war  between  the  railroad 
companies. 

Senator  Blair.  That  is  because  there  are  more  railroads  than  there 
ought  to  be. 

Mr.  Fink.  It  is  because  there  are  so  many  roads  competing  with  each 
other  for  the  same  business.  If  they  were  all  united  as  one  company 
it  would  be  a  com])aratively  easy  matter  to  establish  a  tariff";  l>ut  now 
it  requires  the  agreement  of  a  large  number  of  railroad  companies  hav- 
ing conflicting  interests  and  different  localities  to  serve,  to  make  a  tariff' 
that  will  be  just  to  the  public  and  not  discriminate  against  any  locality. 
This  is  forbidden  by  the  interstate  law.  There  being  so  many  railroad 
companies,  all  independent  of  each  other,  if  each  were  to  make  its  own 
tariff  favoring  its  own  locality  without  regard  to  the  interests  of  other 
localities,  there  would  be  nothing  but  confusion.  These  di If erent  roads 
have  to  come  together  and  establish  their  tariffs  on  the  principle  that 
there  shall  be  no  unjust  discrimination  between  localities.  This  is  a 
very  difticult  problem,  as  I  have  said  before ;  and  it  is  this  which  makes 
it  necessary  for  competing  roads  to  associate  themselves  for  the  pur- 
pose of  agreeing  upon  reasonable  and  proper  tariffs.  Without  that  the 
interstate  law  could  not  be  carried  out. 

Senator  Blair.  Is  not  that  an  argument  in  favor  of  a  consolidation 
of  transportation  interests  under  the  management  of  the  State  or  some 
great  central  power"? 

Mr.  Fink.  Yes,  sir;  that  is  an  argument  in  favor  of  theconsolidatitm 
of  interests,  or  State  management ;  but  as  the  latter  is  not  practicable 
6543 3 


34  TRANSPOKTATION  INTERESTS  OF 

in  this  country,  we  try  to  approximate  to  the  ideal  plan  by  forming 
associations  consisting  of  a  large  number  of  roads  working  together  as 
one  road  in  the  establishment  of  tariffs. 

Senator  JJlair.  And  the  only  power  exercised  by  these  associations 
is  to  regulate  the  rates  of  freight. 

Mr.  Fink.  They  agree  upon  the  rates  of  freight. 

{Senator  JiLAiR.  And  when  the  Government  does  that  it  can  do  jus- 
tice by  all  the  people,  or  do  you  think  it  is  the  better  way  to  put  it  al- 
together  in  the  hands  of  the  railroad  managers'? 

Mr.  Fink.  I  think  it  has  to  be  done  by  the  parties  in  interest  and  who 
understand  the  business. 

Senator  Blair.  The  managers  generally  think  so,  do  they  not? 

Mr.  Fink.  I  think  they  would  all  be  glad  to  be  relieved  of  that  work 
if  the  Government  would  take  the  responsibility  of  paying  the  interest 
on  bonds  and  dividends  on  stock. 

Senator  Blair.  In  other  words,  the  business  has  got  to  bo  so  done 
as  to  maintain  all  the  roads  that  exist  and  all  that  may  be  built ;  is  that 
the  idea "? 

Mr.  P^iNK.  There  are  a  great  many  that  can  not  be  kept  out  of  the 
hands  of  receivers. 

Senator  Blair.  By  this  arrangement  that  has  been  referred  to  a 
differential  is  given  to  the  weaker  roads  to  enable  them  to  do  business 
and  to  live  as  well  as  the  more  powerful  roads,  lou  have  a  system 
that  practically  abolishes  the  question  of  competition,  have  you  not  ? 

Mr.  Fink.  The  differential  rates  may  help  the  weaker  roads  to  do 
some  business,  but  whether  they  can  live  or  not  is  another  question. 

Senator  Blair.  They  probably  could  not  do  business  if  they  were 
dead, could  they  I 

Mr.  Fink.  Yes,  sir;  the  trouble  is  that  some  of  them  do  business  when 
they  are  dead. 

Senator  Blair.  Then  they  ought  to  be  dead. 

Mr.  Fink.  Yes. 

EFFECT   OF   THE  PROHIBITION  OF  POOLING. 

Senator  Hiscock.  You  have  had  two  years'  experience  under  a  pro- 
hibition of  pooling.  In  the  light  of  that  experience,  I  want  you  to  state 
in  detail  the  reasons  why  in  your  judgment  it  has  been  burdensome  or 
injurious  to  the  railroads  and  the  commerce  of  the  country.  I  want  you 
to  do  it  fully,  and,  as  I  say,  in  the  light  of  the  experience  you  have  had, 
state  if  there  are  any  reasons  why,  in  your  judgment,  that  prohibition 
has  been  a  burden  upon  the  railroads  and  a  burden  upon  commerce. 

The  Chairman.  Do  you  refer  to  the  pooling  clause  of  the  act? 

Senator  HiscoCK.  Yes ;  I  wish  Mr.  Fink  would  state  fully  and  with 
argument,  if  he  pleases,  any  change  desirablf^.  If  he  is  of  opinion,  in 
the  light  of  his  experience,  that  the  pool  should  be  legalized  he  should 
state  it  and  state  it  carefully ;  and  I  will  say  further  that  if  Mr.  Fink 
is  unable  to  state  to-day  for  lack  of  preparation  his  ideas  upon  the  sub- 
jects I  have  outlined  he  may  hereafter  put  in  the  record  anything  that 
occurs  to  him  in  this  line. 

Mr.  Fink.  I  will  do  so.  I  can  only  make  a  general  statement.  I 
can  not  put  the  matter  before  you  off-hand  as  well  as  I  would  like. 

What  is  called  pooling  in  this  country  seems  to  be  entirely  misunder- 
stood by  a  great  many  people.  It  is  a  method  of  railway  management 
practiced  in  all  other  countries,  even  where  railroads  are  owned  by  the 
Government.    It  has  been  found  the  most  practicable  method  of  dealing 


THE  UNITED  STATES  AND  CANADA.  35 

with  a  great  many  questions  that  arise  between  the  railroad  companies 
themselves.  The  pr.blie  is  not  concerned  in  it.  It  does  not  affect  the 
public  injuriously;  on  the  contrary,  it  is  to  its  advantage.  It  helps  to 
maintain  steady,  secure,  and  equitable  rates  for  equal  service,  avoids 
unjust  discrimination,  and  in  fact  its  object  and  practical  effect  is  the 
same  as  is  sought  to  be  accom|>lished  by  the  interstate  commerce  law. 
The  interstate  commerce  law  itself  might  be  called  a  pool,  in  tliat  it  re- 
quires the  railroads  to  maintain  their  tariffs  the  same  as  a  pool  would. 
The  railroads  are  at  liberty  to  establish  their  tariff's  now,  the  same  as 
they  were  before  the  interstate  law  was  enacted.  The  United  States 
Government  under  the  law  now  undertakes  to  enforce  these  tariffs. 
The  law  provides  for  penalties  in  case  tariffs  are  violated.  The  pool 
adopts  a  wiser  method,  and  tries  to  do  away  with  the  motive  for  vio- 
lating the  law.  The  main  motive  for  violating  the  tariffs  on  the  part  of 
competing  railroad  companies  is  to  secure  a  larger  share  of  the  traffic. 
Pooling  is  a  private  arrangement  between  the  railroad  companies  which 
guaranties  to  each  competing  railroad  company  that  it  will  secure  a 
fair  share  of  the  traffic,  removing  the  motive  for  using  illegal  means  to 
secure  it,  the  tariff  being  reasonable  and  just,  as  provided  by  the  inter- 
state law,  and,  before  that  law  was  passed,  by  the  common  law,  the 
public  had  no  interest  whatever  in  knowing  whether  this  or  that  com- 
pany carried  a  few  tons  more  or  less  of  the  traffic  ;  but  it  is  a  question  of 
the  most  vital  importance  to  the  competing  railroad  companies,  and  the 
failure  to  settle  it  peacefully  between  themselves  leads  to  all  the  evils 
of  railroad  management  which  the  interstate  commerce  law  was  en- 
acted to  prevent.  Therefore,  any  measure  which  prevents  this  friction 
between  competing  railroads — always  bearing  in  mind  that  the  tariffs 
are  reasonable  and  just — is  one  which  will  aid  in  carrying  out  the  intent 
and  spirit  of  the  interstate  law,  and  it  was  a  great  mistake  to  prohibit 
pooling  when  it  was  the  best  means  of  enforcing  the  law. 

Senator  HiscocK.  Let  me  state  the  proposition  and  see  if  I  nntler- 
stand  it.  You  claim  that  under  the  law,  so  far  as  the  rates  are  con- 
cerned, with  an  agreement  as  to  rates  by  competing  lines  existing,  and 
that  will  exist,  that  the  rates  are  controlled  just  as  completely  and  as 
effectually  at  this  time  as  they  were  before,  when  pooling  was  permitted. 
That  is  to  say,  the  prohibition  of  pooling  has  not  interfered  with  that 
matter. 

Mr.  Fink.  It  has  made  it  absolutely  necessary. 

Senator  UiscocK.  Now,  if  I  understand  you,  you  say  that  if  pooling 
were  permitted  which  gave  to  each  route  its  proportion  of  the  tratlic, 
and  provided  for  a  settlement  of  balances  in  cash,  if  either  exceeded 
the  auiouut  of  tonnage  allotted  to  it,  the  power  to  prevent  all  these 
numerous  artifices  and  frauds  now  being  resorted  to  by  rival  railroad 
organizations  to  get  freight  would  be  taken  away,  and  that  when  you 
had  the  right  to  pool  there  was  then  no  inducement  for  this  cheating. 

Mr.  Fink.  No  motive  for  it. 

Senator  iIisco(;K.  And  for  this  cheating,  and  for  these  deceptive 
practices,  the  result  of  which  is  practical  discrimination  between  one 
shipper  and  another  and  one  locality  and  another,  there  would  be  no 
inducement  if  pooling  were  allowed. 

Mr.  Fink.  No,  sir. 

Senator  Hiscook.  And  if  you  could  have  the  right  to  pool  now  there 
would  be  no  necessity  for  any  criminal  law  as  against  those  frauds  and 
cheats,  because  there  would  be  no  inducement  to  engage  in  them.  Is 
not  that  your  argument"? 

Mr.  Fink.  There  would  be  no  inducement. 


36  TRANSPORTATION  INTERESTS  OF 

Senator  Hiscock.  And  you  say  further,  give  the  Interstate  Com 
uicrce  Commission  control  over  the  rate  schedules  and  there  could  be 
no  disadvantage  to  the  public  by  allowing  the  formation  of  a  pool. 

Mr.  Fink.  There  could  be  none.  I  think  the  pool  is  the  best  method 
that  could  be  adopted  to  prevent  these  illegal  practices,  but  1  would  not 
object  to  the  law  remaining  as  it  is. 

ISenater  Hiscock.  Of  course  you  do  not  object  to  the  penalty  sec 
tions,  but  you  think  if  pooling  were  allowed  that  the  inducement  to  fol- 
io sv  these  practices  would  be  removed. 

^Ir.  Fink.  Yes,  sir. 

The  Chairman.  You  were  the  chairman  of  the  pool  commission  that 
was  in  existence  before  the  j)assage  of  the  interstate  act,  were  you  not  ? 

Mr.  Fink.  1  am  an  officer  of  the  Trunk  Line  Association  ;  I  have  ex- 
plained the  object  of  that  association  to  you.  Its  object  was  not  pool- 
ing, but  the  establishment  of  tariffs,  and  pooling  was  merely  incidental 
to  maintain  them. 

The  Chairman.  Were  there  instances  of  the  violation  of  these  pool- 
ing contracts  between  these  various  corporations  I 

Mr.  Fink.  Plenty. 

The  Chairman.  Had  you  any  method  by  which  you  could  enforce 
such  contracts'? 

Mr.  Fink.  I  am  sorry  to  say  no.    That  is  just  what  we  needed. 

The  Chairman.    And  did  you  enforce  them  ! 

Mr.  Fink.  In  a  great  measure;  yes,  by  voluntary  agreement  and 
moral  suasion. 

The  Chairman.  Asfaras  it  was  possible  to  enforce  it,  you  did  so,  but 
you  had  no  method  by  which  yon  could  compel  obedience  to  it  ? 

Mr.  Fink.  No,  sir;  that  is  the  missing-  link  in  our  organization. 

The  Chairman.  The  pool  fixed  the  rates  ? 

Mr.  Fink.  The  association  fixed  the  rates,  and  the  pool  came  in  after- 
ward to  maintain  the  rates  and  to  prevent  the  violation  of  the  tariffs 
agreed  upon. 

The  Chairman.  Was  it  not  one  of  the  purposes  of  the  pool  to  have 
rates  fixed,  or  to  fix  rates  and  to  maintain  them  I 

Mr.  Fink.  To  maintain  them  was  one  of  the  purposes.     The  pool  was ' 
applied  to  only  a  small  portion  of  the  business.     The  pooled  traffic  did 
not  amount  to  20  per  cent,  of  the  total  business.     The  remaining  traffic 
was  not  pooled. 

The  Chairman.  As  I  understand  you,  at  that  time,  as  now,  the 
common  carriers  fixed  the  rates  for  themselves  ? 

Mr.  Fink.  Yes,  sir. 

The  Chairman.  Without  knowledge  of  what  the  rates  were  by  com 
peting  lines  ? 

Mr.  Fink.  The  competing  lines  came  together  and  fixed  the  tariff. 

The  Chairman.  Bid  I  misunderstand  your  statement  in  the  early 
part  of  your  examination,  when  I  understood  you  to  say  that  the  trunk 
lines,  in  respect  to  which  you  hold  some  connection  at  this  time,  confer 
with  each  other  and  fix  rates,  differentials,  etc.,  by  agreement  and  un- 
derstanding with  each  other  "1 

Mr.  Fink.  They  establish  their  tariffs  by  agreement  at  this  time,  as 
before  the  law  was  enacted. 

The  Chairman.  In  what  does  that  method  of  fixing  rates  differ  from 
the  method  of  fixing  rates  prior  to  the  passage  of  the  interstate  act  2 

Mr.  Fink.  There  is  no  difference  at  all. 

The  Chairman.  So  I  thought.  Then,  under  the  interstate  act,  the 
rates  so  fixed  are  legal,  and  the  law  imposes  penalties  for  violations! 

Mr.  Fink.  Yes. 


THE  UNITED  STATES  AND  CANADA.  37 

The  Chairman.  Does  not  that  give  you  a  better  opportunity  to  main- 
tain those  rates  and  to  enforce  the  rates  as  fixed  than  you  had  under 
your  pooling  contract '? 

Mr.  Fink.  It  helps  us  a  great  deal. 

The  Chairman.  Does  it  not  aid  you  in  maintaining  the  rates  ? 

Mr.  Fink.  Yes,  sir. 

The  Chairman.  And  are  you  not  more  able  to  maintain  the  rates 
under  the  existing  interstate  law  than  you  were  under  a  pool  or  asso- 
ciation or  contract? 

Mr.  Fink.  Yes ;  but  while  it  aids  us  in  some  respects,  the  prohibi- 
tion of  pooling  makes  it  more  difficult  in  others.  The  maintenance  of 
rates  in  itself  is  well  enough,  but  there  is  another  element,  and  a  very 
important  one,  namely,  that  the  rates  established  should  not  only  be 
satisfactory  to  the  public,  but  that  under  rates  fixedly  maintained  the 
various  railroad  companies  competing  with  each  other  should  each  take 
a  fiiir  share  of  the  traflic.  Suppose  certain  established  rates  were  ab- 
solutely maintained  under  the  interstate  law,  and  one  or  another  com- 
pany should  receive  no  business.  That  would  be  an  inducement  for 
that  company  notto  maintain  rates  and  to  resort  to  all  kinds  of  devices 
to  secure  a  share  of  the  tiafdc.  This  would  very  likely  lead  to  a  war 
of  rates,  instability  of  rates,  and  to  all  the  many  other  difliculties  re- 
sulting from  rate  wars  which  are  now  so  well  understood  that  it  is  not 
necessary  for  me  to  detail  them  here.  If  in  connection  with  the  inter- 
state law  enforcing  rates  there  could  be  some  agreement  between  the 
railroad  companies  to  secure  to  each  a  fair  share  of  the  business,  as 
would  be  possible  under  a  pooling  arrangement,  it  would,  as  I  said  be- 
fore, remove  all  motive  for  violation  of  the  law  and  would  help  the  rail- 
roads in  sustaining  the  law.  As  a  matter  of  fact,  the  prohibition  of 
pooling  has  increased  the  difficulty  of  maintaining  tarifls,  and  one  of 
the  reasons  is  that  the  railroads  can  not  arrange  among  themselves  an 
etpiitable  division  of  traffic  which  would  remove  many  of  the  difficulties 
they  now  have  to  contend  with  in  maintaining  equitable  and  just  tariffs. 

The  Chairman.  What  did  the  rate  wars  result  in  ? 

Mr.  Fink.  Yery  low  earnings  of  the  roads,  the  stoppage  of  divi- 
dends, the  lowering  of  the  values  of  stocks,  and  losses  to  the  people 
who  invested  their  money  in  railroad  securities,  which  must  finally 
result  in  financial  disaster. 

The  Chairman.  And  the  cheapening  of  transportation  of  traffic  to 
the  people? 

Mr.  Fink.  Yes,  sir;  the  cheaiiening  of  transportationat  the  expense 
of  the  owners  of  railroad  property,  who  are  entitled  to  reasonable  com- 
pensation, but  which  they  can  not  obtain  unless  rate  wars  can  be  pre- 
vented. 

Senator  Harris.  I  will  go  a  step  further  as  to  the  method  of  pool- 
ing. Now,  if  I  understand  you — and  if  I  do  not,  I  want  to  understand 
you — you  are  better  enabled  to  enforce  the  maintenance  of  rates  under 
the  existing  interstate  law  than  you  were  under  the  pooling  agreement, 
or  tiie  system  called  pooling. 

Mr.  Fink.  The  interstate  law  is  a  great  assistance  in  maintaining 
rates,  but  it  has  not  prevented  the  violation  of  tariffs  by  many  devices 
and  has  not  prevented  rate  wars  and  can  not  prevent  them.  As  I  said 
before,  it  would  be  a  help  in  maintaining  rates  if  pooling  had  not  been 
prohibited. 

Senator  Harris.  The  chairman  suggests,  do  you  mean  by  maintain- 
ing rates  the  keeping  up  of  them  at  a  higher  point? 

Mr.  Fink.  I  mean  the  keeping,  uy  of  reii^onable  and  proper  tariflfs. 


38  TRANSPORTATION   INTERESTS    OP 

THE  DIVISION  OF  TRAFFIC. 

Senator  Harris.  Is  not  tlie  chief  difference  in  the  matter  of  main- 
taining rates  under  the  pooling  system  the  contract  requiring  a  divis- 
ion of  the  traffic  between  the  various  members  of  the  pool  ? 

Mr.  Fink.  Yes. 

Senator  Harris.  Or  a  settlement  in  cash  of  the  balances,  so  as  to 
equalize  and  to  give  each  its  part  of  the  business,  or  the  equivalent  of 
its  part  of  the  business  ? 

Mr.  Fink.  That  is  the  idea. 

Senator  Harris.  Under  the  interstate  law  no  such  rule  can  be  made 
as  that,  and  no  such  rale  can  be  enforced  ? 

Mr.  Fink.  IsTo,  sir. 

Senator  Harris.  Under  that  rule  did  not  the  association  or  pool 
determine  what  lines  the  freight  should  go  over?  Did  they  not  divide 
up  the  freight  according  to  its  destination  1 

Mr.  Fink.  At  one  time  they  did ;  not  lately. 

Senator  Harris^  They  divided  freights  and  thorc^by  deprived  the 
sliii)i)ei-  of  the  right  to  determine  over  what  line  his  freight  should 
l)ass  1 

Mr.  Fink.  Yes  ;  taking  care  that  it  went  over  as  good  a  line  as  the 
shipper  would  have  chosen  if  left  to  his  own  choice  in  tlie  matter. 

Senator  Harris.  He  does  not  control  the  line,  but  the  association 
controls  the  line  over  which  the  freight  passes. 

Mr.  Fink.  We  find  a  suitable  line  and  ship  his  freight  over  it. 

Senator  Harris.  He  has  not  the  determination  of  the  route  by  which 
he  shall  ship! 

Mr.  Fink.  I  do  not  think  that  makes  any  difference  if  he  gets  the  same 
accommodations. 

Senator  Harris.  Would  it  not  make  this  difference,  one  line  being 
absolutely  solvent  and  responsible  in  damages  for  the  loss  of  goods,  or 
for  any  injury  sustained  to  the  goods,  while  another  line  would  not  be 
solvent  and  so  not  be  able  to  respond  in  damages  for  the  loss  or  injury 
of  the  goods,  and  in  the  latter  case  leave  the  shii)per  without  remedy  ? 

Mr.  Fink.  We  provided  for  that.  If  we  diverted  the  freight  from  one 
line  to  another  we  held  ourselv^es  responsible  for  it. 

Senator  Harris.  Could  it  be  enforced  "? 

Mr.  Fink.  I  think  it  could  be  enforced.  I  know  it  has  been.  We 
have  no  right  to  divert  the  traffic  and  not  be  responsible. 

Senator  Hiscock.  You  only  made  those  changes  where  you  had  some 
secret  understanding,  did  you  not? 

Mr.  Fink.  No  ;  it  was  an  open  understanding. 

Senator  Harris.  You  only  held  the  various  members  of  the  associa- 
tion responsible  for  such  a  loss  by  the  contract  that  they  entered  into  ? 

Mr.  Fink.  Yes;  by  our  contract. 

Senator  Harris.  And  if  that  contract  be  void,  because  the  courts 
hold  it  to  be  contrary  to  sound  public  policy,  then  legally  you  could  not 
be  held  at  all  ? 

Mr.  Fink.  We  held  ourselves  liable  in  a  case  of  that  sort. 

Senator  Harris.  The  carrier  to  whom  these  goods  were  consigned 
could  be  held  responsible  for  a  diversion,  but  not  the  other  carriers? 

Mr.  Fink.  The  shipper  would  look  to  the  carrier  to  whom  he  offered 
the  goods,  and  that  carrier  would  look  to  its  associates  to  share  in  any 
loss  that  might  occur.  The  shipper  is  fully  protected.  That  system  had 
an  excellent  effect  in  nuiintaining  rates  and  stopping  unjust  discrimi- 
nation.   Freight  was  diverted  from  a  road  that  was  known  to  be  con- 


THE    UNITED    STATES    AND    CANADA.  39 

tracting  at  lower  rates  aud  showing-  favoritism,  and  was  given  to  a  road 
which  charged  full  rates,  thus  stoi)i)ing  the  secret  concession  made  by 
the  former.  This  practical  method  was  more  effective  in  carrying  out 
the  principles  of  the  interstate  law,  I  thiuk,  than  any  penalty  provided 
for  in  the  law  itself. 

LEGALIZINa  POOLINa. 

Senator  Harris.  Do  you  think  the  public  would  be  benefited  by  re- 
pealing the  fifth  section  and  allowing  the  common  carriers  to  enter  into 
combinations,  associations,  or  pools,  such  as  existed  before  the  passage 
of  this  act,  rather  than  to  retain  that  section  and  allow  every  carrier  to 
fix  his  own  rate,  and  then  giving  him  the  aid  of  the  law  to  maintain  it? 
Do  you  think  the  public  would  be  benefited  by  abolishing  that  feat- 
ure? 

Mr.  Fink.  The  object  of  the  law  could  be  more  completly  accom- 
plished by  abolishing  that  feature  and  legalizing  pooling  instead  of 
prohibiting  it. 

Senator  Harris.  You  would  have  pooling  legalized  instead  of  hav- 
ing it  left  as  a  nihility  ? 

Mr.  Fink.  Yes  ;  I  would  enforce  pooling  contracts  like  any  other 
contracts.  If  you  want  to  make  a  perfect  arrangement  legalize  pool- 
ing ;  but  I  would  hardly  advocate  it.  Let  the  railroads  work  out  the 
problem  as  best  they  can  ;  but  do  not  prohibit  pooling. 

Senator  Blair.  Would  it  not  be  necessary  in  that  event  that  the 
Government  should  have  something  to  say  before  the  fixing  of  the 
rate "? 

Mr.  Fink.  It  does  now. 

Senator  Blair.  Not  by  any  law  I  know  of.  It  may  be  a  law  of  nat- 
ure. 

Mr.  Fink.  If  the  railroads  attempted  to  charge  an  extortionate  or 
unreasonable  rate  you  could  go  before  the  Commission  and  they  would 
prohibit  it. 

Senator  Blair.  But  there  is  no  power  to  reduce  that  rate  but  a 
jury. 

Mr.  Fink.  The  railroads  generally  obey  the  decisions  of  the  Com- 
mission. 

Senator  Blair.  Yes;  but  most  people  avoid  the  crime  of  murder. 
There  is  no  law  that  I  know  of  under  which  the  Government  can  now 
say  you  shall  charge  2  cents  a  mile,  or  if  you  charge  more  there  is  a 
penalty  for  it.  But,  I  say,  is  it  not  necessary  if  the  Government  legal- 
izes pooling  that  it  should  have  something  to  say  about  the  contract 
that  it  is  to  enforce  ? 

Mr.  Fink.  All  the  Government  would  have  to  say  is  that  the  tarifif 
to  be  maintained  by  the  pool  is  a  fair  and  just  tariff. 

Senator  Blair.  That  is  regulating  it.  If  you  make  a  provision  that 
the  Government  shall  enforce  the  pool,  then  the  public  is  at  the  mercy 
of  the  poolers  as  to  rates. 

Mr.  Fink.  Not  under  the  interstate  law  which  provides  for  just  and 
reasonable  rates. 

Senator  Blair.  And  the  Government  would  be  called  in  to  stop  that 
extortion.  Should  you  not  consider  the  public  as  a  factor  in  the  fixing 
of  the  rates  f 

Mr.  Fink.  The  public  is  a  very  important  factor  in  the  fixing  of  the 
rates  at  all  times. 

Senator  Blair.  Now,  if  the  rate  is  extortionate  you  claim  that  a  man 


40  TRANSPORTATION  INTERESTS  OF 

cnn  ^0  to  tlie  Commission  and  tlioy  will  scold  a  little  and  then  lie  will 
biin<i-  the  case  bolore  a  Jiuy  and  get  a  verdicl. 

]\lr.  Fink.  If  the  railroads  do  not  obey  the  Commission  the  shipper 
can  ^o  to  a  jury,  but  1  think  such  a  case  will  hardly  occur. 

Senator  IJiscocK.  Is  it  true  in  point  of  practice  that  whenever  the 
Commission  reduced  rates  that  that  reduction  has  been  adhered  to? 

Mr.  Fink.  Yes,  sir  ;  so  far  as  I  know.  The  railroads  are  not  likely 
to  carry  a  case  of  that  sort  to  the  courts.  I  suppose  you  bear  in  mind 
that  constructively  the  country  accepts  the  tariffs  tiled  with  the  Com- 
mission. Otherwise  it  would  not  legislate  to  have  them  enforced  by 
the  Commission.  We  must,  therefore,  assume  that  there  is  an  approval 
of  the  tariff  until  comi)laint  is  made  and  some  evidence  is  produced  to 
show  that  the  tariff  is  not  correct. 

GOVERNMENTAL  ESTABLISHMENT  OF  RATES. 

Senator  Reaoan.  Is  it  practicable  or  possible  for  the  Government  to 
establish  the  rates,  as  I  understood  you  to  suggest? 

Mr.  Fink.  It  would  be  a  very  difiticult  thiug  for  the  Goverument  to 
establish  the  tariffs,  The  making  of  just  and  reasonable  tariffs  over 
150,000  miles  of  railroad  is  certainly  not  an  easy  task. 

Senator  Keagan.  In  view  of  that,  then,  who  should  establish  the 
rates  under  a  pool  ? 

Mr.  Fink.  The  railroads,  in  the  first  place. 

Senator  Keagan.  When  those  rates  are  established,  does  not  that 
close  out  the  possibility  of  the  public  getting  the  benefit  of  competition 
in  freight  rates  ? 

Mr.  Fink.  Not  at  all.  They  may  not  get  the  benefit  of  rate  wars  and 
unreasonably  low  rates,  but  they  get  the  full  benefit  of  legitimate  com- 
I)eti"«ion.  The  element  of  competition  is  always  taken  into  account  in 
establishing  tariffs. 

Se*iator  Keagan.  If  this  Government  can  not  fix  the  rate — and  I 
agree  with  you  it  is  impossible  for  it  to  do  so — and  the  railroads  can  fix 
the  rate  and  must  fix  the  rate,  cau  they  not  fix  the  rates  at  any  figures 
they  choose  ! 

Mr.  Fink.  No,  they  can  not.  It  is  a  great  mistake  to  suppose  that 
the  railroads  can  sit  down  and  make  any  tariff"  they  please.  If  that 
were  the  case  there  would  not  have  been  so  many  bankrupt  railroad 
companies.  The  tariffs  are  limited  to  such  low  rates  that  it  is  ques- 
tionable whether  many  of  the  railroads  can  live  under  them. 

Senator  Reagan.  Is  it  not  true  that  there  were  more  ditficulties  and 
railroad  wars  and  cut  freight  rates  before  the  passage  of  this  law  than 
since  the  passage  of  this  law  ? 

Mr.  Fink.  I  could  not  say  so.  I  think  there  have  been  more  wars  in 
the  West  since  the  passage  of  the  law  than  before.  lean  not  say  as  to 
the  Eastern  roads.  In  the  East  the  railroad  companies  are  older  and 
better  organized,  but  they  were  fighting  all  last  summer,  notwithstand- 
ing the  law. 

Senator  Reagan.  Is  it  or  is  it  not  true  that  when  pools  have  been 
formed  their  failures  have  been  more  the  rule  than  otherwise "? 

Mr.  Fink.  There  have  been  pools  of  that  sort  and  there  have  been 
pools  that  have  been  successlul.  We  carried  out  a  pool  from  1877  to 
tiie  Ist  of  Ajiril,  1887.  For  ten  years  we  had  no  difficulty.  Of  course, 
the  pool  is  not  a  panacea  lor  all  evils ;  but  it  is  a  great  help  ;  especially 
so  if  it  could  be  legail.v  enforced. 

Senator  Reagan.  Has  it  not  been  the  custom  for  years  for  the  rail- 


THE  UNITED  STATES  AND  CANADA.  41 

roads  to  carry  through  freights,  say  from  Chicago  and  St.  Louis  to  the 
Eastern  markets  below  the  cost  of  transportation  ? 

Mr.  Fink.  Unfortunately  that  has  been  the  case,  sometimes. 

Senator  IIeagan.  And  to  preserve  the  revenues  of  the  roads  they 
have  been  obliged  to  carry  the  way  freights  at  a  higher  rate  to  make  up 
the  deficit? 

Mr.  Fink.  Comparatively  higher  as  compared  with  through  freight, 
but  not  absolutely  higher.  They  did  not  increase  the  charges  on  way 
freight  for  the  purpose  of  making  up  the  loss  on  through  freight;  but 
they  charged  as  much  as  they  could  ou  local  freight  when  the  through 
rates  were  on  a  ])roper  basis. 

Senator  Reagan.  Did  it  not  often  happen  that  persons  could  ship 
their  goods  away  from  the  market  and  then  bring  them  back  at  a  lower 
rate  than  they  could  have  shipped  directly"? 

THE   ENFORCEMENT  OF   THE  LAW. 

Mr.  Fink.  Yes,  during  rate  wars,  I  do  not  complain  of  the  interstate 
law.  I  am  heartily  in  favor  of  it.  The  great  difficulty  with  the  law  is 
that  you  can  not  enforce  it,  and  we  are  prevented  from  enforcing  it  our- 
selves by  being  prevented  fi'om  pooling.  You  have  no  machinery  for 
enforcing  the  law.  Our  associations  have  the  machinery  to  carry  it  out, 
but  not  the  i)ower. 

Senator  Reagan.  1  would  venture  the  opinion  that  under  the  amended 
law  it  will  be  enforced. 

Mr.  Fink.  I  think  that  there  is  every  intention  of  enforcing  it. 

Senator  Reagan.  The  Government  not  being  able  to  fix  the  rate, 
and  the  cor[)orations  having  fixed  the  rate,  if  they  choose  to  make  ex- 
tortionate taritfs,  without  the  benefit  of  such  protection,  how  are  the 
people  protected  ? 

Mr.  Fink.  It  is  utterly  impossible  for  the  railroads  in  this  part  of  the 
country  to  make  extortionate  rates.  You  have  the  interstate  law,  and 
whenever  there  is  a  case  of  extortionate  charges  you  can  go  straight  to 
the  Commission  and  rectifv  it. 

Senator  Heagan.  Suppose  they  enter  into  a  general  pool,  what  wouhl 
hinder  them  from  fixing  any  rate  they  pleased,  it  the  pool  is  legalized  ? 

Mr.  Fink.  You  can  not  get  waterways  into  the  pools.  1  have  iK)t 
been  able  to  see  how  railroads  can  make  any  higher  charges  than  tliey 
do  to-day.  There  has  been  no  comi)laint  about  high  rates.  If  you  ex- 
amine the  records  of  the  Interstate  Commerce  Commission  you  will  find 
that  with  the  exception  of  some  little  adjustments  of  interior  local  rates, 
there  has  not  been  a  single  complaint  brought  by  a  man  in  the  United 
States  as  to  extortionate  rates;  they  are  an  imi)ossibility.  You  have 
an  idea  that  the  roads  could  make  these  rates  arbitrarily,  but  they  can 
not.  The  shippers  make  the  rates  rather  than  the  railroads.  The  shij)- 
per  comes  to  the  freight  agent  and  tells  his  story  about  what  tlie  rates 
ought  to  be,  and  the  freight  agent  is  always  inclined  to  accommodate 
the  shipper.  Thus  the  shippers  exercise  a  great  infiuenee  on  the  rail- 
roads in  the  making  of  rates. 

Senator  Reagan.  Do  you  happen  to  be  informed  as  to  the  rates  on 
the  transcontinental  railroads — I  mean  the  Northern  I'acitic,  the  South- 
ern Pacific,  the  Union  Pacific,  and  the  Canadian  Pacific— do  you  hap- 
pen to  be  informed  about  their  relative  rates  ? 

Mr.  Fink.  I  know  their  tariffs  in  a  general  way;  I  know  they  have 
a  great  many  difficulties  to  contend  with. 

Senator  Reagan.  What  do  you  understand  to  be  the  relative  rates 
between  the  Canadian  Pacific  and  the  other  roads  ? 


42  TRANSPORTATION    INTERESTS    OF 

Mr.  FiNK.  I  believe  tliey  work  uinler  au  agreement.  The  Canadian 
Pacitic  is  allowed  a  dilVerential  of  40  cents.  The  rates  are  about  $4  be- 
tween New  York  and  San  Francis(;o  on  iirst-class  business,  and  from 
that  down  to  $1  on  the  lower  classes. 


STATEMENT  OF  JOHN  KING. 

Mr.  John  King,  president  of  the  New  York,  Lake  Erie  and  Western 
Railroad  Company,  appeared. 

The  Chairman.  Will  you  tell  tlie  committee  what  your  business 
now  is? 

Mr.  King.  I  am  president  of  the  New  York,  Lake  Erie  and  Western 
Eailroad  Company. 

The  Chairman.  What  are  the  termini  of  that  road  ? 

Mr.  King.  Jersey  City  at  this  end  and  Buffalo  and  Dunkirk  on  the 
hike  and  Salamanca  on  the  road  proper. 

The  Chairman.  Where  is  Salamanca  I 

Mr.  King.  In  New  York,  at  the  point  where  the  New  York,  Pennsyl- 
vania and  Ohio  road  commences. 

The  Chairman.  Can  you  give  the  connections  of  your  road  ? 

Mr.  King.  The  New  York,  Pennsylvania  and  Ohio  commences  at 
Salamanca  and  goes  in  one  direction  to  Marion,  Ohio,  where  the  Chicago 
and  Atlantic  commences,  which  road  was  built  under  the  auspices  of 
the  Erie  road,  but  not  directly  under  the  control  of  the  latter.  Then 
we  go  to  Dayton,  Ohio,  where  we  connect  with  several  roads,  princi- 
pally the  three  C's  and  I.  road  into  Cincinnati.  We  have  various  con- 
nections in  the  State  of  New  York. 

TRAFFIC  RELATIONS  WITH  THE  GRAND  TRUNK. 

The  Chairman.  What  are  your  traffic  relations  with  the  Grand 
Trunk  Railway  Company  ? 

Mr.  King.  It  is  a  very  friendly  connection  of  ours  at  the  Niagara 
frontier. 

The  Chairman.  Do  you  do  much  business  in  connection  with  that 
road  ? 

Mr.  King.  Y'^es,  sir. 

The  Chairman.  What  freight  do  they  take  from  you  ? 

Mr.  King.  Could  not  tell  you  exactly,  but  it  is  very  large ;  we  inter- 
change a  good  many  passengers  as  well. 

The  Chairman.  Going  west  and  east? 

Mr.  King.  Yes.    It  is  a  full  close  connection  of  ours. 

The  Chairman.  Could  you  give  approximately  the  total  business  done 
between  your  road  and  the  Grand  Trunk  ? 

Mr.  King.  I  think  100  cars  a  day  on  an  average,  or  about  70  west 
and  30  east. 

The  Chairman.  What  would  that  aggregate  in  tons  ? 

Mr.  King.  It  would  average  about  15  tons  to  the  car. 

The  Chairman.  Have  you  any  special  agreements  with  that  road  by 
which  you  do  business  in  connection  with  it? 

Mr.  King.  Yes,  sir. 

The  Chairman.  Do  you  know  what  they  are? 

Mr.  King.  Generally  to  interchange  business.  We  met  within  the 
last  week  or  ten  days.  We  have  nothing  but  the  ordinary  traffic  ar- 
rangements between  railroad  companies,  except  that  we  agree  that  we 


THE    UNITED    STATES    AND    CANADA.  43 

will  run  one  principal  passenger  train  by  that  ronte,  and  they  agree  to 
to  do  the  same  thing  with  us. 

The  Chairman.  At  what  point  does  your  road  connect  with  the 
Grand  Trunk  ? 

Mr.  King.  At  Suspension  Bridge  and  Black  Rock. 

The  Chairman.  1  believe  you  gave  your  western  connection  in  this 
country  as  at  Salamanca,  did  you  noti 

Mr.  King.  Yes,  sir.  Our  relations  there  are  these :  We  lease  that 
railroad.  Jt  whs  called  the  Atlantic  and  Great  Western,  but  is  now 
known  as  the  New  York,  Pennsylvania  and  Ohio.  We  iiay  32  per  cent, 
of  the  gross  earnings  as  rental. 

Th<^  Chairman.  You  form,  then,  a  through  line  in  connection  with 
the  Grand  Trunk,  do  you  ! 

Mr.  King.  One  line,  yes,  sir;  and  another  in  connection  with  the 
Niw  York,  Pennsylvania  and  Ohio,  and  the  Chicago  and  Atlantic. 

The  Chairman.  You  have  a  railroad  connection  with  the  Grand 
Trunk,  but  do  you  have  any  competitive  relation  with  it"? 

Mr.  King.  Yes,  sir. 

The  (Chairman.  What  is  that  1 

Mr.  JviNG.  The  Chicago  and  Atlantic,  and  the  Atlantic  and  Great 
Western,  iind  our  main  line. 

The  Chairman.  So  you  are  in  competition  with  the  Grand  Trunk, 
and  (lo  a  larg<'  portion  of  your  western  business  in  connection  with  it? 

Mr.  King.  Yes,  sir ;  and  we  also  do  a  large  business  with  the  Penn- 
sylvania Kailroad,  and  some  business  in  connection  with  the  Baltimore 
and  Ohio  Railroad  at  Mansfield. 

DIFFERENTIALS. 

The  Chairman.  What  arrangements  exist  now  with  respect  to  differ- 
entials whereby  your  company  and  the  Grand  Trunk  are  enabled  to  get 
a  satistai  tory  share  of  the  competitive  business  between  the  East  and 
th.^  West '? 

Mr.  King.  We  get  no  differential  on  the  east-bbund  by  any  line,  ex- 
cept on  dressed  beef  for  a  portion  of  the  time  ;  we  get  a  differential  on 
the  west-bound  traffic. 

The  Chairman.  You  mean  on  freight  going  west  you  get  a  differen- 
tial? 

Mr.  King.  Yes,  sir. 

The  Chairman.  You  and  the  Grand  Trunk  in  conjunction  ? 

Mr.  King.  Yes;  also  by  the  Atlantic  and  Great  Western. 

The  Chairman    How  is  it  you  get  it  west  and  not  east? 

Mr.  King.  Because  we  have  not  asked  for  it  east. 

The  Chairman.  Why  do  they  give  it  to  you  west? 

Mr.  King.  Because  we  insisted  upon  it,  and  fought  for  it,  and  after 
a  long  delay  got  it. 

The  Chairman.  Have  you  a  right  to  it,  do  you  think  ? 

Mr.  King.  Oh,  yes  ;  we  have  a  right  to  more. 

The  (  HAIRMAN.  What  is  your  differential  now'? 

Mr.  King.  From  New  York  City  and  Boston  on  first,  5  cents ;  sec- 
ond, 4  cents;  third,  3  cents;  fourth,  2  cents;  fifth,  1|  Boston,  1  New 
York  ;  sixth,  1  cent. 

The  Chairman.  Is  there  any  reason  why  if  you  have  a  right  to  get 
it  one  way  that  you  should  not  get  it  both  ways  ? 

Mr.  King.  Yes,  sir.  In  a  few  minutes  I  could  tell  you  as  to  that  so 
far  as  the  past  three  years  are  concerned.     Before  pooling  was  prohib- 


44  TRANSPORTATION   INTERESTS    OF 

ited  w«»  ^ot  those  cash  balances  that  have  been  alhulcd  to  from  time  to 
time  because  we  did  not  cany  business  enouf^h — did  not  cany  the  per- 
centage that  was  awarded  tons  by  the  arbitrator,  whoever  it  may  have 
been,  at  the  time.  When  the  interstate  hiw  went  into  effect  the  rail- 
road managers  were  very  much  embarrassed  as  to  exactly  how  they 
should  act.  We  could  not  pool.  The  stronger  lines  did  not  want  to 
admit  that  they  would  allow  differentials,  but  said  they  would  do  it  if 
it  was  lound  ui)on  the  actual  business  done  that  it  was  necessary  or 
right  to  do  it.  After  a  good  deal  of  hesitation  the  Erie  Railroad  agreed 
after  April,  1887,  that  it  would  maintain  full  rates  absolutely,  and  we 
would  watch  the  result  of  that  before  demanding  a  differential.  Our 
object  in  doing  that  was  to  the  end  that  if  we  could  get  the  jxTcentage 
of  business  that  we  formerly  got  we  would  be  content,  and  on  the  otln  r 
band  the  Pennsylvania  and  the  New  York  Central  said  that  they  would 
be  willing  at  the  proi)er  time  to  make  souu'  sort  of  an  adjustment.  It 
has  gone  along  under  that  arrangement  until  this  time.  There  was  no 
adjustment  made  until  about  a  year  ago.  Our  west  bound  business 
fell  off,  and  they  then  agreed  that  the^'  wo'uld  allow  a  differential  in  our 
favor  on  westbound.  They  did  not  allow  any  differential  on  east- 
bound  business,  as  I  said  before,  and  the  result  of  the  whole  thing  is 
that  for  the  first  two  years,  which  have  just  about  expired,  we  are 
$1,064,110  short  in  competitive  traffic,  as  compared  with  what  we  W(»uld 
have  received  under  the  old  system. 

The  Chairman.  What  old  system  ? 

Mr.  King.  Paying  balances  under  the  pool. 

The  Chairman.  What  effect  did  the  law  have  to  produce  that  short- 
age f 

EFFECT   OF   THE   INTERSTATE   LAW. 

Mr.  King.  The  effect  is  this,  and  I  will  answer  two  questions  at  one 
time.  In  the  first  place,  take  a  line  like  the  Erie  Railroad,  which  has 
not  the  best  reputation  in  the  world,  though  it  has  now  a  better  reputa- 
tion than  it  had  at  one  time,  and  w^e  are  trying  to  outlive  the  old  repu- 
tation as  fast  as  we  can.  Formerly  we  could  not  get  our  share  of  the 
traffic.  The  reason  we  were  given  a  percentage  under  the  i)ool  was  be- 
cause the  stronger  lines  knew  we  could  do  a  certain  large  amount  of 
business  legitimately,  and  knew  we  could  get  another  amount  of  busi- 
ness, larg(!  or  small,  illegitimately. 

The  Chairman.  Tliat,  of  course,  was  before  the  law  took  effect'? 

Mr.  King.  Yes,  sir;  and  so  they  made  us  payments  in  cash  of  our 
shortages  under  the  pool  before  the  interstate  hiw  went  into  effect, 
amounting  in  the  last  year,  ending  April  1,  1887,  to$4L'0,.'^37,  and  which, 
under  the  same  basis  of  settlement,  amounted  to  over  $r);>0,()0()  per  an- 
num for  the  two  years  from  A})ril  1,  1887  to  April  1,  1880 

The  Chairman.  So  you  lose  nothing  by  the  passage  of  the  interstate 
law? 

Mr.  King.  Except  about  ,|L0(>(),000,  or  over  $500,000  per  annum. 

The  Chairman.  But  your  road  is  not  so  situated  naturally  as  to  be 
able  to  secure  business  in  competition  with  others* 

Mr.  King.  The  New  York  Central  is  a  v<ry  strong  line,  and  the  Penn- 
sylvania is  a  stronger  one  at  the  same  rates.  That,  of  course,  is  under- 
stood. 

The  Chairman.  Your  road  has  the  right  to  fix  any  rates  it  pleases, 
provided  it  is  done  according  to  law.  You  have  been  done  no  injury 
by  the  operation  of  the  interstate  act  except  in  that  way,  have  you,  that 


THE  UNITED  STATES  AND  CANADA.  45 

your  road  is  at  a  disadvantage  as  compared  with  the  other  roads  in  get- 
ting the  business  ordinarily. 

Mr.  KiNfr.  As  a  general  proposition  that  is  a  correct  statement.  The 
operation  of  the  interstate  law  has  been  to  strengthen  the  strong  lines 
and  to  weaken  the  weak  lines.  I  am  not  talking  of  the  Canadian  lines 
at  the  moment,  but  am  speaking  of  the  lines  in  the  United  States. 

The  Chairman.  Under  the  operation  of  the  pool  you  say  you  received 
$500,000  a  year  f 

Mr.  King.  Yes;  the  Erie  would  have  got  that  much  more  than  we 
get  now  if  the  law  had  not  been  changed. 

The  Chairman.  How  did  you  get  that? 

Mr.  King.  We  got  that  for  being  virtuous,  for  one  reason,  and,  gen- 
erally speaking,  the  lines  thought  it  only  fair  that  the  competitive  busi- 
ness be  distributed  under  the  rule,  as  Mr.  Fink  explained.  We  got  that 
amount  for  these  reasons. 

Tlie  Chairman.  And  you  got  that  without  doing  anything? 

Mr.  King.  We  got  it  every  month.  If,  upon  a  statement  it  was 
shown  that  we  owed  them  anything,  we  paid  it,  and  we  gave  security, 
but  we  did  not  pay  much. 

The  ('HAirman.  The  balance  was  always  in  your  favor? 

Mr.  King.  Generally. 

The  Chairman.  (Jf  tJie  differentials  that  you  get  on  your  west  bound 
freight  what  proportion  does  your  particular  line  get  as  compared  with 
the  Grand  Trunk  ? 

Mr.  King.  The  same. 

The  Chairman.  Per  mile  1 

Mr.  King.  Yes. 

The  Chairman.  Do  you  think  that  this  differential  arrangement 
should  b3  kept  up  ? 

Mr.  King.  1  think  the  differential  ought  to  be  increased ;  the  princi- 
ple is  good  enough. 

The  Chairman.  You  think  the  differentials  should  be  increased? 

Mr.  King.  Yes  ;  because  we  are  running  behind. 

The  Chairman.  Are  these  differentials  the  expedient  whereby  your 
company  secures  the  traffic,  and  do  they  take  the  place  of  the  pool  in 
order  to  attain  that  object  ? 

Mr.  King.  That  is  a  true  statement.  The  reason,  also,  why  we  have 
fallen  bt^hind  since  these  differentials  were  allowed  nominally  is  that 
they  are  really  allowed  because  the  other  lines  have  reduced  their  rates 
in  proportion. 

The  Chairman.  lieduced  their  rates  for  what  reason '! 

Mr.  King.  Simply  because  business  was  dull  and  they  wanted  all 
they  could  get.  They  thought  we  were  getting  a  little  too  much.  I  do 
not  think  that  is  being  done  now,  however. 

The  Chairman.  VVas  not  that  the  result  of  the  interstate  act  and 
the  publication  of  rates  by  all  the  roads? 

Mr.  King.  I  can  not  say  that  it  was;  it  may  have  been. 

OBSERVANCE   OF  THE  LAW. 

The  Chairman.  You  do  not  mean  that  they  reduced  the  rates  in 
violation  of  the  act? 

Mr.  King.  I  would  not  like  to  swear  to  that.  You  know  that  for  a 
time — say  most  of  last  year — the  rates  were  not  strictly  observed  by 
any  of  the  lines. 

The  Chairman.  What  particular  period  do  you  refer  to? 


46  TRANSPORTATION    INTERESTS    OF 

Mr.  King.  Last  .year. 

The  CiiAiK.'MAN.  Tilt'  year  aftor  the  act  went  into  operation  ? 

Mr.  King.  Yes;  188S.  With  the  beginning  of  the  enforcement  of 
tile  law  lioni  the  lirst  of  April,  1887,  they  generally  obeyed  it,  but  after- 
ward they  got  careless  and  looser  in  rate  matters. 

The  (/IIAIHMAN.  How! 

IMr.  King.  They  did  it  all  along,  and  I  think  one  reason  for  it,  thongli 
1  do  not  say  it  in  criticism  of  the  Interstate  Commerce  Commission,  is 
thiit  the  Government  did  not  undertake  to  carry  oat  the  law.  The  Com- 
missioners gave  various  opinions  in  conflict  with  each  other.  The  only 
thiiig  the  companies  ai)peared  to  know  was  thattbey  were  not  jjunished. 
So  the  roads  went  along  ])ursuing  these  i)ra<;tices  while  i^ermitted  to  do 
so,  and  the  fact  is  that  not  until  the  amendment  of  the  law  was  made,  on 
the  thiid  of  last  March,  did  the  trafiSc  agents  wake  up  to  the  fact  that 
they  might  be  placed  in  a  dangerous  position  if  they  violated  the  law. 

The  Chairman.  So  they  are  now  beginning  to  observe  it '? 

Mr.  King.   I  think  it  is  very  fully  observed  in  this  country. 

OPPORTUNITIES   OF   THE   CANADIAN   ROADS. 

The  Chairman.  How  is  it  with  these  Canadian  roads  that  are  taking 
traflic  into  and  out  of  the  United  States '? 

]\Ir  King.  Of  course  we  can  not  tell  how  they  act  up  there,  not 
nearly  as  well  as  we  can  tell  how  we  act  ourselves  ;  but  we  know  this, 
that  they  have  abundant  opportunities  for  doing  things  contrary  to  law 
without  being  punished. 

The  Chairman.  What  are  these  opportunities  ? 

Mr.  King.  The  opportunities  are  these:  As  an  example  of  what  they 
can  do,  and  1  must  coniess  I  believe  they  do  it,  they  make  a  contract 
with  a  man  in  Chicago  to  take  his  export  business  to  Liverpool,  and 
they  give  him  rates  and  the  rates  are  on  the  bill  of  lading,  and  every- 
thing is  right  on  the  face  of  it  and  hardly  anybody  knows  anything 
dift'erent ;  but  it  is  the  easiest  thing  in  the  world,  and  I  am  told  it  is  a 
fact,  for  the  freight  agent  in  Montreal  to  send  a  draft  to  the  man  in 
Liverpool  or  London  paying  him  a  rebate.  If  the  rate  is  25  cents  on  a 
bill  of  lading  and  the  agent  agreed  to  make  it  22  cents,  the  3  cents  in 
sterling  is  seut  to  Liver[)Ool. 

The  Chairman.  And  a  part  of  that  cargo  goes  through  the  United 
States  ? 

Mr.  King.  In  some  cases.  It  does  not  come  through  always.  It  goes 
to  the  line  at  Portland  or  the  line  at  Montreal. 

The  (Chairman.  Any  goods  carried  to  Liverpool  or  any  place  abroad 
where  they  do  not  strike  the  United  States  in  transit,  as  a  matter  of 
course  are  entirely  out  oi' our  jurisdiction. 

Mr.  King.  But  I  am  inclined  to  believe  that  it  goes  to  Portland.  I 
do  not  believe  those  lines  are  directly  subsidized.  They  may  have  been 
at  one  time.  That  you  will  tind  out  in  your  investigation  in  Canada. 
We  all  know  that  no  business  originates  at  Portland.  We  know  that 
these  shii)s  must  have  a  load,  and  the  road  must  give  them  a  load,  aiid 
if  they  can  not  give  them  a  load  at  one  j)rice  they  will  give  it  to  them 
at  another.  The  steamship  lines  settle  with  the  railroad  lines,  and  the 
railroads  settle  with  the  shipper  by  means  of  drafts.  That  is  what  is 
believed  among  railroad  men,  but  1  do  not  charge  it. 

The  Chairman.  Are  any  of  you  gentlemen  engaged  in  that  sort  of 
practice  f 

Mr.  King.  Not  at  this  timej  but  those  fellows  did  not  stop.    They 


J 


THE    UNITED    STATES    AND    CANADA.  47 

kept  goiug  on  aud  on,  and  will  go  on  forever.  They  do  not  mind  the 
law. 

The  Chairman.  Have  any  of  them  committed  a  violation  of  law,  or 
has  any  agent  in  the  United  States  disobeyed  the  law?  If  they  have 
they  may  mind  the  law  some  of  these  days. 

Mr.  King.  Commissioner  Fink  thinks  it  is  pretty  hard  to  get  hold 
of  them.  It  seems  to  me  that  the  Federal  court  can  get  hold  of  an  agent 
living  in  the  United  States,  even  if  he  be  a  citizen  or  lives  in  Canada, 
but  I  am  not  a  lawyer,  and  can  not  speak  definitely  as  to  that. 

The  Chairman.  But  it  is  your  judgment  that  the  American  people 
who  are  engaged  in  railroading  are  trying  to  obey  the  law  just  nt/w? 

Mr.  King.  I  do  not  know  of  any  case  of  violation. 

THE   AMENDMENT   OF   THE  LAW. 

The  Chairman.  So  that  the  additional  stringency  of  the  law  has  aided 
in  its  enforcement  instead  of  weakening  it? 

Mr.  King.  I  think  the  amendment  of  the  law  is  a  very  important 
thing,  and  I  am  sorry  it  was  not  done  before. 

The  Chairman.  The  fact  is  that  the  reason  the  Commission,  if  I  may 
be  allowed  to  say  it  here,  did  not  enforce  the  act  as  rigidly  as  I  thought 
and  others  thought  they  should  have,  and  as  you  must  have  thought 
they  should  have,  if  you  were  trying  to  obey  it  yourself,  was  because 
there  were  some  missing  links  in  the  law  aud  some  questions  as  to 
whether  it  could  be  enforced  in  the  courts. 

Mr.  King.  I  think,  as  I  understood  it,  and  in  fact  I  understood  some 
one  who  claimed  to  know  to  say  so,  that  the  Commissioners  did  not 
agree  among  themselves,  though  the  majority  decided  that  the  Com- 
mission could  not  enforce  it  on  the  through  business,  and  the  amend- 
ment was  made  to  correct  that,  and  it  had  a  salutary  eliect  on  the  rail- 
road people. 

THE  SITUATION  AS  TO  THE  GRAND  TRUNK. 

The  Chairman.  Have  you  any  comment  to  make  on  the  present  sit- 
uation under  the  interstate  act  as  between  your  road,  being  an  Amer- 
ican road,  or  of  any  other  roads  that  you  know  of  in  America,  and  those 
in  the  Canadian  Dominion  ? 

Mr.  King.  I  have  this  to  say,  that  the  Chicago  and  Atlantic  road, 
which,  as  I  said,  was  promoted  by  the  Erie  but  does  not  belong  to  it,  the 
Erie  Company  having  two  millions  of  dollars  in  it,  is  in  close  connec- 
tion and  full  harmony  with  the  Erie  system.  We  do  not  get  out  of  Chi- 
cago what  we  regard  as  our  fair  share  of  the  business.  That  may  be  a 
question,  but  we  know  we  do  not  get  as  much  as  we  did  formerly  and 
the  Grand  Trunk  gets  certainly  twice  as  much,  and  they  distribute  that 
among  their  diflerent  connections.  You  understand  we  not  only  have 
a  connection  with  them,  but  the  West  Shore,  the  Lehigh  Valley,  the 
Rome,  Watertown  aud  Ogdensburg,  aud  the  Lackawanna  have  con- 
nections with  them  also,  and  they  have  connections  through  Maine  and 
Vermont. 

The  Chairman.  What  is  the  connection  in  Vermont? 

Mr.  King.  The  Vermont  Central. 

The  Chairman.  Does  that  belong  to  the  Grand  Trunk  or  is  it  leased 
by  the  Grand  Trunk  ? 

Mr.  King.  It  is  not,  but  it  is  in  close  affiliation  with  them.  Its  policy 
in  a  measure  is  dictated  by  the  Grand  Trunk.  They  have  been  a  thorn 
in  the  tlesh  of  all  roads  up  there  for  years ;  they  have  always  been  mak- 
ing lower  rates. 


48  TRANSPORTATION    INTERESTS    OF 

The  Chaiiiman.  You  say  you  have  not  fared  as  well  as  you  did  be- 
fore the  act  was  passed.  Now  what  is  the  specific  explanation  that 
you  liave  to  make  for  not  having  fared  as  well  f 

Mr.  King.  AVell,  1  could  not  prove  it,  and  I  would  not  attempt  to 
prove  it,  but  my  impiession  is  that  they  do  these  things.  I  have  un- 
derstood that  they  give  drawbacks. 

The  Chairman.  And  in  fact  the  Canadian  road  does  not  obey  the 
law  as  you  do  1 

Mr.  King.  No,  sir. 

The  Chairman.  And  violates  it  by  giving  rebates  ? 

Mr.  King.  I  can  not  account  for  it  in  any  other  way.  I  do  not  say 
anything  jibout  our  line.  But  you  take  a  line  like  the  Lake  Shore. 
Nobody  knows  any  better  line  than  the  Lake  Shore  running  from  Chi- 
cago to  the  East.  The  Michigan  Central  also  is  a  good  line.  It  runs  to 
Detroit  and  runs  over  the  Canadian  Southern,  which  they  lease,  to  the 
Niagara  froaitier.  Everybody  knows  that  the  Pennsylvania  Railroad 
is  a  s])lendid  line,  and  yet  the  Grand  Trunk  go  into  Chicago  and  get 
as  they  did  a  week  or  two  ago,  39  per  cent,  of  the  business,  when  it  used 
to  get  less  than  20  per  cent. 

The  Chairman.  I  will  ask  you  to  explain  that. 

Mr.  King.  I  can  not  explain  it.  These  things  are  done  in  the  corner 
and  secretly  in  every  way.  I  think  Mr.  Newell  has  the  figures.  The 
Grand  Trunk  has  been  getting  recently  39  per  cent,  of  the  through 
business  out  of  Chicago. 

Senator  Keagan.  In  competition  with  your  road  and  the  Pennsyl- 
vania and  the  New  York  Central  1 

Mr.  King.  Yes,  and  the  Baltimore  and  Ohio. 

Senator  Keagan.  Have  you  any  notion  as  to  any  change  in  legisla- 
tion necessary  to  protect  American  roads  against  foreign  roads  doing 
business  in  this  country  ? 

M  r.  King.  No,  sir ;  I  have  no  idea  as  to  how  it  can  be  done.  As  I  said, 
I  am  not  a  lawyer,  and  certainly  am  not  a  legislator;  but  it  seems  to 
uie  that  with  persons  doing  business  in  this  country,  where  a  part  of 
the  business  is  done  in  Canada,  you  can  apply  the  same  rule  as  you 
would  apply  to  the  American  roads. 

The  Chairman.  Do  you  think  the  interstate  law  can  be  so  enforced 
that  a  Canadian  road  coming  into  this  country  must  obey  it"? 

Mr.  King.  I  can  not  see  any  reason  why  it  should  not.  If  a  law  of 
Congress  is  passed  it  applies  to  everybody  in  the  United  States.  I  do 
not  see  why  it  should  not  apply  to  others  doing  business  in  the  United 
States.  Speaking  for  our  road,  we  do  not  ask  anything.  We  do  not 
ask  that  we  shall  have  any  advantage  over  the  Canadian  road,  but  we 
ask  that  the  Canadian  road  be  put  exactly  on  the  same  footing  as  we 
are. 

Senator  Gorman.  How  are  you  to  get  at  it? 

Mr.  King.  That  is  not  for  me  to  state. 

The  Chairman.  How  are  the  tariffs  of  the  Canadian  road,  as  far  as 
you  know  ? 

]\Ir.  King.  T  do  not  know.  J  know  the  same  action  is  taken  toward 
them  by  the  Commission  as  it  takes  toward  other  roads.  They  are  re- 
quired to  post  their  rates,  as  the  American  roads  do. 

The  Chairman.  Are  their  through  rates  posted  ? 

Mr.  King.  Yes;  I  think  they  are  all  posted  in  Chicago. 

The  Chairman.  And  the  only  question  in  your  mind  is  whether  or 
not  they  are  lived  up  to  I 

Mr.  King.  Yes. 


THE    UNITED    STATES    AND    CANADA.  49 

The  Chairman.  They  post  the  rate  according  to  what  they  are  enti- 
tled to  charge  under  the  differential  rate? 

Mr.  King.  There  is  no  differential  east-bound.  We  publish  the  dif- 
ferentials here  on  west-bound. 

The  Chairman.  Over  what  lines  of  the  Grand  Trunk  or  other  Cana- 
dian roads  do  your  cars  now  run,  and  in  the  carriage  of  what  traffic? 

Mr.  King.  They  run  over  the  Grand  Trunk,  but  I  do  not  think  we 
have  any  cars  running  over  the  Canadian  Pacific.  If  we  have  any  they 
are  very  few. 

The  Chairman.  Do  your  cars  go  through  to  Canada  without  hinderance 
in  any  way  ? 

Mr.  King.  Yes,  sir. 

The  Chairman.  Just  as  though  tlie  two  companies  were  one? 

Mr.  King.  Yes,  sir;  just  as  they  do  by  any  line  south  of  the  lakes. 

The  Chairman.  Do  you  know  what  becomes  of  your  cars  when  they 
get  into  Canada? 

Mr.  King.  I  think  they  use  them  in  the  through  traffic,  unless  they 
are  very  short  of  cars.  They  use  them  pretty  much  as  they  are  used 
elsewhere. 

The  Chairman.  And  when  Canadian  cars  come  over  here,  do  you  let 
them  go  olf  your  line  anywhere? 

Mr.  King.  No,  sir ;  we  send  them  right  back. 

the  pooling  QUESTION. 

The  Chairman.  There  has  been  a  good  deal  of  discussion  here  on 
the  pooi  question.  Mr.  Fink  seems  to  think  that  it  is  a  cure  for  all  ills 
and  that  its  prohibition  has  been  the  cause  of  most  of  the  ills  that  have 
existed  since  the  j)assage  of  the  act. 

Mr.  Fink.  I  did  not  express  myself  quite  so  strongly. 

Mr.  King.  1  was  going  to  say  that  1  would  not  go  quite  that  far.  I 
think  this,  that  the  pooling  system  ought  not  to  have  been  broken  up 
until  some  better  system  had  been  devised.  We  lost  more  than  one 
million  of  dollars  on  account  of  the  abolition  of  the  pool  in  the  two  years 
since  the  interstate  law  went  into  effect. 

The  Chairman.  If  the  pooling  had  gone  on  you  would  have  been 
getting  that  much  more  money  now  ? 

Mr.  King.  Yes,  sir;  and  it  would  be  very  acceptable.  By  breaking 
up  the  so  called  vice  of  pooling  the  weak  lines  have  been  weakened  and 
the  stronger  lines  have  grown  stronger. 

The  Chairman.  Has  not  the  interstate  law  had  a  tendency  to  check 
the  building  of  unnecessary  railroads  and  thereby  give  the  weak  lines 
a  chance  of  recouping? 

Mr.  King.  That  might  follow  as  a  corrollary. 

The  Chairman.  Has  the  interstate  law  prevented  the  building  of 
more  railroads? 

Mr.  King,  l^es,  but  I  do  not  think  that  the  interstate  law  is  the 
only  thing  that  produced  that  effect.  Lines  were  built  into  deserts  and 
everywhere  else  where  there  was  no  business  for  them,  and  taking  the 
two  things  together  it  has  prevented  the  railroads  from  making  money. 
As  we  know,  some  of  the  leading  roads  in  the  West  are  very  much  em- 
barrassed, and  the  fact  is  that  the  people  do  not  want  to  build  any 
more  roads  while  the  existing  lines,  which  were  formerly  very  strong 
and  profitable,  can  hardl,y  e.aru  their  fixed  charges,  and  very  few  declare 
^  dividend, 

m'i^r-^i 


50  TRANSPORTATION    INTERESTS    OF 

The  Chairman.  Of  course  when  you  need  more  railroads  they  will  be 
built? 

Mr.  King.  Yes;  somebody  will  build  them. 

The  Chairman.  And  no  law  could  be  passed  to  prevent  it? 

]\Ir.  King.  No,  sir. 

The  Chairman.  But  the  forcing  of  the  weak  roads  to  stand  a  little 
more  upon  their  own  resources  when  they  found  they  were  making 
nothing  and  could  not  recoup  from  the  strong  roads  had  a  tendency  to 
check  up  a  little  the  building  of  unnecessary  roads'? 

Mr.  King.  Yes ;  the  natural  result  was  this,  tiiat  we  did  not  get  any 
more  by  carrying  the  freight  under  the  interstate  law,  or  not  as  much,  as 
before.  As  far  as  we  are  concerned  we  have  not  got  as  much  of  this 
competitive  traffic  as  before  we  met  competition  in  another  way. 

The  Chairman.  When  was  that ! 

Mr.  King.  Heretofore.  It  has  been  difterent  in  the  last  two  years. 
If,  for  illustration,  a  man  had  a  car  of  cattle  to  ship  from  Chicago  he 
was  not  going  to  the  Erie  Railroad  that  would  take  half  a  day  longer 
time  to  get  to  New  York  than  it  would  require  on  the  Pennsylvania. 
The  Pennylvania'is  in  superb  condition  and  there  is  no  better  line  as 
to  physical  condition  in  the  country.  It  is  no  trouble  for  them  to  run 
their  trains  in  comparatively  fast  time,  and  we  have  had  to  run  our 
trains  in  the  same  time  to  get  any  of  this  business,  and  in  order  to  do  so 
we  have  had  to  spend  a  good  deal  of  money  to  get  our  track  in  order  to 
transport  in  the  same  time  as  the  Pennsylvania. 

The  Chairman.  Is  it  not  a  good  thing  for  you  that  you  had  to  put 
your  track  in  good  condition  •? 

Mr.  King.  Good  for  the  public  but  not  good  for  the  road. 

The  Chairman.    But  it  is  the  public  we  are  looking  after. 

Mr.  King.  I  was  looking  a  trifle  after  the  railroad.     [Laughter.] 

THE  grand  trunk  ROAD. 

The  Chairman.  Take  this  Grand  Trunk  road,  has  it  been  an  injury 
or  a  benefit  to  the  people  of  New  England  and  to  the  people  of  the  bor- 
der States  along  the  northern  line  of  the  United  States  ? 

Mr.  King.  I  should  not  say  it  was  an  injury ;  I  do  not  know  of  how 
much  benefil  it  was.     It  was  no  injury  certainly. 

The  Chairman.  I  put  it  both  ways  because  I  did  not  want  to  be 
understood  as  leading  you  in  either  direction. 

Mr.  King.  I  think  it  about  an  even  thing.  The  Grand  Trunk  is  well- 
managed  and  a  portion  of  it  is  in  tine  condition,  the  Great  Western  road 
of  Canada  especially,  and  I  do  not  think  any  intelligent  man  in  the 
country  would  want  to  shut  up  the  Grand  Trunk  Company  and  prevent 
it  from  doing  business. 

The  Chairman.  Why  not? 

Mr.  King.  Because  there  is  competition  all  over  the  land,  and  we  do 
not  mind  that  competition  in  addition.  It  is  only  a  part  of  the  whole 
thing. 

The  Chairman.  Suppose  it  were  shut  off,  what  would  be  the  effect 
upon  the  people  of  Illinois  and  Minnesota  and  Dakota  and  Wisconsin, 
and  Michigan  and  New  England? 

Mr.  King.  1  do  not  think  it  would  have  any  effect. 

The  Chairman.  Would  it  not  increase  the  price  of  transportation  I] 

Mr.  King.  It  would  give  more  business  to  the  remaining  lines. 

The  Chairmaj^,  And.  would  not  the  result  b^  that  you  would  raise] 
your  rates  ?  "■'.:, 


THE  UNITED  STATES  AND  CANADA.  51 

Mr.  King.  No,  sir  ;  because  enough  competition  would  be  left  to  keep 
the  rates  down.     There  is  no  doubt  about  that. 

Senator  Keagan.  Would  not  the  increase  of  business  rather  tend  to 
lower  rates  ? 

Mr.  King.  No,  I  think  tliey  would  keep  them  about  as  they  are.  The 
increase  of  business  may  happen  during  a  certain  part  of  the  year,  but 
before  the  year  is  over  it  will  ecjualize.  One  part  of  the  year  we  would 
get  more  business  than  we  could  do,  and  another  portion  of  the  year  it 
would  become  slack,  and  in  the  long  run  about  equalize,  year  by  year, 
for  the  year. 

WHAT  KEGULATES  RATES. 

Senator  Reagan.  Is  there  any  reason  that  controls  you  gentlemen  in 
the  railroad  business  in  the  direction  of  lowering  rates  when  you  have  to  ? 

Mr.  King.  No,  sir. 

Senator  Reagan.  And  you  nfever  lower  them  except  when  you  are 
compelled  to  do  so  ? 

Mr.  King.  Competition  regulates  it. 

Senator  Reagan.  Suppose  you  have  not  much  competition,  you  keep 
it  up  do  you  not "? 

Mr.  King.  Keep  it  up  to  a  reasonable  rate. 

Senator  Reagan.  In  other  words,  do  you  consider  the  condition  of 
the  shipper  at  all,  or  consider  how  much  you  get  out  of  the  trattic  you 
get  control  of? 

Mr.  King.  No,  sir;  I  do  not.  I  never  subscribed  to  the  doctrine 
that  we  should  maUe  it  pay  all  it  could  pay. 

Senator  HiscocK.  Has  the  rule  been  in  last  twenty  years  that  the 
railroads,  or  at  least  some  of  them,  upon  the  theory  of  increasing  their 
tonnage  by  lowering  rates,  have  been  more  than  compensated  by  the 
increased  tonnage  for  the  losses  sustained  in  lowering  the  rates  ? 

Mr.  King.  That  was  the  result. 

The  Chairman.  It  is  a  question  whether  you  make  more  money  by 
one  system  than  another  ? 

Mr.  King.  We  try  to  regulate  itand  consider  the  business  in  the  light 
of  what  would  be  best  for  the  interests  of  our  patrons.  Mr.  Fink  stated 
something  with  reference  to  the  railroads  when  they  got  into  these  wars, 
and  their  doing  business  whether  it  would  pay  or  not.  We,  however, 
never  took  any  business  on  the  Erie  that  did  not  pay  j^er  se. 

The  Chairman.  Pay  what  ? 

Mr.  King.  Some  profit  on  the  operating  expenses,  and  we  never  took 
anything,  if  we  knew  it,  of  course,  at  less  than  the  cost.  Of  course  in 
a  vast  traffic  like  that,  we  maj'  at  tunes  do  so,  but  never  if  we  know  it. 

EFFECT   OF   THE   INTERSTATE   LAW. 

The  Chairman.  What  is  your  judgment  now  as  to  the  operation  of 
the  interstate  law  upon  the  trattic  of  the  country"?  Has  it  reduced 
rates,  or  in  any  way  affected  the  transportation  rates  of  the  country? 

Mr,  King.  I  do  not  think  it  has  reduced  rates.  I  think,  as  1  said  a 
little  while  ago,  it  has  increased  the  expenses  of  the  railroads. 

The  Chairman.  How  increased  expenses? 

Mr.  King,  Take  our  case.  We  had  to  compete  wirh  the  best  lines 
in  the  country,  and  that  forced  us  to  make  large  expenditures  for  in- 
creasing our  facilities.  Tlie  strong  lines  make  faster  time  than  there  is 
any  necessity  for  in  many  cases.  They  set  the  pace  for  tJie  rest  of  us, 
and  we  had  to  keep  up  the  best  way  we  could. 


52  TRANSPORTATION    INTERESTS    OF 

The  CiiA^iRMAN.  You  say  tlie  result  has  been  a  reduction  of  rates. 
You  moan  by  that  in  the  aggregate,  do  you? 

Mr.  King.  1  mean  to  say  that  if  you  take  the  rejiorts  of  the  several 
railroads,  as  far  as  we  have  gone  this  year,  it  is  about  the  same  thing 
that  the  roa«ls  have  done  the  past  two  years  at  the  same  time,  and  just 
about  what  it  was  two  years  ago.  This  year  the  rates  have  been  a  little 
less,  because  the  rates  are  ratlier lower;  butl  tliink  at  the  moment  the 
rates  are  better  maintained,  and  that  when  the  year  ends  there  will  be 
very  little  loss  compared  with  the  previous  year,  and  very  little  loss 
dining  the  previous  year  compared  with  the  year  before,  and  very  little 
loss  for  that  year  in  comi)arison  with  the  year  preceding. 

The  Chairman.  Well,  the  average  rate  is  about  the  same,  or  possibly 
a  little  less.  Is  it  or  not  true  that  in  the  making  of  new  schetlules  in 
localities,  rates  have  been  largely  redu(;ed  so  as  to  comply  with  the  long 
and  short  haul  clause  of  the  law,  and  the  general  provisions  of  the  law  ! 

Mr.  King.  I  do  not  know  how  that  is  on  other  roads.  It  has  not  been 
so  to  any  great  extent  ui)on  ours. 

The  Chairman.  I  happen  to  know  that  in  my  section  of  the  State  of 
Illinois  freight  rates  were  very  greatly  reduced  on  wheat  and  corn  and 
cattle. 

Mr.  King.  I  can  understand  how  that  would  be  on  a  short  road. 

The  Chairman.  I  mean  as  to  points  not  competing.  I  ask  whether 
or  not  it  is  true  that  at  non-competing  points  and  in  different  sections 
of  the  country  rates  have  been  reduced  very  much  below  what  they 
were  before  tlie  law  took  effect. 

Mr„  King.  I  do  not  know  how  it  is  on  other  roads.  If  so  on  our  road, 
it  is  to  a  very  sliglit  extent.     I  think,  perhaps,  it  is  so  to  a  slight  extent. 

OPERATION  OF  THE  POOLING  CONTRACT. 

Senator  IIarris.  I  understood  you  to  say  that  under  the  pooling  con- 
tract that  existed  before  the  passage  of  the  interstate  act,  your  road  re- 
ceived about  a  half  mdlion  dollars  a  year  froni  other  carriers  that  be- 
longed to  that  pooling  association. 

Mr.  King    That  was  about  it. 

Senator  Harris.  And,  to  use  your  own  language,  it  was  paid  your 
road  because  you  were  "  virtuous." 

Mr.  King.  Yes. 

Senator  Harris.  I  understand  that  to  mean  that  it  was  paid  by  other 
carriers  out  of  their  earnings  and  not  earned  by  your  road. 

Mr.  King.  I'es,  sir. 

Senator  Harris.  That  being  true,  did  it  not  practically  result  in  tax- 
ing the  shii)pers  of  this  country  to  the  extent  of  a  half  million  dollars 
a  year  more  than  they  would  have  been  taxed  necessarily  but  for  this 
bounty  donated  by  other  carriers  to  your  road? 

Mr,  King.  No;  certainly  not. 

Senator  Harris.  The  other  roads  had  to  earn  that  much  more 
money  than  was  necessary  to  sustain  them,  if  they  were  to  be  sustained, 
to  pay  you  that  half  million  of  dollars  for  doing  nothing? 

Mr.  King.  That  may  be  the  right  way  of  stating  it,  but  as  a  matter 
of  fact  they  do  not  now  i)ay  us  anything.     They  have  secured  what  be 
longs  to  us.     Other  comi)anies  get  that  much  more;  we  get  that  muck 
less.     What  we  do  not  get  on  this  competitive  business  the  strong* 
companies  retain. 

Senator  Harris,  Ptit  you  recplvetl  a  H\f  million  dollars  w  year  Urn 
you  did  wot  eant  ? 


Cll' 

iigj 

J 


THE    UNITED    STATES   AND    CANADA.  53 

Mr.  King.  Yes. 

Senator  Harris.  And  the  shippers  of  the  country  paid  it.  If  tliey 
pay  the  same  now,  though  you  do  not  get  any  part  of  it,  it  would  tend 
to  show,  woiihl  it  not,  that  the  rates  are  a  little  exorbitaut  and  uu- 
uecessaiily  high  ? 

Mr.  King.  That  I  can  not  answer  for  anybody  else.  I  know  we 
earned  only  a  little  over  our  fixed  charges,  and  that  little  and  more  be- 
si<les  was  i)ut  into  the  road  for  the  benefit  of  the  public.  A  man  who 
travels  over  the  Erie  road  will  feel  very  <lifterently  from  what  he  felt 
while  traveling  over  it  three  or  four  years  ago.  Then,  when  he  started 
on  that  road,  it  was  doubtful  if  he  would  reach  his  destination  on  time. 
Now  we  can  run  over  the  road  as  safely  and  as  i)romptly  as  the  Penn- 
sylvania Eailroad  does, 

'  Senator  Blair.  You  said  that  you  got  the  half  a  million  dollars  for  be- 
ing virtuous,  and  that  if  you  had  not  got  the  half  million  you  would  not, 
in  effect, have  been  virtuous.  You  said  they  knew  you  would  have  some 
business  anyway,  and  that  if  you  did  not  get  the  business  legitimately 
you  would  get  it  illegitimately.  Xow  what  were  those  illegitimate  means 
of  getting  the  business  with  which  you  threatened  the  other  roads  ! 

Mr.  King.  I  did  not  say  I  threatened  them. 

Senator  Blair.  I  do  not  mean  anything  personal,  but  I  want  the  idea. 

Mr.  King.  The  point  is  this,  that  they  knew  perfectly  well  that  we 
were  bound  to  get,  somehow  or  other,  some  of  this  business.  This  was 
a  time  when  we  were  under  no  restrictions,  and  we  were  bound  to  get 
enough  business  to  pay  our  fixed  charges,  if  possible.  We  did  not  get 
it  the  first  year  because  the  business  was  done  throughout  the  country 
and  they  thought  it  better  that  they  should  allow  us  the  percentages 
than  to  allow  us  to  go  in  independently  and  make  the  rates.  Now 
understand  how  these  i)ercentages  were  established.  It  was  left  to  the 
commissioner  to  determine  just  what  per  cent,  the  Erie  road  and  its 
system  should  get  out  of  certain  business  at  certain  points,  and  it  was 
all  combined,  and  after  months  of  deliberation  he  announced  these  per- 
centages, and  our  percentage  was  made  whatever  it  was  fixed  by  him 
and  was  paid  to  us  under  those  figures.  To  be  honest  and  candid  I  do  not 
think  those  roads  would  have  agreed  to  continue  to  pay  $500, 000,  but  I 
have  stated  the  way  those  percentages  were  worked  out  before  the 
passage  of  the  law,  and  we  would  have  been  contented  to  allow  it  to  go 
along,  for  if  the  law  had  not  been  enacted  we  would  have  been  $500,- 
000  per  annum  richer. 

benefits  of  THE  LAW. 

Senator  Blair.  Do  you  know  of  any  good  the  interstate  law  has 
done  ? 

Mr.  King.  I  think  it  has  done  good. 

Senator  Blair.  Please  state  in  what  way. 

Mr.  King.  I  think  it  has  brought  the  railroad  men  to  abetter  appre- 
ciation of  the  fact  that  there  is  some  general  power  that  isgoingto  gov- 
ern them  instead  of  every  fellow  striking  out  for  himself  and  doing  as 
he  likes.  If  I  should  indicate  any  criticism  at  all  about  the  Interstate 
Commerce  Commission  it  would  be  that  they  should  carefully  consider 
the  whole  case  presented  to  them  and  make  their  decision  as  promptly 
as  possible,  and  then  carry  it  out.  I  do  not  mean  to  criticise  the  Com- 
mission of  course.  You  all  know  it.  You  know  that  the  Interstate 
Commerce  Commission  started  out  two  years  ago,  and  let  everybody 
do  as  they  please,  especially  in  the  South.     I  know  this  question  of 


54  TKANSPORTATION    INTERESTS    OF 

passes  has  been  before  them  for  months.  That  qnestion  was  presented 
to  them  three  months  a<;o,  after  they  had  been  talking  in  all  sorts  of 
ways  abont  it,  and  some  tlion<;hl;  that  passes  ou.uht  to  be  i)rohibited 
and  soon,  and  linally  the  question  was  presented  to  them  otficiall^'  three 
months  ago,  and  1  (lo  not  know  today  any  more  what  the  law  is  with 
respect  to  passos  than  before  the  interstate  law  was  passed. 

Senator  Bi.Aiii.  Is  tliat  a  trouble  with  the  lawf 

Mr.  KiNCi.  1  fhink  it  is  due  to  the  ambiguity  of  the  law,  because  I 
could  not  get  two  lawyers  together  who  could  agree  on  it. 

The  Chairman.  That  is,  two  railroad  lawyers  ? 

Mr.  King.  1  do  not  have  any  other  kind,  and  now  with  this  pass 
question  pending  we  have  to  get  along  the  best  way  we  can. 

Senator  Blaih.  Have  you  observed  the  practical  workings  of  the 
law,  and  are  you  familiar  with  its  provisions? 

Mr.  King.  Yes,  sir. 

SUGGESTIONS  AS  TO   ADDITIONAL  LEGISLATION. 

Senator  Blair.  Do  any  suggestions  occur  to  you  as  to  additional 
legislation  that  would  be  useful  to  the  country  ? 

Mr.  King.  I  think  the  very  case  before  you  is  a  most  important  mat- 
ter. You  have  to  consider  as  to  how  it  is  i)ossible  to  bring  the  Cana- 
dian lines  abreast  with  us,  and  at  the  same  time  provide  that  they  shall 
not  have  any  advantage  over  us.  You  have  to  do  something  to  stop 
the  quarreling  we  now  have,  and  1  do  not  think  you  can  hurt  the  in- 
terests of  the  country  if  you  do  so,  and  perhaps  you  would  benefit  the 
country. 

Senator  Blair.  I  will  ask  you  at  that  point  what  suggestion  would 
you  make  as  to  what  should  be  embodied  in  the  law  ? 

JNIr.  King.  I  would  make  some  provision  suthciently  stringent  to 
bring  those  Canadian  railroad  people  before  the  courts  just  as  any  of 
us  may  be  brought  before  the  courts.  I  would  not  have  any  punish- 
ment administered  to  them  that  would  not  apply  to  any  American  rail- 
roads, but  would  have  the  same  thing  apply  to  both.  I  think  that 
would  operate  fairly  all  around.  And  it  does  not  strike  me,  as  I  said 
awhile  ago,  that  there  is  any  difficulty  about  accomplishing  this  end. 

Senator  Blair.  Would  you  convict  their  employes! 

Mr.  King.  Y'^es,  sir ;  that  is  what  you  have  to  do  with  us. 

The  Chairman.  Under  the  law  as  it  is  we  can  stop  the  running  of 
trains. 

Mr.  King.  Yes,  sir;  I  do  not  think  there  is  any  trouble  about  it,  ex- 
cept that  somehow  or  other  the  Canadian  people  seem  to  thiidv  that  you 
can  not  reach  them,  and,  in  fact,  they  say  so.  I  think  that  they  would 
say  to  the  Interstate  Commerce  Commission,  "That  is  your  clecision, 
but  that  does  not  count  with  us." 

The  Chairman.  \Ve  will  see  if  we  do  not  make  something  countbe 
fore  we  get  through. 

Mr.  King.  As  lar  as  our  roads  are  concerned  it  would  be  a  great  dis- 
advantage if  the  Grand  Trunk  Line  were  stopped,  because  they  bring 
to  and  take  from  us  a  good  deal  of  business. 

Senator  Blair.  Inasmuch  as  your  business  is  valuable  to  them,  they 
would  come  to  terms  if  they  were  obliged  to  lose  the  business  by  not 
doing  so,  would  they  not! 

Mr.  King.  Yes,  sir;  I  think  it  only  proper  for  tbe  Government  in  its 
proi)er  channels  to  notify  them  that  they  have  to  obey  the  law. 

Senator  Blair.  Do  you  think  the  pooling  provision  ought  not  to  have 
been  repealed? 


THE  UNITED  STATES  AND  CANADA.  55 

Mr.  King.  Yes. 

Senator  Blair.  And  if  it  were  legalized  you  would  get  that  half 
million  again  ? 

Mr.  King.  Yes,  sir;  that  is  one  reason. 

Senator  Blair.    Yes,  that  is  a  strong  argument  with  you. 

Mr.  King.  Yes,  sir,  that  is  the  strongest  I  can  present. 

CANADIAN  pacific  COMPETITION. 

Senator  Gorman.  Do  you  do  any  through  business  with  the  Pacific  ? 

Mr.  King.  Very  little.     We  issue  bills  of  lading  through. 

Senator  Gorman.  What  effect  has  the  Canadian  Pacific  on  that 
through  business,  as  far  as  your  road  is  coucerned  ? 

Mr.  King.  I  do  not  think  it  has  much  effect  between  here  and  San 
Francisco.  They  only  get  in  here  by  temporary  arrangements  with 
such  lines  as  connect  with  them. 

Senator  Gorman.  You  have  not  felt  that  competition? 

Mr.  King.  Ko,  but  I  can  see  how  the  transcontinental  lines  feel  it. 

Senator  Gorman.  How  about  through  shipments  to  Liverpool  coming 
from  San  Francisco  ? 

Mr.  King.  There  is  some  silk  and  tea  that  comes  here  to  New  York. 
We  get  our  share  of  that. 

Senator  Gorman.  Looking  at  these  conditions  as  you  know  them  to 
be  \vth  their  steam  ship  lines  at  the  other  end,  how  much  of  a  competi- 
tor is  this  going  to  be  ? 

Mr.  King.  Very  formidable  if  they  get  a  good  line  into  the  United 
States.  I  am  speaking  now  of  the  American  railroad  system.  It  will 
be  very  strong.  The  truth  is  that  the  rates  on  tea  and  silk  are  very, 
very  low,  ridiculously  low  in  view  of  the  great  risk  taken  in  the  trans- 
portation. Silk  is  a  valuable  article,  and  if  we  happen  to  ditch  a  train 
we  would  have  to  pay  very  heavily  for  the  value  of  the  silk  destroyed. 

The  Chairman.  How  about  tea  ? 

Mr.  King.  Tea  is  nothing  like  as  valuable  in  the  car-load  as  silk. 

COMPETITION   OF   THE   WATER-WAYS. 

The  Chairman.  How  do  the  water-ways  trouble  you  ? 

Mr.  King.  They  do  not  trouble  us  because  we  have  a  water-way. 
We  have  a  line  of  steamers  on  the  lake.  We  have  steamers  running 
from  Buffalo,  Milwaukee,  and  Duluth. 

The  Chairman.  How  as  to  the  Canadian  routes  and  the  Canadian 
rates  f 

Mr.  King.  That  we  do  not  know  much  about. 

The  Chairman.  Those  matters  do  not  regulate  vour  charges  here  at 

ain 

Mr.  King.  Perhaps  indirectly,  but  we  do  not  recognize  and  feel  them. 
It  is  generally  a  question  whether  we  are  willing  to  take  the  grain  as 
low  as  the  Erie  Canal,  and  when  the  rates  are  too  low  and  we  can  get 
anything  else  we  let  it  go. 

The  Chairman.  The  grain  generally  comes  by  the  canal,  does  it  not? 

Mr.  King.  Yes,  sir;  if  the  market  is  active  they  i)ay  the  lake  rate, 
but  when  they  can  get  the  low  rate  they  would  just  as  soon  have  it  as 
the  elevator. 

Senator  Gorman.  If  you  had  a  pool  would  not  the  Erie  Canal  and 
the  Mississippi  River  determine  the  rates  to  be  charged  on  the  freight 
coming  east? 


56  TRANSPORTATION  INTERESTS  OF 

Mr.  King.  Now  you  come  to  the  fact,  after  all,  that  this  comi)etitive 
business  cuts  a  very  small  figure  in  the  business  of  the  trunk  lines. 
The  Erie  road  carries  ten  millions  of  tons  of  coal  one  way  or  another. 
We  earn  a  great  deal  more  in  the  transportation  of  that  one  article  than 
on  all  the  through  business  combined. 

Senator  Gokman.  Through  from  Chicago  ? 

Mr.  King.  Through  from  anywhere  Wesr. 

Senator  Gorman.  Where  does  your  canal  go  ? 

Mr,  King.  Tlirongh  New  York  largely. 

The  Chairman.  Where  do  you  get  the  coal? 

Mr.  King.  From  the  anthracite  fields  aronnd  Scranton  and  from  the 
bituminous  region.  It  goes  to  Buffalo  and  is  shipped  from  there  by  lake 
to  Chicago  and  all  points  West.  We  are  carrying  to-day  500  car-loads 
to  Buffalo  and  more  than  that  number  to  tide- water. 

Senator  Blair.  Do  you  ship  any  on  your  water  routes  up  the  lake  ? 

Mr.  King.  We  take  it  to  Buffalo  for  the  different  coal  companies  or 
for  individuals  and  they  make  their  own  arrangements  by  boat  from 
Buffalo. 

PROHIBITION   OF   AGREEMENTS   AS   TO   RATES. 

Senator  Hiscock.  What,  in  your  opinion,  would  be  the  effect  if  Con- 
gress should  prohibit  competitive  routes  from  agreeing  on  rates  ? 

Mr.  King.  1  think  it  would  make  very  low  rates  for  the  railroads,  and 
I  do  not  think  it  would  do  any  good  to  the  public.  You  must  have 
some  rule  to  govern.  You  can  not  change  the  rates  half  a  dozen  times 
a  day  on  roads  running  beside  each  other.  Take,  for  instance,  the  Lack- 
awanna in  our  case.  We  must  have  some  sort  of  an  understanding 
from  Binghamton,  for  example,  as  to  what  the  rates  should  be.  First, 
we  might  make  our  rates  15  cents  to-day.  Our  competitors  would  then 
make  theirs  14  cents  tomorrow,  ani  we  would  make  ours  13  cents  the 
next  day.     It  would  only  cause  a  great  loss  to  us  both. 

The  Chairman.  Would  you  not  both  come  to  a  point  after  awhile 
where  you  would  stop  ? 

Mr.  King.  We  would  come  to  a  point  where  we  could  not  go  any 
lower.  We  would  have  some  silent  understanding,  and  must  have  it 
some  way  or  other,  or  else  the  roads  would  go  into  bankruptcy. 

Senator  Hiscock.  The  effect  would  be,  you  say,  in  some  way  to  reach 
a  tacit  understanding  between  the  roads,  or  else  the  roads  would  have 
to  go  into  bankruptcy  ? 

Mr.  King.  I  think  so.  It  is  a  new  idea  to  me,  but  I  should  say  so 
off"  hand. 

THE  PUBLICATION   OF  RATES. 

Senator  Gorman.  What  has  been  the  practical  effect  of  the  agree- 
ment of  rates  by  the  different  roads  and  the  publication  of  them  as  re- 
quired by  law  ?     Has  it  not  tended  to  put  everybody  on  an  equality  ? 

Mr.  King.  I  think  it  has  helped  in  that  direction. 

Senator  Gorman.  Has  there  not  been  a  very  decided  improvement 
in  that  direction  since  the  passage  of  the  interstate  commerce  law  ? 

Mr.  King.  I  think  that  has  been  the  effect  generally.  I  do  not  know 
how  decided  that  effect  has  been. 

Senator  Gorman.  After  all,  was  not  that  the  great  cause  of  com- 
plaint ? 

Mr.  King.  Yes;  in  many  sections  of  the  country,  too,  very  justly  the 
cause  of  complaint. 


THE  UNITED  STATES  AND  CANADA.  57 

Senator  Gorman.  Suppose  you  could  uot  reach  this  Canadian  busi- 
ness by  the  enforcement  of  our  law,  and  they  were  permitted  to  go  on 
as  you  intimate  they  are  now,  what  would  be  the  eliect  on  your  lines 
here  that  are  in  direct  competition  with  them  ? 

Mr.  KiNa.  It  would  be  very  severe  on  all  of  us.  It  wouUl  be  more 
severe  on  some  of  the  roads  than  on  ours  on  account  of  our  coal  trade. 
But  I  learn  tliat  the  laws  of  Canada  do  not  provide  for  any  receivership 
or  for  going"  into  court  like  the  laws  of  this  country  do.  The  railroads 
keep  on  running  as  long  as  there  is  anything  to  pay  the  men  with.  I 
do  not  know  whether  that  is  correct  or  not,  but  I  have  heard  it  was. 

The  Chairman.  When  the  raih-oads  fail  to  pay  interest  on  their  in- 
vestments, or  pay  their  expenses,  the  government  comes  to  their  re- 
lief; is  that  the  idea? 

Mr.  King.  They  have  some  very  peculiar  laws  in  Canada ;  their  laws 
are  not  like  ours. 

WHAT   THE   KOADS   ARE   MAKING. 

The  Chairman.  Do  you  mean  to  say  that  the  trunk  lines  are  not  now 
making  more  than  their  running  expenses  ? 

Mr.  King.  Oh,  no;  I  do  not  mean  that  the  railroads  are  not  making 
more  than  their  running  exi^euses ;  they  are  making  much  more  than 
that. 

Tljjip  Chairman.  Tou  simply  mean  they  are  not  making  more  than 
their  operating  expenses  ? 

Mr.  King.  The  railroads  are  doing  better  than  that.  We  are  now 
earning  all  our  (>j)erating  expenses  and  the  fixed  charges  and  something 
over.  The  New  York  Central  is  doing  all  that  and  declaring  a  dividend. 
Senator  Gorman  can  tell  you  how  much  is  beiug  made  on  the  Baltimore 
and  Ohio,  as  he  is  a  director  in  that  road. 

Senator  Keagan.  Are  not  the  roads  generally  earning  more  now  than 
they  did  before  the  passage  of  the  interstate  commerce  law  ! 

Mr.  King.  I  can  not  speak  for  all  the  roads.  I  can  tell  vou  within 
$25,000  what  the  result  was  on  our  road.  We  fell  off  -$(100,000  in  the 
first  six  months  of  this  year,  and  decreased  our  expenses  just  about  the 
same — not  a  difference  of  $20,000  between  the  two  results. 

Senator  Eeagan.  How  has  it  been  since  then"? 

Mr.  King.  The  accounts  are  not  yet  made  up.  Tlie  gross  earnings 
have  fallen  off' I  know,  and  I  think  the  net  earnings  have  also. 

Senator  Reagan.  You  can  not  speak  as  to  the  other  roads? 

Mr.  King.  No,  sir;  except  what  I  see  in  the  newspapers. 

Senator  Gorman.  Do  you  or  do  you  not  think  it  would  be  possible  for 
the  trunk  lines  to  lower  their  rates  from  what  they  now  are'? 

Mr.  King.  I  think  if  anybody  had  predicted  ten  years  ago  that  such 
rates  would  exist  as  do  now  exist  they  would  have  predictted  at  the  same 
time  bankruptcy  ;  but  there  has  been  such  a  change  in  railroad  manage- 
nient,  in  the  cost  of  building  and  operating  roads,  etc.,  that  matters 
have  somewhat  equalized.  Take  the  Baltimore  and  Ohio  llailroad  for 
instance.  Souie  years  ago  they  bought  steel  rails  that  cost  $100  per 
ton.  You  can  now  buy  steel  rails  for  $20  or  $27  a  ton.  Of  course  those 
rails  costing  $20  a  ton  are  not  as  good  as  the  old  steel  rails  costing  $150 
a  ton,  but  they  answer  all  ])ractical  iiuri)oses. 

The  Chairman.  That  is  the  cfiVct  of  the  tariff,  I  snpimse.    [Laughter.] 

Mr.  King.  I  would  not  say  that;  I  do  not  know  ms  to  that. 

The  Chairman.  I  have  no  further  questions  to  ask.  The  committee 
will  a<l.iourn  until  to  morrow  moruing,  when  Mr.  I)ei)ew  will  api)ear. 

At  5  o'clock  p.  m.  the  committee  adjourned  until  to-morrow  at  10 
o'clock  a.  m. 


68  TRANSPORTATION  INTERESTS  OF 

New  Youk,  Maij  7,  1880. 
The  coiuniiltec  met  at  10  o'clock  a.  m.,  pursuant  to  adjournuieut. 

STATEMENT  OF  CHAUNCEY  M.  DEPEW. 

Mr.  Chauncey  M.  Depew,  presideut  of  the  New  York  Central  and 
Hudson  Kiver  Railroad  Company,  appeared. 

Tlie  Chairman.  Mr.  Depew,  we  have  been  i)rosecutinf?  an  examina- 
tion here  but  a  day,  but  I  suppose  you  have  seen  tiie  resobition  under 
wliich  we  have  been  actiug.     1  think  we  sent  you  a  copy,  did  we  not! 

Mr.  Depew.  Yes,  sir. 

The  Chairman.  If  you  are  familiar  with  the  jjurposesof  the  investi- 
gation, or  the  general  scope  of  it,  we  would  like  to  hear  from  you  on  the 
subject  generally,  or  I  will  put  questions  to  you  for  your  guidance,  just 
as  you  prefer. 

Mr.  Depew.  I  had  not  thought  of  anything  but  in  a  general  way. 
I  do  not  understand  exactly  the  scope  of  the  inquiry  of  the  committee. 
I  would  like  to  do  anything  the  committee  desires  of  me,  but  T  have  not 
pre])ared  anything  in  the  shape  of  a  communication. 

The  Chairman.  I  do  not  know  but  that  it  would  be  more  agreeable 
to  you  to  take  up  the  resolution  and  discuss  the  general  subject  sug- 
gested. 

Mr.  Depew.  I  would  have  to  give  a  little  thought  to  it  to  do  that. 

The  Chairman.  What  is  your  relation  to  the  New  York  Central  Rail- 
road ? 

Mr.  Depew.  I  am  president  of  it. 

The  Chairman.  How  long  have  you  occupied  that  position  ? 

Mr.  Depew.  Five  years,  1  think. 

The  Chairman.  What  are  the  terminals  of  that  road  ? 

Mr.  Depew.  New  York  and  Buffalo. 

The  Chairman.  W^hat  are  its  connections? 

Mr.  Depew.  The  Lake  Shore  and  the  Michigan  Central  are  its  imme- 
diate and  direct  connections. 

The  Chairman.  Are  there  any  more  connections  of  the  New  York 
Central  than  the  two  corporations  you  mention  ? 

Mr.  Depew.  Through  New  England  our  direct  connection  is  the 
Boston  and  Albany  road. 

The  Chairman.  Is  there  anything  more  than  the  ordinary  business 
connection  between  your  road  and  those  two  roads,  the  Michigan  Cen- 
tral and  the  Lake  Shore?  In  other  words,  do  you  own  or  control  them 
in  any  degree  ? 

Mr.  Dei'EW.  Not  at  all. 

The  Chairman.  Do  they  own  or  control  the  New  Y^ork  Central  ? 

Mr.  Depew.  Not  at  all.  The  owncrshi])  and  control  of  the  three 
roads  are  substantially  in  the  same  i)eoi)le;  but  other  than  that  the 
controlling  interest  of  the  stock  is  substantially  the  same,  there  is  no 
consolidation  or  union  of  the  corporations.  They  are  entirely  inde- 
pendont. 

The  Chairman.  They  do  business  separately  and  distinctly,  excei>t 
as  you  make  through  connections,  just  as  you  do  with  any  other  road; 
is  that  the  fact  ? 

Mr.  Depew.  Yes,  sir;  excei)t  that  the  relations  between  the  New 
York  Central  and  the  Lake  Shore  and  the  Michigan  Central  are  very 
close.  We  do  the  whole  of  our  business,  east  and  west  bound,  sub- 
stantially with  those  two  roads. 


THE    UNITED    STATES    AND    CANADA.  69 

The  Chairman.  Give  us  the  terminals  of  those  two  roads  you  men- 
tion. 

Mr.  Depew.  The  Lake  Shore  riuis  on  the  south  side  of  the  lake  be- 
tween Butialo  and  Chicago,  and  the  Michigan  Central,  in  connection 
with  the  Canada  Southern,  which  it  leases,  on  the  north  side  of  the 
lake,  between  Buffalo  and  Chicago. 

Senator  Blair.  Does  your  connection  cover  the  Canada  Southern 
also  ? 

Mr.  Depew.  Yes,  sir;  the  Michigan  Central  leases  the  Canada 
Southern. 

The  Chairman.  How  long  have  you  or  the  Michigan  Central  had  any 
control  of  the  Canada  Southern  ? 

*"  Mr.  Depew.  I  do  not  remember  dates  exactly,  but  it  is  six  or  seven 
years  under  tiiis  lease. 

The  Chairman.  The  present  lease  ? 

Mr.  Depew.  Yes,  sir. 

The  Chairman.  Did  the  Michigan  Central  have  it  before  the  lease 
was  made? 

Mr.  Depew.  Before  that  the  Vanderbilts  had  control  of  the  stock  of 
the  Canada  Southern. 

The  Chairman.  It  belonged  originally  to  Canadians,  did  it  not? 

Mr.  Depew.  It  never  belonged  to  Canadians;  it  was  built  by  Amer- 
ican cai)ital. 

The  Chairman.  And  alwa3's  owned  by  Americans  I 

Mr.  Depew.  Always  owned  by  Americans. 

The  Chairman.  And  it  was  finally  taken  in  by  the  Vanderbilt  sys- 
tem f 

Mr.  Depeav.  Yes,  sir.  The  ^'"ew  York  Central  is  the  lessee  of  the 
West  Shore,  which  is  also  a  trunk  line,  running  between  New  York  and 
Buffalo,  and  of  which  I  am  presi<U'nt  and  ^Ir.  Layng  is  general  man- 
ager. The  connections  of  that  road  are  the  Grand  Trunk  and  the 
Nickel  Plate. 

relations  with  THE  GRAND  TRUNK. 

The  Chairman.  Have  you  any  connections  or  do  you  do  business 
with  the  Grand  Trunk  ? 

Mr.  Depew.  The  New  York  Central  i)roper,  very  little;  the  West 
Shore,  a  great  deal. 

The  Chairman.  Do  you  have  any  ditticnlty,  or  does  that  road  have 
any  difficulty  that  you  know  of,  in  getting  along  with  the  Canadian 
road  ? 

Mr.  Depew.  No,  sir. 

The  Chairman.  On  what  basis  do  they  oi)erate? 

Mr.  Depew.  Simply  the  usual  interciiange  of  business  between  con- 
necting lines.  The  Grand  Trunk  has  three  (;onnectii)ns  to  New  York, 
the  P^rie,  the  West  Shore,  and  the  Lackawanna,  and  it  distributes  its 
business  as  its  interest  from  time  to  time  dictates,  in  larger  or  smallei 
measure,  to  the  three  lines. 

The  Chairman.  The  Grand  Trunk  does  ? 

Mr.  Depew.  Yes,  sir.  And  these  three  lines  give  certain  proportions 
of  their  west-bound  traffic  to  the  Grand  Trunk. 

The  Chairman.  As  they  see  proper  f 

Mr.  Depew.  Yes,  sir.    ' 

The  Chairman.  The  Grand  Trunk  has  no  legal  control  over  either  of 
these  lines,  has  it  ? 


60  TRANSPOKTATION  INTERESTS  OF 

Mr.  ])EPEW.  No  control  of  <iny  kiiid  over  them,  stock  or  otherwise. 

Tlie  CiiAiiiMAN.  Have  you  j^iven  iniicli  iittejitiou  to  the  general  sub- 
ject of  the  (Iraiitl  Trunk  and  otlier  Canadian  roads  extending  their 
lines  into  the  United  States? 

Mr.  Depew.  Yes,  sir  ;  a  good  deal. 

The  Chairman.  We  would  like  to  hear  what  you  have  to  say  on  that 
subject,  generally. 

Mr.  Depew.  1  would  say,  generally,  that  I  have  never  favored  the 
movement  of  cutting  out  the  Canadian  roads  from  the  United  States 
entirely. 

The  Chairman.  To  begin  with,  could  you  tell  tlie  committee  what 
lines  extending  into  tlie  United  States  this  Canadian  Grand  Trunk  road 
owns  or  controls  'i 

Mr.  Depew.  Well,  the  Grand  Trunk  owns  the  Chicago  and  Grand 
Trunk,  extending  from  Detroit  to  Chicago,  and  that  gives  them  a  com- 
pleted line  of  their  own  to  the  Niagara  trontier.  They  have  also  a  com- 
pleted line  of  their  own  to  northern  New  England,  wliere  they  connect 
with  the  Vermont  Central  system.  The  relations  between  the  Vermont 
Central  and  the  Grand  Trunk  have  always  been  as  intimate  as  if  they 
were  interchangeable  owners,  but  I  do  not  know  whether  such  is  the 
case  or  not. 

The  Chairman.  You  do  not  know  what  the  actual  fact  is  as  to  joint 
ownership  I 

Mr.  Depew.  No,  sir. 

The  Chairman.  Do  you  say  you  favor  or  do  not  favor  the  extension 
of  these  Canadian  trunk  lines  into  the  United  States'? 

Mr.  Depew.  I  have  not  favored  it.  At  the  same  time,  I  never  have 
favored  the  radical  suggestion  of  cutting  them  out.  They  are  practi- 
cally in  a  position  where  they  dictate  to  the  American  roads  their  rates, 
and  they  have  facilities  for  doing  it  without  injuring  themselves.  The 
American  roads  are  bound  by  the  provisions  of  the  interstate-commerce 
act,  and  whatever  may  be  the  rate  from  Chicago  to  the  sea-board  is  the 
rate  which  governs,  under  the  long  and  short  haul  clause,  our  local 
business.  So  that  the  Chicago  rate  virtually  controls  our  whole  traflQc. 
But  the  Canadian  roads  are  entirely  free  from  this  provision. 

The  Chairman.  As  to  the  local  trathe  "I 

Mr.  Depew.  As  to  the  local  traflic.  They  can  fix  their  rate  from 
Chicago,  and  then  recoup  by  any  charges  they  see  fit  in  Canada.  Their 
lines  in  Canada  constitute  the  larger  part  of  their  system.  They  can 
recoup,  also,  by  rates  on  traffic  from  points  in  the  United  States  to  points 
in  Canada. 

The  Chairman.  Have  they  a  right  to  do  that  *? 

Mr.  Depew.  They  have  limitless  op])ortunities  that  the  law  can  not 
reach.  For  instance,  they  ship  grain  by  steamer  across  the  lake  from 
Sarnia  to  Collingworth  and  four  or  five  points  on  Lake  Michigan.  Now, 
the  rates  from  points  on  Lake  Michigan  to  points  in  the  Uinted  States 
or  to  Montreal  are  entirely  beyond  the  reach  of  this  law,  J  think  ;  cer- 
tainly beyond  the  power  of  the  commission  to  reach  the  roads  them- 
selves. 

EXPORT   business   THROUGH  MONTREAL. 

It  is  only  the  feeling  on  the  part  of  the  Canadian  roals  that  it  is  their 
best  interest;  it  is  only  a  matter  of  comity  on  their  part;  a  judgment 
as  to  what  is  best  for  .themselves,  that  they  maintain  any  rates  at  all. 
Then  they  have  arrangements  at  Montreal  with  the  steam  ship  lines 
■which,  if  Montreal  were  better  located  for  business  all  the  year  round, 


THE   UNITED    STATES    AND    CANADA.  61 

would  transfer  business  from  tbe  American  ports  to  Montreal  neces- 
saril.v.  Certainly  tbe  interstate  commerce  act  could  not  deal  with  ex- 
port business  tlirou.ch  Montreal 

The  Chairman.  Provided  it  did  not  touch  the  United  States. 

]Mr.  Depew.  1  mean  gathered  from  points  in  the -United  States  and 
shipped  to  Li\erpool  from  Montreal. 

They  have  an  arranjiement  with  the  lines  from  Montreal,  and  also 
with  the  lines  Irom  Portland,  which  I  understand  to  be  this  :  They  agree 
to  i)ny  the  steamship  line  a  certain  sum  foradefinitespacefor  the  year, 
so  that  the  steamship  line  is  assured  of  payment  of  its  tonnage  whether 
it  carries  it  or  not.  The  steamship  line  can,  therefore,  make  a  rebate 
or  drawback  to  secure  the  tonnage  to  fill  this  si)ace.  That  rebate  or 
diawback  does  not  appear  at  all  in  the  accounts  of  the  railway  company. 

The  same  thing  has  been  done,  I  understand,  by  American  roads 
where  they  have  had  close  connection  with  steamship  lines,  by  owning 
them  wholly  or  in  part.  Now  the  American  lines  uniforudy,  with  the 
jjossible  excejitiou  of  the  Pennsylvania  and  the  lines  that  they  own,  on 
shipments  to  Liverpool  are  deiiendent  entirely  u})ou  the  rates  from  day 
to  day  and  space  on  outgoing  steamers.  If  there  are  a  thousand  car- 
loads of  grain  in  Chicago  destined  for  export  to  Liverpool  the  American 
lines  as  a  rule  would  give  to  the  shipper  the  inland  rate,  and  then  they 
would  telegrai)h  to  New  York  and  get  the  ocean  rate,  or  get  it  directly 
from  the  agent  of  the  steamship  line  at  Chicago,  and  the  two  rates  to- 
gether would  make  the  through  rate.  But  where  the  rate  is  contracted 
for  from  Montreal  it  is  immaterial  to  the  steamship  line  what  they 
chaige  ;  and  while  the  inland  rate  might  be  the  san)e,  the  ocean  rate,  I 
think,  would  be  graded  just  enough  to  take  the  shii)ment  every  time. 

I  think  that  accounts  tor  the  enormous  dispropoitiou  of  the  percent- 
age of  business  secured  by  the  Grand  Trunk  at  times  as  against  tbe 
American  lines. 

The  (Chairman.  On  foreign  shipments? 

Mr.  Depew.  Yes,  sir. 

Senator  Platt.  Is  tbe  Grand  Trunk  interested  in  a  line  of  steamers 
from  Portland? 

Mr.  Depew.  Yes,  sir;  that  is,  they  are  interested  to  the  extent  that 
they  say  that  tbe  line  would  not  be  kept  up  unless  they  guaranteed  a 
certain  subsidy. 

Now,  I  understand  that  the  English  Government  gives  a  subsidy  to 
tbe  ships  connecting  with  the  termini  of  tbe  Canadian  Pacific  on  the 
Pacific  coast.  It  is  done  with  an  idea  of  carrying  the  Asiatic  trade 
which  comes  into  the  United  States  or  through  the  United  States  to 
foreign  ports  across  the  Canadian  Pacific  line,  which  Is  wholly  within 
Canadian  territory,  and  that  subsidy  is  sufticient  to  enable  the  Cana- 
dian Pacific  steamers  running  to  Asiatic  jiorts  to  make  rates  which  it 
is  not  possible  for  tbe  American  lines,  which  carry  to  our  own  Pacific 
roads  tonnage  from  the  same  countries,  to  make. 

The  Chairman.  You  think,  then,  that  the  greatest  advantage  that 
the  Grand  Trunk  gets  over  the  United  States  roads  is  from  tbe  fact 
that  it  has  advantages  in  foreign  shipments'? 

Mr,  Depew.  Not  wholly  ;  no,  sir.  As  I  mentioned  before,  they  can 
recoup  in  Canada.  That  is  their  great  point.  They  have  got  the  whole 
of  Canada  in  which  to  recoup  for  any  loss  they  may  sustain  on  through 
businet^s  from  Chicago.  They  can,  therefore,  at  all  times  compel  tbe 
American  roads  to  give  them  such  a  percentage  of  tbe  traftic  as  they 
think  they  ought  to  have  on  the  through  business  to  the  American  »en- 
boards— AjVyCricw  busiuess.    Otberwise,  they  cm  demoralize  the  wbol© 


62  TRANSPORTATION   INTERESTS    OF 

business  of  the  Americau  roads  and  make  themselves  good  in  Canada 
on  account  of  the  long;  and  short  haul  clause,  which  makes  the  direct 
rate  cover  our  whole  business. 

Tluui  they  have  the  power,  if  they  choose  to  exercise  it,  of  billing  and 
rebilling  in  Canada  under  conditions  that  place  them  outside  the  pale 
of  the  provisions  of  the  interstate  commerce  act. 

The  CuAiRMAN.  What  do  you  mean  by  tliaf? 

Mr.  Depew.  I  mean  they  can  bill  to  points  in  (3anada  and  then  rebill 
to  points  in  the  United  States. 

Senator  Reagan.  Where  commerce  goes  out  of  the  United  States  and 
comes  back  into  the  United  States,  it  subjects  them  to  tariff  duties. 

Mr.  JJepew.  1  know  that  they  are  subject,  and  yet  it  is  the  difficulty 
of  going  into  the  foreign  country.  You  take  this  ])oint  where  the  steam- 
ship lines  carry  to  Canadian  i)oints  on  Lake  Michigan,  and  then  it  is  a 
shipment  from  Cana<la  to  tlie  United  States, 

The  Chairman.  Do  you  know  what  tliefact  is  with  reference  to  their 
conduct — do  they  actually  recoup  from  their  (»wn  ])eoi)!e  in  order  to 
make  up  what  the  difference  would  be  as  between  wliat  you  regard  as  a 
fair  charge  and  what  their  rates  are  on  tlirongh  business? 

Mr.  Depew.  Of  course.  The  Grand  Trunk  road  is  a  longer  line  and 
works  under  conditions  which,  commercially,  in  any  other  business, 
would  put  them  out  of  business.  Now,  they  exist,  therefore,  only  by 
certain  concessions  which  are  arbitrary,  and  which  are  not  governed  by 
business  rules.  With  those  concessions  that  have  been  made  by  the 
Trunk  lines  to  them  they  have  an  advantage. 

The  Chairman.  By  consent? 

Mr.  Depew.  Yes,  sir;  by  consent;  and  I  think  that  the  Grand 
Trunk  officials  have  tried  to  live  up  fairly  to  the  law. 

The  Chairman.  What  isthe  concession  now,  Mr.  Depew  ? 

Mr.  Depew.  Well,  I  can  not  carry  the  figures  in  my  head  exactly; 
it  is  a  differential. 

The  Chairman.  Varying  according  to  the  class  of  goods,  I  suppose? 

Mr.  Depew.  Y^es,  sir.    Sometimes  it  has  been  very  large. 

WHY  DIFFERENTIALS   ARE   GIVEN. 

The  Chairman.  Do  you  think  that  tlie  situation  ou^lit  to  be  such  as 
to  require  you  to  give  that  «iifferential  ? 

Mr.  Depew.  1  have  given  a  good  deal  of  attention  to  the  argument, 
one  side  and  another,  on  that  ditferential  question,  and  tiien  to  the 
practical  working  of  it.  I  think  that  every  railroad  man  in  tiie  United 
States  has  now  come  to  the  conclusion  that  differentials  are  absolutely 
necessary;  in  other  words,  that  the  railroad  business  differs  from  all 
other  business  from  the  fact  that  you  can  not  by  competition  wipe  out 
a  rival  in  the  railroad  business.  The  railroad  coujpanies  continue  to 
run  after  their  owners  have  ceased  to  have  any  interest  in  them,  and 
after  they  have  ceased  to  be  safe  to  ride  on. 

So  the  only  way  in  which  the  public  can  get  decent  accommodations 
on  the  one  hand,  and  reasonable  rates  can  be  had  with  fair  remunera- 
tion to  the  railroads  on  the  other,  and  the  commercial  community  can 
have  stable  rates,  and  not  all  become  speculative  and  the  whole  busi- 
ness of  the  country  demoralized,  is  to  grant  such  diffeientials  to  thej 
weaker  roads  as  will  enable  them,  to  use  a.  railroad  word,  to  li\e. 

eifect  of  the  law. 

The  operation  of  the  interstate  commerce  act  is  directly  to  give  t( 
the  strong  roads  the  whole  Of  the  Ijusjuess  and  %q  yiiiu  the  \Yeitk  roadsJ 


THE    UNITED    STATES    AND    CANADA.  63 

because  it  compels  the  publication  of  rates  and  it  prohibits  rebates,  which 
destroys  all  the  processes  by  which  the  weak  roads  used  to  sustain 
themselves  and  the  strong  roads  to  wink  at  their  sustaiuiDg  them- 
selves. 

The  Chairman.  They  sustained  themselves  by  all  the  tricks  of  the 
trade  ? 

Mr.  Depew.  That  is  what  they  did;  and  the  strong  roads  permitted 
them  to  do  it. 

The  Chairman.  And  did  the  same  thems(dves  ? 

Mr.  Depew.  Well,  only  when  the  grievance  became  so  serious  that 
they  had,  in  self  defence,  to  teach  the  weaker  roads  that  that  was  a 
weapon  which  might  be  used  to  their  own  destruction. 

The  Chairman.  I  suppose  you  admit  yourself  tluit  before  the  law 
was  passed  there  was  a  great  degree  of  recklessness  as  to  the  manage- 
ment of  railroads;  in  other  words,  that  rebates,  secret  rates,  draw- 
backs, and  every  other  device  that  could  be  invented  was  practiced  so 
that  the  people  knew^  nothing  about  what  anybody's  else  rate  was  in 
dealing  with  tlie  railroad. 

Mr.  Depew.  Except  so  far  as  it  was  governed  by  voluntary  pools. 

The  Chairman.  Since  the  interstate  commerce  law  has  been  passed, 
has  the  condition  been  improved  or  not  ? 

Mr.  Depew.  Yes,  sir;  it  has  been  improved. 

The  Chairman.  You  say  it  has  been  I 

Mr.  Depew.  Yes;  but  1  think  that  if  the  interstate  commerce  act 
had  permitted  also — I  do  not  care  under  how  rigid  regulation — the 
maintenance  of  pools,  that  it  would  have  gone  further  and  accomplished 
more  in  the  line  of  fair  and  open  treatment  and  the  same  treatment  to 
everybody  than  it  has. 

THE  EVILS  THAT  THREATEN  THE  RAILROADS. 

Of  course  the  gentlemen  who  framed  the  interstate  commerce  act 
and  the  jiublic  sentiment  behind  them  feared  that  the  pool  would  make 
exorbitant  rates  by  combinatiion ;  but  the  experience  of  railroad  men 
shows  that  the  tendency  and  drift  of  the  whole  business  of  the  country 
make  that  impossible.  The  tendency  is  constantly  to  lower  rates.  I 
do  not  think  anything  can  resist  it.  The  three  evils  that  threaten  the 
railway  system  of  this  country  today  are  constantly  decreasing  rates 
and  constantly  increasing  expenses. 

The  Chairman.  What  is  the  third  ? 

Mr.  Depew.  Too  many  railroads. 

The  Chairman.  Why  should  there  be  an  increase  in  the  expenses? 

Mr.  Depew.  The  railway  facilities,  on  account  of  competition,  are 
constantly  increasing.  The  cars  are  better,  the  engines  are  heavier 
and  more  expensive,  the  trains  are  more  frequent,  the  rails  and  bridges 
within  the  last  ten  years  have  been  substantially  renewed  to  meet  the 
heavier  traffic.  There  is  a  great  difference  between  a  30-t()n  engine 
and  a  50-ton  engine  and  a  10-ton  car  and  a  30-tou  car.  Then  there  is  a 
demand  for  fast  time.  The  freight  train  of  the  past  ran  at  12  miles  an 
hour.  Now  the  live-stock  trains,  and  the  dairy  trains,  and  the  dressed- 
beef  trains  run  25  miles  an  hour,  and  make  what  twenty  years  ago  was 
express  time.  Well,  all  that  increases  expenses.  Tlien  the  tendency 
of  wages  is  constantly  on  the  increase  and  has  been  for  ten  years. 

The  Chairman.  All  those  things  are  in  the  interest  of  the  people. 

Mr.  Depew.  They  are  in  the  interest  of  the  people  and  at  the  ex* 
pense  of  the  roads. 


64  TRANSPORTATION    INTERESTS    OF 

The  Chairman.  Still  the  roads  are  able  to  live,  are  they  not? 

Mr.  Depew.  Some  of  them  live.  1  suppose  if  you  take  the  great 
mass  of  railway  capital  in  the  Uuiteci  States  and  the  return  upon  it,  it 
is  small  in  comparison  with  any  other  business  which  is  as  well  man- 
aged and  iu  which  there  is  so  much  ability  and  energy. 

RAILROADS  NEVER  DIE. 

The  Chairman.  According  to  the  testimony,  no  railroad  can  die. 

Mr.  Depew.  They  do  not  die.  A  railroad  differs  from  every  other 
thing  in  the  world.  If  the  legislation — and  I  do  not  mean  that  in  any 
offensive  sense,  because  I  have  been  ])art  of  it  myself — had  dealt  with 
facts  instead  of  theories,  it  would  have  been  better  for  all. 

Take  a  road  like  the  New  York  Central.  Certain  gentlemen  believe 
they  can  make  money  by  building  a  road  alongside  it.  It  is  admitted 
that  the  rates  on  the  New  York  Central  are  the  lowest  rates  in  the 
world.  It  is  admitted  that  it  is  one  of  the  best  roads  in  the  world  in 
point  of  service.  There  is  no  demand  from  the  shipper,  from  the  pub- 
lic, from  anybody,  for  another  road;  but  there  is  a  great  surplus  of 
money  in  New  York.  Bankers  get  large  commissions  for  selling  bonds. 
The  bonds  are  issued  with  a  bonus  of  stock  to  make  them  go,  and  are 
sold  at  25  per  cent,  less  than  their  face  value.  The  speculative  oppor- 
tunity to  make  the  25  per  cent,  on  the  bonds,  and  possibly  have  the 
stock  worth  something  besides,  is  a  tremendous  temptation. 

Under  the  operation  of  the  general  railroad  act  these  gentlemen  can 
organize  a  road  and  build  it,  exercise  the  right  of  eminent  domain, 
cutting  up  people's  farms,  running  through  their  village  and  city  streets, 
when  there  is  absolutely  not  a  scintilla  of  public  necessity  for  the  road. 
Now,  if  there  had  been  free  opportunity  afforded  the  New  York  Central 
to  meet  that  sort  of  thing  as  a  business  man  would  have  met  it,  we 
would  have  said  at  once  to  the  gentlemen  who  were  building  the  road, 
"  You  will  lose  your  money,  and  we  will  not  let  you  construct  the  road  ; 
we  will  compete  with  you  in  such  a  way,  free-handed,  as  to  make  your 
business  good  for  nothing."  Of  course  that  would  have  had  to  be  done 
by  competing  with  them  at  the  points  where  they  touched  us  and  living 
at  points  where  they  did  not.  But  the  State  steps  in  at  that  point  and 
ties  both  hands  and  says,  "You  shall  not  do  that ;  you  have  got  to 
treat  everybody  alike.  You  can  not  have  the  ordinary  methods  of  com- 
petition in  your  business,  because  it  is  against  the  public  interest." 

The  State  is  right  iu  that,  but  when  the  State  ties  the  hands  of  the 
investors  that  way,  they  ought  to  have  the  power  in  some  officials  to 
ask,  "  Shall  the  road  be  built  ?  Is  there  any  public  necessity  for  it  on 
the  one  hand,  and  should  it  be  permitted  to  i)eril  the  investment 
already  made  on  the  other?  Shall  it  be  allowed  the  right  to  trespass 
upon  private  rights  by  exercising  the  right  of  public  domain  Avhen 
there  is  no  demand  to  justify  it?" 

The  Chairman.  I  wdl  ask  you  whether  it  is  true  or  not  that  the  oper- 
ation of  the  interstate  commerce  law  has  had  some  tendency  to  check 
the  indiscriminate  building  of  railroads  ? 

Mr.  Depew.  I  think  it  has,  and  in  that  respect  I  think  it  has  done 
very  well.  But  I  think  it  ought  to  be  supplemented.  Of  course  it  is  a 
tremendous  power,  and  one  which  the  legislative  branch  has  hesitated 
to  give.  I  think  it  has  been  given  in  Massachusetts,  but  they  have  al- 
ways hesitated  to  give  it  in  New  York.  But  the  power  should  reside 
somewhere  in  the  Government  to  say  where  ^  new  road  is  ^ecegg^ry, 
aud  whether  it  should  be  built. 


THE    UNITED    STATES    AND    CANADA.  65 

The  Chairman.  That  is  so  in  the  old  coimtry*? 

Mr.  Depew.  Yes,  sir. 

Senator  Blaie.  That  is  so  everywhere  where  there  are  no  general 
railroad  laws  ! 

Mr.  Depew.  Yes,  sir.  Where  there  are  no  general  railroad  laws, 
that  power  rests  in  the  legislative  branch. 

Senator  Blair.  Every  charter  has  to  pass  the  gamut  for  itself? 

Mr.  Depew.  Yes,  sir. 

RAILROAD  expenses  INCREASING. 

Senator  Platt.  To  go  back  a  moment,  Mr.  Depew ;  has  the  percent- 
age of  railroad  expenses  to  the  volume  of  business  increased  ?  The 
volume  of  business  is  very  much  larger  than  it  used  to  be. 

Mr.  Depew.  Oh,  yes.  Otherwise  we  could  not  live.  Ten  years  ago 
the  New  York  Central  road  got  per  ton  per  mile  about  a  cent  and  a 
half.  Now  the  rate  is  about  j^o  of  a  cent.  The  expenses  have  increased 
more  rapidly  than  the  volume  of  business  has  increased. 

Senator  Platt.  That  is  what  I  want  to  get  at. 

Mr.  Depew.  We  found  no  difficulty  in  paying  8  per  cent,  dividends 
at  one  time. 

The  Chairman.  What  dividends  do  you  pay  now? 

Mr.  Depew.  Four  per  cent. 

Senator  Blair.  You  say  that  the  expenses  have  increased  more  rap- 
idly than  the  volume  of  business  ? 

Mr.  Depew.  The  increased  volume  of  business  and  the  decreasing 
rates  make  the  difference.  Take  the  volume  of  business  on  the  one 
hand  and  the  decreasing  rates  connected  with  it  on  the  other,  and  the 
volume  of  business  has  not  increased  enough  to  recoup  for  the  decrease 
in  rates  and  make  up  for  the  increase  in  expenditures. 

Senator  Blair.  So  that  the  relation  between  expenditures  and  re- 
ceipts is  changing  to  the  disadvantage  of  the  roads? 

Mr.  Depew.  It  is  at  present;  but  we  all  look  to  a  growth  in  the 
business  of  the  country.  Unless  the  mania  for  building  new  roads 
continues,  we  all  look,  in  the  growth  of  the  country,  for  an  increase  in 
the  volume  of  business. 

Senator  Platt.  The  decrease  in  rates  is  forced  by  business  senti- 
ment, I  suppose  ? 

Mr.  Depew.  Yes;  it  is  business  sentiment  which  causes  decrease  in 
rates. 

Senator  Platt.  The  shippers  say  they  must  have  a  lower  rate,  do 
they  not  ? 

Mr.  Depew.  The  rate  is  governed  for  the  railroad  by  the  foreign  de- 
mand, by  the  home  market,  and  by  competition  of  the  water-ways. 
But  there  is  another  force  constantly  reducing  rates.  Even  where  pools 
and  the  very  best  of  relations  exist  between  roads,  each  road  must  ne- 
cessarily take  care  of  the  business  transacted  on  its  line. 

Now,  if  there  are  certain  kinds  of  milling  and  of  manufacturing  on 
the  line  of  the  New  York  Central  which  reaches  points  in  competition 
with  the  same  class  of  business  on  the  bnes  of  the  Baltimore  and  Ohio 
and  of  the  Pennsylvania,  our  people  tell  us  that  they  can  not  live  and 
compete  in  those  markets  unless  they  have  more  favorable  rates  for 
their  raw  material  and  for  their  manufactured  articles,  and  as  the  com- 
petition between  the  producers  lowers  their  prices  ours  go  down  corre- 
spondingly. 

The  Chairman.  Necessarily,  in  order  to  keep  them  alive  f 
6j43 5 


6Q  TRANSPORTATION    INTERESTS    OF 

Mr.  Depew.  Yes,  sir. 

Senator  HiscocK.  Do  you  mean  this,  that  if  there  is  a  manufactur- 
ing; industry  located  at  a  phice  ou  your  road,  and  the  products  of 
it  have  got  to  be  carried  to  points  elsewhere  and  enter  into  competi- 
tion with  the  products  carried  upon  other  roads  and  other  lines,  you 
give  rates  to  that  industry  which  enable  them  to  carry  on  that  business 
at  that  point  ? 

Mr.  Depew.  Yes,  sir. 

Senator  Platt.  Being  forced  to  reduce  the  rates  increased  the  ex-  j 
peuses  largely,  did  it  not  I 

Mr.  Depew.  Yes,  sir.  You  see  you  have  to  do  a  larger  amount  of] 
business  to  get  the  same  amouut  of  money.  You  can  not  do  the  larger] 
amount  of  business  at  the  same  expense. 

SHUTTING  OUT  THE  CANADIAN  ROADS. 

The  Chairman.  You  intimated  a  while  ago,  I  believe,  that  without] 
this  differential  you  did  not  see,  except  on  the  suj)position  that  they  re-J 
coup  on  their  own  people,  that  the  Grand  Trunk  could  live  and  do  bus- 
iness in  this  country  ? 

Mr.  Depew.  Yes,  sir. 

The  Chairman.  Now,  suppose  that  any  legislation  should  be  enacted] 
by  the  United  States  that  would  cut  them  oft'  from  doing  business  in} 
the  United  States,  what  would  you  think  about  that  1 

Mr.  Depew.  I  never  favored  that,  and  I  say  that  entirely  independ- 
ent of  our  relations  to  the  Grand  Trunk  Railroad. 

The  Chairman.  Suj^pose  we  do  not  do  that ;  what  is  there,  in  your 
judgment,  that  the  United  States  can  do  that  will  compel  the  Canadian 
roads,  in  doing  business  in  the  United  States  and  in  their  own  country, 
to  obey  the  same  law  that  your  road  does  or  the  American  roads  do  ? 

Mr.  Depew.  1  would  suggest  that  you  increase  the  powers  of  the 
Interstate  Commerce  Gommission. 

The  Chairman.  In  what  way  1 

Mr.  Depew.  By  giving  them  the  power  to  cut  off  the  Canadian  roads 
under  proper  Treasury  regulations. 

Senator  Eeagan.  The  Commission  has  that  power  now  under  the 
interstate  commerce  act. 

Mr.  Depew.  Yes,  sir ;  unless  the  Canadian  roads  will  not  only  con- 
form to  the  provisions  of  the  interstate  commerce  act  in  the  United 
States,  but  to  such  regulations  as  the  Interstate  Commerce  Commission 
may  think  necessary  in  order  to  make  them  obey  the  law  equalizing 
their  oi)erations  with  American  roads  and  making  it  a  condition  with 
the  Canadian  roads  that  they  shall  subject  themselves  in  Canada  as 
well  as  in  the  United  States  to  the  inspection  and  examination  of  the 
Interstate  Commerce  Commission  and  its  agents. 

Senator  Reag-an.  Do  you  think  we  have  that  power  ? 

Mr.  Depew.  I  think  we  have  the  power  to  cut  them  off",  and  we  would 
cut  them  off"  unless  they  did  it. 

THE  CANADIAN   PACIFIC. 

You  see  the  Canadian  Pacific  is  not  completed  yet.  It  is  an  enormous, 
system.  I  understand  that  it  received  a  subsidy  to  the  amount  of  sixty! 
or  seventy  millions  of  dollars,  the  most  enormous  subsidy  ever  granted 
by  a  government.  It  will  probably  be  in  a  condition  from  its  relations 
with  the  Canadian  Government  to  operate  its  road,  whether  it  earns: 


i 


THE  UNITED  STATES  AND  CANADA.  67 

money  or  not.  Of  course,  being  protected  by  the  Government  in  that 
way,  it  will  make  all  the  money  it  can  out  of  the  Canadian  people.  At 
the  same  time  it  will  seek  to  till  up  its  cars  by  products  of  the  United 
States,  and  such  a  road  as  that  ought  certainly  to  be  put  under  the 
power  of  the  Interstate  Commerce  Commission  in  such  a  way  that  the 
Commission  may  entorce  its  rules  or  drive  the  road  out  of  the  country. 

Senator  Eeagan.  Your  idea  is  that,  in  addition  to  the  provision  that 
now  exists,  authorizing  the  cutting  off  of  Canadian  roads,  that  a  provis- 
ion be  inserted  authorizing  the  Commission  to  force  inspection  at  the 
border. 

Mr.  Depew.  Yes,  sir ;  from  what  I  know  of  the  Commission,  I  do  not 
believe  that  they  would  object  either. 

The  Chairman.  Are  you  familiar  with  the  feeding  lines  of  the  Cana.- 
dian  Pacific  in  the  United  States  ? 

Mr.  Depew.  Yes,  sir. 

The  Chairman.  Where  are  they  ? 

Mr.  Depew.  The  Canadian  Pacific  are  building  a  line  now  to  reach 
Detroit,  and  when  they  get  to  Detroit  they  are  substantially  in  connec- 
tion with  all  the  lines ;  and  they  have  secured.  I  understand,  the  two 
lines  to  the  Sault  Ste.  Marie  from  the  West  and  Northwest. 

Senator  Platt.  Where  is  that  line  being  built  ? 

Mr.  Depew.  They  are  now,  I  think,  at  St.  Thomas,  and  another  line 
is  nearly  completed  to  the  Detroit  Eiver. 

THE   QUESTION  OF  RATES. 

Senator  Blair.  What  are  the  American  people  going  to  say  when 
we  so  legislate  that  they  must  pay  a  dollar  for  the  carriage  of  traffic 
through  the  United  States  that  they  can  now  get  done  for  fifty  cents 
by  going  through  Canada,  and  the  Canadian  roads  want  to  do  the  bus- 
iness "? 

Mr.  Depew.  Well,  I  do  not  think  it  is  necessary  for  you  to  legislate 
to  accomplish  any  such  result  as  that  in  order  to  reach  this  difdculty. 
It  certainly  seems  a  monstrous  case  that  you  have  here  in  the  United 
States  almost  eight  thousand  million  dollars  invested  in  railways  which 
are  subject  to  our  laws,  which  pay  their  taxes,  which  help  support  the 
Government,  and  are  therefore  entitled  to  a  measure  of  protection, 
which  are  in  return  regulated  and  supervised  as  semi-public  bodies,  and 
yet  that  the  Government  itself  should  take  their  taxes  and  then  permit 
the  roads  of  a  foreign  country,  which  contribute  nothing  to  the  support 
of  our  Government,  owe  it  no  allegiance,  are  not  owned  by  our  citizens, 
and  in  case  of  war  would  be  used  against  us  to  emasculate  our  own 
properties. 

Senator  Blair.  I  know  it  seems  like  a  crime ;  but  the  question  is, 
will  the  people  be  willing  to  pay  a  dollar  for  what  they  can  get  now  for 
50  cents? 

Mr.  Depew.  No  such  result  need  be  feared,  and  if  the  people  would 
permit  the  American  roads  to  take  this  matter  in  their  own  hands  they 
would  settle  matters  very  quickly  with  these  Canadian  roads;  very 
soon  if  it  came  to  that  point. 

Senator  Blair.  The  idea  is  that  the  same  effect  is  produced  that 
would  be  produced  were  they  exempted  from  the  operation  of  the  inter- 
state commerce  act. 

Mr.  Depew.  That  is  precisely  it.  Here  is  one  great  trunk  line,  a 
Canadian  one,  exempt  from  the  operation  of  the  interstate  commerce 
act  and  the  American  lines  subject  to  it.    If  there  were  a  great  through 


68  TRANSPORTATION  INTERESTS  OF 

trunk  line  from  San  Francisco  to  New  York  and  Boston,  so  subsidized 
by  the  CTnited  States  Government  that  it  did  not  have  to  earn  any- 
thing, and  then  relieved  from  the  operations  of  the  interstate  commerce 
act,  you  would  then  produce  on  American  soil  these  conditions  that 
exist  in  Canada. 

THE   ONLY  ALTERNATIVES. 

Senator  Blair.  Is  there  any  other  remedy  than  to  repeal  the  law  oi 
subject  the  Canadian  roads  to  the  same  legal  control  as  the  United 
States  roads  ? 

Mr.  Depew.  There  is  none. 

Senator  Blair.  That  is  political  union,  is  it  not? 

Mr.  Depew.  We  do  not  want  the  law  repealed.  I  should  regard  it 
as  a  great  calamity  to  the  railroads  of  the  United  States  and  to  the 
people  of  the  United  States  to  repeal  that  law. 

Senator  Blair.  Then  you  must  extend  the  interstate  commerce  act 
to  Canada  as  well,  must  you  not  ? 

Mr.  Depew.  Yes,  sir. 

Senator  Blair.  Then,  you  must  control  Canada;  make  laws  for  it? 

Mr.  Depew.  No,  sir ;  only  so  far  as  the  Canadian  road  transacts 
business  in  the  United  States. 

Senator  Blair.  But  if  you  prohibit  the  Canadian  road  from  doing 
business  in  the  United  States  the  American  people  have  got  to  pay  $1 
instead  of  50  cents  for  the  same  service. 

Mr.  Depew.  No,  sir;  not  even  if  the  Canadian  roads  went  out  of 
business. 

Senator  Blair.  But  they  may  prefer  union  to  annihilation. 

NOT  A  QUESTION  OF  RATES. 

Mr.  Depew.  I  think  if  the  Canadian  road  did  not  carry  a  ton  of 
American  products  or  a  passenger,  and  stopped  doing  so  on  the  1st  of 
July,  that  from  that  time  out  the  American  shipper  and  the  American 
traveler  would  not  pay  a  dollar  more  than  they  do  now. 

The  Chairman.  You  believe  that  is  so"? 

Mr.  Depew.  I  do,  and  for  this  reason,  that  the  Canadian  road  is 
managed  by  able  men ;  it  wants  to  do  business  in  the  United  States ; 
that  is  just  so  much  of  a  surplus  to  its  regular  business.  Those  able 
men  know  that  it  can  not  do  busin(  ss  in  a  constant  war  with  the  rail- 
road system  of  the  United  States,  and  therelbre  they  are  entirely  in 
accord  with  the  railway  managers  of  the  United  States  in  such  associa- 
tions as  we  are  permitted  to  form  ;  and,  as  I  said  before,  they  live  up 
to  the  agreements  very  well.  There  is  no  dollar,  therefore,  nor  no  penny 
to  the  shipper  of  the  United  States  by  the  business  which  the  Canadian 
road  transacts,  or  the  tonnage  which  they  carry,  or  the  regulation 
which  they  have  upon  our  rates. 

But  what  we  com])lain  of  is  that  they  should  have  the  power,  if  they 
choose  to  exercise  it,  to  do  things  that  we  can  not  do,  to  recoup  where 
we  are  tied  up,  and  to  accomplish  in  Canada,  free  from  the  restrictions 
that  bind  us,  things  that  give  them  an  advantage  which,  if  we  do,  is  a 
penal  offense. 

Senator  Harris.  In  connection  with  that  precise  view  of  the  ques- 
tion what  I  desire  to  ask  you  is,  if  you  doubt  that  if  we  should  adopt  such 
legislation  as  makes  it  a  condition  precedent  to  the  Canadian  roads 
doing  business  at  all  in  this  country  that  they  shall  agree  to  conform 


J 


THE   UNITED   STATES.  AND   CANADA.  69 

Strictly  to  the  same  regulations  that  apply  to  our  own  American  roads, 
in  Canada  as  well  as  in  the  United  States,  in  respect  to  this  competi- 
tive traffic— have  you  any  doubt  that  there  is  a  Canadian  road  that 
would  hesitate  a  moment  to  accept  those  terms  ? 

Mr.  Depew.  No,  sir ;  I  think  they  would  accept  it  at  once.     ' 

Senator  Platt.  There  is  a  popular  impression  that  by  reason  of  this 
Canadian  transportation  of  American  products  New  England  and  other 
portions  of  the  country  get  their  freights  cheaper. 

Mr.  Depew.  I  know  that  is  the  popular  impression. 

Senator  Platt.  Do  you  think  that  the  American  roads  would  not 
take  advantage  of  it  to  increase  rates,  even  though  that  traflfic  through 
Canada  should  be  regulated  in  accordance  with  our  .law  ? 

Mr.  Depew.  1  would  reply  in  the  negative.  But  just  see  what  your 
proposition  is.  It  seems  to  me  to  be  the  same  proposition  made  by 
Senator  Blair — a  frightful  attack  upon  the  interstate  commerce  act 
itself. 

Senator  Blair.  I  was  not  asking  any  questions  with  reference  to  the 
effect  of  the  act. 

Mr.  Depew.  I  know;  but  the  effect  of  the  proposition  is  this,  that 
under  Ure  interstate  commerce  act  the  people  of  the  United  States  will 
be  mulcted  in  large  sums  for  unreasonable  charges  for  freight  unless 
there  be  some  roads  that  can  violate  the  law. 

Senator  Platt.  I  did  not  ask  the  question  because  that  was  my  be- 
lief about  it,  but  was  simply  speaking  of  what  is  a  popular  belief. 

Mr.  Depew.  I  know ;  but  the  popular  belief,  if  you  reduce  it  to  a 
proposition,  is,  that  the  only  way  to  reduce  rates  is  to  have  some  road 
that  can  violate  the  law  with  impunity. 

The  Chairman.  Do  as  they  are  a  mind  to  ? 

Mr.  Depew.  Yes,  sir. 

Senator  Blair.  Is  not  that  so  now? 

Mr.  Depew.  No,  sir ;  it  is  not. 

Senator  Blair.  Why  not "?  That  is  to  say,  if  there  is  a  road  that  vio- 
lates the  law,  is  not  the  force  of  your  testimony  that  the  road  operating 
in  violation  of  the  law  can  carry  traffic  cheaper  than  the  one  that  con- 
forms to  the  law  ? 

Mr.  Depew.  On  that  x>roposition  I  am  still  an  American. 

Senator  Blair.  We  are  all  Americans. 

Mr.  Depew.  If  it  is  necessary,  in  order  to  get  reasonable  and  low 
rates  to  the  shipper  in  the  United  States,  to  permit  some  road  to  violate 
the  law  while  the  rest  are  to  be  bound  by  it  I  want  the  New  York  Cen- 
tral to  be  that  road. 

Senator  Blair.  I  have  not  any  objection  to  the  New  York  Central 
being  that  road,  if  there  is  to  be  any.  But  is  it  not  a  fact  that  if  most 
of  the  roads  conform  to  the  law  and  one  be  excepted  that  the  excepted 
one  has  an  advantage? 

Mr.  Depew.  Yes,  sir ;  it  has  an  advantage. 

Senator  Blair.  And  by  having  the  advantage  it  can  give  cheaper 
rates  ? 

Mr.  Depew.  It  can. 

Senator  Hiscock.  Do  you  not  lose  sight  of  the  power  of  the  Inter- 
state Commerce  Commission  over  excessive  rates  ? 

THE  QUESTION  AS  IT  EXISTS. 

Mr.  Depew.  There  is  no  such  thing  as  excessive  rates.  We  have 
got  to  take  this  question  i)ractically  as  it  actually  exists.  The  Canadian 
roads  want  to  do  business  in  the  United  States.    Now,  even  if  they  aref 


70  TRANSPORTATION    INTERESTS    OF 

relieved  from  the  operatiou  of  the  interstate  coininerce  law,  they  can 
not  do  business  in  hostility  to  all  the  roads  of  the  United  States. 
Therefore  the  maua,i?ers  of  the  Canadian  roads  who  are  business  men, 
pure  and  simple,  without  any  sentiment  whatever,  come  into  our  con- 
ferences, and  they  say,  "  We  want  to  act  in  thorough  harmony  with 
you  and  secure  such  a  share  of  this  trafiSc  as  is  fair  and  reasonable 
with  our  conditions  and  by  your  consent.  If  we  can  make  that  arrange- 
ment— and  we  will  not  be  unreasonable — we  will  live  up  to  tariffs,  and 
we  will  agree  upon  tariffs." 

Now,  I  never  yet  have  found  in  any  of  our  associations  aCanadian  road 
anxious  to  reduce  tariffs.  I  never  have  heard  of  such  a  proposition 
from  a  Canadian  road.  They  are  always  in  favor  of  advancing  rates. 
The  oidy  benefit  tlie  people  of  the  United  States  get  from  the  opera- 
tion of  a  Canadian  road  which  is  entirely  free  from  the  penalties 
of  the  interstate  commerce  act  and  its  provisions  is  not  to  them  as  a 
whole,  but  to  certain  favored  people,  and  they  are  always  the  large 
shippers  who  are  crushing  out  the  small  ones  The  Canadian  road  can 
guarantee  advantages  by  way  of  rebate  and  secret  profit,  secret  return, 
or  drawback,  which  will  give  a  lower  rate  possibly  to  one  or  two  or 
three  favored  individuals,  but  not  to  the  shippers  generally  of  the 
United  States.  But  you  come  back  immediately,  when  you  relieve  the 
Canadian  roads  from  the  operation  of  the  act  in  order  to  secure  lower 
rates  for  the  people  of  the  United  States,  to  the  conditions  which  this 
law  was  enacted  to  amend  and  improve ;  that  is,  a  system  of  rebates 
and  secret  favors  which  build  up  the  few  and  crush  out  the  many. 

THE  REMEDY  PROPOSED. 

The  Chairman.  State  again,  Mr.  Depew,  exactly  what  you  think 
ought  to  be  an  amendment  to  the  present  interstate  commerce  act  in 
order  to  i)rotect  American  interests  as  against  Canadian  interests. 

Mr.  Depew.  I  have  already  said  what  I  think  is  necessary,  which  is 
the  enlargement  of  the  powers  of  the  Commissioners,  so  that  they  can 
very  properly  say  to  any  foreign  road,  whether  Mexican  or  Canadian, 
"If  you  wish  to  do  any  business  in  the  United  States  the  condition  is 
that  you  shall  conform  to  our  act." 

Senator  Blair.  You  do  not  mean  to  say  that  they  shall  ask  the  same 
for  the  service  rendered  as  the  American  roads  ? 

Mr.  Depew.  Simply  that  they  shall  conform  to  this  law. 

Senator  Blair.  That  has  nothing  to  do  with  the  regulation  of  the 
rate  ? 

Mr.  Depew.  No,  sir. 

Senator  Blair.  Now,  then,  let  us  get  on  this  broad  platform  of  equity. 
Is  it  not  possible  and  is  it  not  sure  that  those  Canadian  roads,  having 
the  shorter  lines 

Mr.  Depew.  They  have  the  longer  lines. 

Senator  Blair.  Well,  the  longer  lines,  then,  but  built  at  the  expense 
of  the  government,  necessarily  doing  business  as  all  roads  do  until  they 
are  worn  out — is  it  not  sure  that  under  those  conditions,  being  in  a 
situation  to  compete  to  their  advantage  and  to  the  ruin  of  American 
roads,  that  they  will  still  put  the  price  so  that  they  will  do  the  business  ? 

Mr.  Depew.  No. 

Senator  Blair.  That  is  the  point  that  is  troubling  my  mind.  I  sup- 
posed that  being  subsidized  roads,  built  for  nothing,  capital  furnished, 
and  exempt  from  taxation,  as  their  own  country  develops  by  tapping 
^the  prosperity  of  our  own,  by  and  by  they  will  defy  these  great  Ameri 


THE  UNITED  STATES  AND  CANADA.  71. 

cau  corporations,  being  more  powerful  themselves  than  any  of  them, 
and  the  original  investment  being  nothing,  while  they  have  the  results 
in  transportation  capacity,  that  they  would  take  the  business  from  the 
American  roads. 

Mr.  Depew.  That  is  a  very  broad  question,  Senator,  and  involves 
speculations  for  the  future. 

Senator  Blair.  Well,  I  think  the  whole  thing  relates  to  the  future. 

Mr.  Depew.  And  there  are  a  good  many  factors  that  govern  it.  If 
the  Canadian  Pacific  Railroad,  subsidized  to  this  enormous  extent, 
were  protected  by  the  Government  so  that  it  need  not  earn  anything 
whatever,  then  it  would  be  enabled  to  do  business  in  the  United  States 
under  conditions  which  would  seriously  injure  our  American  railroads 
and  their  investments.  It  would  dictate  to  tlie  American  roads  pre- 
cisely the  amount  of  business  which  it  should  take,  with  the  threat  that 
if  it  did  not  get  it,  it  would  destroy  the  whole  business  of  the  American 
roads. 

Now  the  safety  that  the  American  roads  have  against  that  condition  is 
the  condition  of  Canada  itself.  I  understand  that  the  settlement  along 
the  line  of  the  Canadian  Pacific  has  not  met  at  all  the  expectation  of  the 
projectors  of  the  road  nor  the  expectations  of  the  statesmen  of  Canada 
who  advised  Canada  to  assume  this  burden,  and  therefore  the  road  is 
not  likely  to  become  rich  enough,  from  the  business  which  originates 
on  its  own  line,  to  do  anything  very  aggressive. 

Then  I  understand  that  the  governmental  conditions  in  Canada,  pres- 
ent and  prospective,  are  not  such  that  the  treasury  can  be  absolutely 
relied  upon  for  any  large  drains  for  the  future. 

Senator  Blair.  But  it  has  already  built  the  road. 

Mr.  Depew.  Yes,  sir. 

Senator  Blair.  Would  there  not  perhaps  be  some  possibility  of  pro- 
tection in  the  fact  that  gradually  the  stock  of  the  Canadian  Pacific  will 
fall  into  the  hands  of  those  who  paid  liberally  for  it,  and  that  the  neces- 
sity of  furnishing  them  dividends  in  the  future  will  be  a  protection! 

Mr.  Depew.   Yes. 

The  Chairman.  You  do  not  favor  the  absolute  cutting  off  of  foreign 
trade  in  this  country ;  that  is,  I  mean  to  say,  you  are  not  opposed  to 
the  building  of  lines  into  this  country  by  these  Canadian  roads  and 
using  them,  provided  they  comply  with  the  same  regulations  that  gov- 
ern American  roads  ? 

Mr.  Depew.  Not  at  all,  and  for  two  reasons.  One  is  the  business 
reason,  that  I  do  not  think  it  would  be  good  policy  to  cut  them  oft", 
provided  they  comply  with  the  same  conditions  as  our  own  roads.  The 
other  is  the  sentimental  reason,  that  if  you  did  cut  them  olf  the  senti- 
ment that  the  Canadian  roads  reduced  the  price  to  the  shippers  would 
be  an  increasing  sentiment  always,  and  w^ould  lead  to  charges  against 
the  American  roads  which  were  not  true,  and  which,  as  a  representa- 
tive of  part  of  them,  I  would  rather  not  share. 

• 

building  roads  in  CANADA. 

The  Chairman.  There  has  been  no  obstruction  to  their  building 
roads  into  this  country  by  any  of  the  States. 

Mr.  Depew.  None  whatever. 

TheCHAiRMAN.  They  have  been  given  charters  whenever  they  asked 
for  them. 

Mr.  Depew.  Yes,  sir ;  they  have. 


72  TRANSPORTATION    INTERESTS    OP 

The  Chairman.  Suppose  you  desired  to  build  a  road  through  any 
portion  of  Canada,  would  you  have  any  difficulty  in  doing  so  ? 

Mr.  Depew.  I  think  we  would. 

The  Chairman.  You  say  you  think  you  would? 

Mr.  Depew.  Yes,  sir,  I  do. 

The  Chairman.  Why  is  that  ? 

Mr.  Depew.  There  is  no  general  railroad  law  iu  Canada.  Every 
road  has  to  be  built  under  a  special  act  of  Parliament,  and  if  the  road 
which  it  was  desired  to  build  by  American  lines  was  competitive  with 
the  Canadian  system  of  roads  I  do  not  think  that  the  Parliament  of 
Canada  would  grant  the  charter. 

Senator  Hiscock.  Especially  if  they  were  subsidized  roads. 

Mr.  Depew.  Yes,  sir.  There  is  a  contract  with  the  Canadian  Pa- 
cific by  the  Canadian  Grovernment  that  it  will  not  permit  roads  within 
their  territory  at  all. 

The  Chairman.  Within  a  hundred  miles  of  either  side  of  the  line. 

Mr.  Depew.  Yes. 

The  Chairman.  Now,  it  is  a  fact  that  we  probably  have  more  rail- 
road lines  in  the  United  States  than  all  the  balance  of  the  world. 

Mr.  Depew.  Yes,  sir ;  there  is  no  doubt  about  that. 

The  Chairman.  And  that  our  enterprising  men  have  been  building 
roads  through  the  Northwest  and  West  and  through  the  Rocky  Mount- 
ains and  over  them  to  a  very  great  extent,  probably  unsurpassed  by 
any  other  country  iu  the  world.  Now  how  does  it  happen  that  there  is 
no  disposition,  apparently,  or  no  effort  made  to  build  roads  into  this 
Canadian  country  by  American  people? 

Mr.  Depew.  I  think  the  reason  is  that  we  have  had  i)lenty  of  land 
in  our  own  country  that  we  could  develop  by  immigration.  Our  rail- 
road constructors  knew  that  the  immigrant  would  come  to  the  United 
States  who  would  not  go  to  Canada.  It  is  so  along  the  Canadian  line 
through  the  Manitoba  district.  The  colonists,  who  are  a  valuable  ac- 
quisition to  us,  who  come  here  with  some  money  and  experience  and 
household  implements  and  take  up  land  and  make  it  productive  at 
once— you  can  not  get  those  people  to  go  to  Canada,  but  they  will  come 
to  the  United  States. 

The  Chairman.  You  think  that  is  the  substantial  reason  why  roads 
have  not  been  attempted  to  be  built  by  American  capital  into  Canada 
as  compared  with  the  effort  that  has  been  made  in  the  northwestern 
part  of  the  country  which  has  not  been  settled  up  ? 

Mr.  Depew.  Yes,  sir. 

The  Chairman.  Is  it  not  true  that  there  are  a  great  many  roads  out 
West  now  that  have  no  substantial  business  along  the  line  of  the  rail- 
road to  support  them  ? 

Mr.  Depew.  A  great  many  roads  have  been  built  in  the  West  for  the 
purpose  ot  selliug  bonds. 

The  Chaikman.  Could  not  that  be  done  in  building  a  road  through 
Canada  just  as  welW! 

Mr.  Depew  No ;  the  American  investor  will  not  touch  a  Canadian 
bond.  It  IS  difficult  to  sell  Canadian  bonds  in  England.  A  Canadian 
railroad  is  projected,  and  the  promoter  goes  on  the  London  market.    It  is 

tm-Trp"^?  Pnr^^n';,'^/.^^  ^^^^'^^  banker  and  investor  look  at  the  matter 
with  great  care,  and  they  have  got  to  absolutely  demonstrate  returns  uv 
a  government  subsidy  or  they  can  not  sell  their  securities.  But  so  mucli 
money  has  been  made  in  the  purchase  of  American  bonds,  while  proper 
tionately  little  has  been  lost,  and  there  is  such  a  feeling  all  over  the  worhl 
as  to  the  limitless  possibility  of  development  here,  that  if  an  American 


THE    UNITED    STATES    AND    CANADA.  73 

road  has  any  sort  ofbackiugtliere  is  no  substantial  difficulty  in  dispos- 
ing of  its  securities. 

The  Chairman.  And  that  is  not  true  as  to  the  Canadian  bonds  ? 

Mr.  Depew.  No,  sir. 

The  Chairman.  I  have  always  supposed  that  one  of  the  reasons,  and 
possibly  a  jiretty  strong  one,  was  in  the  fact  that  American  enterprise 
was  not  encouraged  in  Canada  in  building  railroads  through  their 
country, 

Mr.  Depew.  I  understand  the  Canadians  do  not  desire  it,  and  I  am 
quite  sure  that  if  a  syndicate  of  American  bankers,  investors,  railroad 
men,  business  men,  etc.,  should  want  to  build  a  system  of  roads  in  Can- 
ada they  would  not  be  permitted  to  do  it. 

I  am  very  sure  that  if  the  Northwestern  American  lines  which  now 
come  down  to  Duluth  and  Minneapolis  wanted  to  build  through  Canada 
to  connect  with  the  systems  on  this  side,  free  from  the  Canadian  Pa- 
cific, the  Canadian  Parliament  would  not  permit  it  to  be  built. 

Senator  Blair.  The  railroads  there  would  not  permit  it  anj'  way. 

Mr.  Depew.  Parliament  would  not  permit  it,  nor  the  railroads  either. 
The  roads  and  the  parliament  are  nearly  one. 

traffic  ARRANGEMENTS. 

The  Chairman.  Going  back  to  the  pooling  question,  as  I  understand 
it,  you  have  an  arrangement  now,  just  as  you  had  before  the  interstate 
commerce  act  passed,  but  it  does  not  reach  to  all  the  points  of  opera- 
tion that  it  did  then,  by  which  you  came  to  these  agreements  practically 
to  control  rates  on  freights. 

Mr.  Depew.  Yes. 

The  Chairman.  Do  you  think  that  the  agreement  now  existing  be- 
tween these  trunk  lines  is  entirely  within  the  scope  of  the  interstate 
commerce  act? 

Mr.  Depew.  Yes,  sir ;  entirely.    There  are  no  penalties. 

The  Chairman.  You  do  nothing  that  is.interfered  with,  or  attempted 
to  be,  by  that  law. 

Mr.  Depew.  No.  The  first  provision  ofour  agreement  is  to  obey  the 
law  and  to  provide  the  machinery  for  its  enforcement.  We  have  a  vast 
and  expensive  system  of  returns  from  every  shipping  point  in  our  ter- 
ritory to  Mr.  Fink's  bureau,  the  object  of  which  is  to  know  constantly, 
from  day  to  day,  precisely  what  the  rates  are  and  what  the  tonnage  is 
from  every  point  within  the  territory  to  the  sea-board,  or  from  the  sea- 
board to  every  point  in  the  territory.  This  system  detects  a  rebate  at 
once  ;  the  object  of  it  is  to  detect  at  once  any  rebate  or  secret  advan- 
tage or  any  violation  of  the  law.  Our  instructions  to  the  commissioner 
are  to  inform  the  Interstate  Commerce  Commission  when  he  finds  out 
through  his  machinery  any  violations  of  the  law  and  who  is  the  party 
violating  the  law. 

The  Chairman.  What  is  tlie  efiect,  so  far  as  your  knowledge  extends 
and  so  far  as  you  believe,  as  to  the  enforcement  of  the  act  ? 

Mr.  Depew.  There  is  no  doubt  that  prior  to  your  last  amendment, 
imposing  penalties  of  a  i)enal  character  upon  a  shipper  and  officer 
alike,  the  act  was  disregarded,  not  generally,  but  to  a  considerable  ex- 
tent, west  of  the  Mississii)pi  Kiver,  and  in  the  South  very  largely.  In 
New  England  and  in  the  territory  east  of  Chicago  the  act  was  very 
well  obeyed,  but  the  lines  that  did  live  up  to  it  kept  const-intly  discov- 
ering diversions  of  business  that  could  occur  only  by  violations  of  the 
act.    The  lines  which  obeyed  the  law  best  suffered  the  most  in  loss  of 


74  TRANSPORTATION   INTERESTS    OF 

traffic  to  the  roads  violating  the  law.    There  was  a  premiu.n  upon  law 

SinceThe  penalty  clause  has  been  inserted  the  -M-.t  has  been  nmch 
better  lived  ui)  to"  but  it  requires  not  only  the  voluntary  machinery  of 
the  Trunk  Line  Association  and  of  the  Central  Trattic  Association,  but 
it  will  require  much  more  than  that  to  thoroughly  enforce  .t.  It  will 
require  the  prosecution  and  conviction  of  a  fellow  occasionally. 

The  Chairman.  Otherwise  they  will  droi)  back  again  into  a  jlisregard 

of  the  law.  ^        ,  ,      • 

Mr.  Depew.  Yes,  sir;  some  of  the  boards  of  trade  at  central  i>oints, 
before  the  penalty  clause  was  enacted,  refused  by  unanimous  votes  to 
allow  inspectors  of  the  roads  to  examine  their  books  and  ascertain  if 
there  had  been  any  rebates  paid. 

LEGALIZING  POOLING. 

My  opinion,  Mr.  Chairman,  is  that  this  law  will  never  be  thoroughly 
enforced  and  its  operation  absolutely  eflVctive  until  in  some  lorm  and 
under  some  other  name  you  have  a  legalized  i)Ool. 

The  Chairman.  You  believe  that  is  the  only  way  to  secure  its  thor- 
ough enforcement? 

Mr.  Depew.  Yes,  sir.  The  one  object  of  the  goveniineiital  part  of 
this  railroad  machinery  is  to  secuie  for  the  peojjle  stable  rates  and  rea- 
sonable rates.  The  evil  of  an  unstable  rate  is  so  great  that  it  needs  no 
argument.  Unstable  rates  simi)ly  demoralize  the  whole  business  of  the 
country.  They  ruin  every  calculation  a  business  man  may  make.  They 
transform  all  business  men  into  speculators  and  ultimately  centiT  the 
whole  business  of  the  country  in  the  hands  of  a  lew  j)eople. 

Now  the  pool  prevents  that  by  the  roads,  great  and  small  and  strong 
and  weak,  arranging  among  themselves  divisions  of  tiatlic.  The  weak- 
ness of  the  pool  has  always  been  that  it  coidd  not  enfcuce  its  agree 
raents.  If  it  had  in  some  way  the  support  of  the(io\'«'riiment,  by  which 
the  contract  could  be  enforced,  then  it  could  maintain  its  agreements. 

The  only  argument  against  the  poo]  is  that  it  makes  a  universal  com- 
bination which  would  lead  to  exorbitant  rates.  Now  the  Clovernment 
can  regulate  that,  on  the  other  hand,  by  enactments  equally  rigid  in  that 
respect. 

The  Chairman.  So  that  your  idea  is  that  there  ought  to  be  some 
power  given  to  the  pool  to— ^ — 

Mr.  Depew.  If  you  will  allow  me,  Mr.  Chairman,  I  am  almost  pre- 
pared to  say  that  a  legahzed  pool  on  the  one  hand,  and  no  rate  to  be 
put  in  force  that  does  not  receive  the  sanction  of  the  Interstate  Com- 
merce Commission  on  the  other,  with  the  penalties  of  tlie  act  attiwhed 
to  both  provisions,  would  be  a  good  thing  for  the  i)eople  and  the  rail- 
roads. 

Senator  Blair.  Eepeat  that. 

Mr.  Depew.  I  am  almost  prepared  to  believe  that  a  legalized  pool  on 
the  one  hand,  under  which  the  railroads  can  form  an  agreement  for  the 
maintenance  of  rates,  and  on  the  other  hand  reasonable  rates  be  insured 
by  providing  that  no  rate  be  put  in  force  until  approv«'(l  bv  the  Inter- 
state Commerce  Commission,  with  the  penalties  of  the  interstate  law  at 
tached  to  violations  of  the  pool,  and  the  tariff'  approved  bv  the  com- 
mission, would  be  a  good  thing  for  the  people  and  the  railro'a<ls. 

benator  Blair.  Let  me  see  if  I  understand  von.  You  sav  that  if 
the  law  were  such  that  the  roads  and  some  representation  ot  tin-  people 
conkl  fix  the  tariffs  and  then  enforce  their  contiimitv  and  steadiness, 
that  such  a  law  would  be  the  best  law  you  could  have."    Is  that  correct  t 


I 


THE    UNITED    STATES    AND    CANADA.  75 

Mr.  Depew.  N<t,  that  is  uot  my  idea.  The  GovtTnm<ut  could  not  fix 
the  tariffs. 

Senator  Blair.  I  mean  in  connection  with  the  roads. 

Mr.  Depew.  But  what  I  mean  is  this.  On  the  one  hand  let  us  have 
a  legalized  pool,  .^o  that  these  roads  could  agree  among  themselves. 

Senator  Blair.  That  is  all  rigbt,  only  the  pool  mightmake  the  tariii* 
too  high. 

Mr.  Depew.  Then  it  is  for  the  Interstate  Commerce  Commission  to  say 
that  the  rate  is  too  high  and  for  them  to  cut  it  down. 

Senator  Blair.  The  point  is  this,  that  the  Government  and  the  pool 
agree  what  the  tariff  shall  be,  and  the  Government  enforce  the  contract 
or  pool.     Is  that  correct  ■? 

Mr.  Depew.  Yes. 

Senator  Reagan.  To  avoid  the  difficulty  of  building  new  roads,  would 
it  not  involve  the  necessity  of  some  power  to  limit  the  construction  of 
needless  roads "? 

Mr.  Depew.  Not  necessarily  in  connection  with  that,  but  that  power 
ought  to  exist. 

Senator  Reagan.  If  differentials  are  allowed  to  all  roads  competing 
for  freight  under  such  an  arrangement  as  Mr.  Depew  mentions,  in  order 
to  make  the  scheme  which  he  presents  successful,  would  it  not  be  nec- 
essary to  accompany  it  with  a  power  lodged  somewhere  to  limit  and 
prevent  the  construction  of  needless  roads  ?  If  that  is  not  done,  why 
not  build  new  roads  to  levy  tribute  upon  existing  roads  and  divide  the 
traffic  with  them  ? 

Mr.  Depew.  Well,  there  is  a  good  deal  of  force  in  that,  and  yet  I 
think  that  we  could  get  along  with  the  new  road,  but  we  infinitely  pre. 
fer  to  have  the  Government  say  whether  the  road  is  necessary  or  uot- 

Senator  Platt.  The  Government  could  not  do  that. 

Mr.  Depew.  But  the  States  ought  to  take  it  up  as  matters  are  now. 
The  public  now  look  at  it  in  one  way.  The  public  see  the  existing  roads 
are  trying  to  prevent  competition,  but  it  seems  to  me,  if  the  existing 
roads  absolutely  fill  all  the  public  demands,  that  the  people  whose 
rights  are  destroyed  by  their  property  being  taken  by  a  road  for  which 
no  necessity  exists 

Senator  Blaie.  And  they  have  got  to  be  taxed  to  maintain  it. 

Mr.  Depew.  Yes,  sir — should  be  able  to  say  to  the  State  "  there  is 
no  necessity  for  that  road."  There  should  be  some  tribunal  to  decide 
the  question  whether  the  road  should  be  built  or  not.  There  ought  to 
be  some  tribunal  to  which  they  could  appeal. 

the  exchange  of  cars. 

The  Chairman.  This  is  a  little  aside  of  the  main  question,  but  still 
I  think  it  is  a  question  there  ought  to  be  some  legislation  on,  perhaps. 
Do  your  cars  go  into  Canada  ? 

Mr.  Depew,  Yes,  sir. 

The  Chairman.  Are  they  loaded  by  your  road  and  sent  there  ? 

Mr.  Depew.  Yes,  sir. 

The  Chairman.  They  are  loaded  by  your  road  and  sent  there  with 
goods  ? 

Mr.  Depew.  Yes. 

The  Chairman.  Do  they  stay  th.  re  indefinitely  or  come  back  imme- 
diately ? 

Mr.  Depew.  They  come  ba<k. 

The  Chairman.  What  is  the  actual  situation  with  reference  to  Oa- 


76  TRANSPORTATION    INTERESTS    OF 

iiadiau  and  American  cars;  are  they  used  indiscriminately  in  the  two 

countries"?  .        ,  xi      t  rru     i- 

Mr  Depew  Yes,  sir;  indiscriminately  among  the  lines.  Ihe  Ca 
nadian  roads  are  united  in  freight  lines,  to  which  each  road  contributes 
a  certain  number  of  cars.  There  is  the  Midland  Line,  th*-  Blu.-  Line, 
the  Ked  Line,  the  White  Line,  and  all  those  lines,  and  the  cars  of  those 
lines  go  interchangeably. 

The  Chairman.  As  vou  understand  it,  I  suppose,  under  the  r.-gu- 
tious  of  the  Treasury  Department  of  this  Government,  and  possibly 
under  some  law  of  Canada,  goods  in  transit  back  and  forth  between  the 
two  countries  and  the  cars  are  free  of  duty? 

Mr.  Depew.  Yes,  sir. 

The  Chairman.  But  it  has  been  a  question  whether  there  is  any  law 
authorizing  cars  to  go  through  without  paying  duty  ? 

Mr.  Depew.  There  has  been  some  controversy  on  that  point. 

The  Chairman.  Now,  admitting  that  the  cars  have  a  right  to  come 
from' Canada  directly  to  New  York  for  the  purpose  of  bringing  a  ear- 
load  of  goods,  yet  there  is  no  law,  1  take  it,  that  would  allow  those  cars 
to  be  used  anywhere  over  the  country  in  the  United  States,  and  our 
cars  going  into  Canada  to  be  used  anywhere  there  without  paving  duty 
as  they  go  back  and  forth. 

Mr.  Depew.  I  suppose  there  is  no  law,  but  in  the  practical  opera- 
tion of  the  roads  the  cars  are  interchangeably  used  precisely  in  Canada 
as  are  cars  in  this  country,  as  if  Canada  and  the  United  States  were  ad 
joining  States.  1  had  that  matter  called  to  my  at-t4jntioa  by  an  order 
issued  recently  by  the  late  Secretary  of  the  Treasury  prohibiting  Cana- 
dian cars  entering  the  United  States  without  jmyiug  duty.  1  made  a 
very  earnest  appeal  to  the  Secretary  of  the  Treasury  on  the  subject, 
because  if  that  order  had  been  carried  out  it  would  have  broken  up  the 
whole  traflBc.  It  would  have  been  just  the  same  as  a  withdrawal  of  the 
privilege  by  which  the  goods  come  through  now  in  bond,  and  the  Cana- 
dian roads  are  permitted  to  do  business,  and  the  Secretary  su.spended 
the  operation  of  the  order.  J.  believe  that  the  question  has  been  re- 
vived by  the  present  Secretary  of  the  Treasury. 

The  Chairman.  There  is  probably  a  hearing  going  on  now,  or  about 
to  goon,  before  one  of  the  Secretaries  of  the  Treasury  on  this  subje<  t. 
That  is  the  reason  1  wanted  to  secure  whatever  information  you  have 
in  reference  to  it. 

Mr.  Depew.  The  operation  of  it  would  be  to  deprive  the  Canadian 
roads  of  the  use  of  their  cars  in  United  States  business.  They  would 
have  to  use  the  cars  of  their  connecting  lines  or  else  unload  at  the 
border,  and  it  would  be  impossible  to  do  that  and  comi)ete  for  the 
business. 

The  Chairman.  You  do  not  suppose  that  if  there  were  a  law  allow- 
ing the  cars  to  go  through,  car-load  bonded,  and  the  car  c<mie8  to 
New  York,  for  instance,  that  you  would  have  the  right  under  the  law 
to  let  that  car  go  oftand  do  business  in  the  United  States,  or.  if  at  th.' 
other  end,  to  go  off"  and  do  business  anywhere  in  Canada  and  then 
come  back  again  ?  , 

Mr.  Depew.  The  practical  operation  is  this,  Senator.  All  thes^ 
roads  do  their  business  by  the  freight  lines.  The  freight  line  is  a 
voluntary  organization  of  the  roads  themselves.  Each  road  in  the  line 
puts  m  a  certain  proportion  of  cars,  and  those  cars  are  painted  the  color 
otthe  hue  and  are  marked  with  the  name  of  the  line  or  s  me  initials  to 
indicate  the  cars  that  belong  to  the  dift'  rent  parts  i.f  the  combination 
m  case  ot  a  breaking  up  of  the  line. 


THE    UJIITED    STATES"  AND    CANADA.  77 

Now,  those  cars  go  everywhere  in  Canada  and  everywhere  in  the 
United  States  where  the  line  runs,  and  are  very  often,  in  slack  of  busi- 
ness, when  there  is  not  enough  of  through  business  to  occupy  them, 
used  by  the  road  on  which  the  cars  happen  to  be  for  their  local  busi- 
ness. 

The  Chairman.  In  other  words,  there  are  many  Canadian  cars  in 
this  country  that  are  scattered  around  here,  and  many  United  States 
cars  in  Canada  that  are  scattered  over  the  Dominion  ;  and  they  have 
probably  more  of  our  cars  now  than  we  have  of  theirs. 

Mr.  Depew.  Yes ;  but  as  to  the  actual  number,  it  depends  upon  the 
situation  at  a  particular  time.     How  is  that,  Mr.  Hickson  "? 

Mr.  Hickson.  I  think  we  use  ten  American  cars  to  one  Canadian  car 
used  here. 

The  Chaieman.  So  that  there  are  more  cars  belonging  to  United 
States  roads  in  Canada  than  there  are  Canadian  cars  here^ 

Mr.  Depew.  That  necessarily  would  be  so. 

Senator  Reagan.  Have  you  a  system  of  accounts  so  as  to  know  how 
to  credit  a  car  with  the  number  of  miles  it  runs  when  out  of  its  own  ter- 
ritory ? 

Mr.  Depew.  Yes,  sir ;  we  have. 

Senator  Platt.  How  far  east  does  the  San  Francisco  business  which 
is  bonded  up  to  Fort  Moody  come  ?  Does  it  come  clear  through  to  New 
York  ? 

Mr.  Depew.  I  think  it  does. 

The  Chairman.  You  railroad  gentlemen  here,  representing  the  dif- 
ferent lines,  have  some  sort  of  an  arrangement  by  which  you  gather  in 
your  cars,  have  you  not  ? 

Mr.  Depew.  We  have  a  car  accounting  division,  so  that  we  keep 
run  of  them.  We  have  a  large  bureau  of  fifty  clerks  at  the  New  York 
Central  depot  whose  sole  business  is  to  keep  the  run  of  every  car  in  our 
service,  where  it  is,  and  its  mileage  on  the  different  lines. 

The  Chairman.  What  is  the  mileage  of  your  cars  now  on  other 
roads  or  on  other  lines  ? 

Mr.  Depew.  The  mileage  has  been  constantly  diminishing.  The 
average  mileage  is  twenty-seven  miles  per  day. 

The  Chairman.  I  mean  what  do  you  get  for  the  use  of  your  car  ?  Is 
it  three-fourths  of  a  cent  a  mile  '? 

Mr.  Depew.  It  is  three-quarters  of  a  cent  a  mile.  One  hand  about 
washes  up  the  other.  You  see  if  it  were  not  for  this  sj'stem  of  freight 
lines,  by  which  each  road  contributes  its  share  of  cars  the  traffic  of  the 
country  could  not  be  done. 

The  Chairman.  Are  you  familiar  with  the  situation  on  the  Western 
border  of  the  country,  as  to  the  proportion  of  freight  that  the  American 
lines  get  in  comparison  with  the  Canadian  Pacific? 

Mr.  Depew.  Do  you  mean  on  the  Pacific  coasts 

The  Chairman.  Yes ;  I  mean  west  of  Chicago,  clear  through  to  the 
Pacific  coast. 

Mr.  Depew.  As  yet  I  think  the  American  lines  get  the  larger  i)fo- 
portion,  but  I  really  could  not  tell  definitely.  I  have  only  an  impres- 
sion, and  not  the  data. 

THE  coastwise  TRADE. 

Senator  Platt.  We  do  not  allow  any  foreigner  to  do  a  coastwise 
business  1 
Mr.  Depew.  No,  sir. 
Senator  Platt.  It  has  to  be  done  in  American  vessels? 


78  TRANSPORTATION    INTERESTS    OF 

Mr.  Dbpew.  Yes,  sir.  ,    ,    ^, 

Senator  Platt.  Why  should  we  not  then  apply  the  same  rule  to  the 
border  line  and  have  the  business  done  on  American  cars  ?  Where  is 
the  difference  in  principle  I  _  .     .  ,    ^, 

Mr.  Depew.  The  principle  is  the  same,  but  there  is  no  principle  that 
governs  railway  operations.     [Laughter.] 

Senator  Blaie.  Is  there  not  a  necessity 

Mr. Depew.  If  Senator  Piatt's  proposition  were  carried  out  the  Cana- 
dian Government  would  retaliate  and  say  that  no  American  car  shall 
run  into  Canada  while  we  say  no  Canadian  cars  shall  run  into  the  United 
States.  Then  you  have  accomplished  the  imrpose  of  the  gentlemen  who 
wish  to  cut  off  the  Canadian  roads  ;  the  traflic  is  stopped,  and  that  ends 
it.  If  the  Canadian  roads  had  to  transfer  its  tratlic  at  the  border  they 
could  not  stand  the  burden,  and  if  the  American  road  had  to  transfer 
its  business  at  the  border  it  would  not  send  through  Canada  except  it 
received  a  considerable  concession  for  doing  so. 

Senator  Harris.  In  effect  it  makes  the  border  the  terminal  of  both 
lines. 

Mr.  Depew.  Yes,  sir;  it  destroys  the  through  line. 

Senator  Hiscock.  There  is  this  difference,  that  the  proportion  of  cars 
is  ten  American  cars  to  one  Canadian  car  interchanged.  Now,  if  the 
same  thing  exists  in  reference  to  our  coastwise  trade  and  the  propor- 
tion of  vessels  be  ten  American  to  one  foreign  we  won  hi  probably  not 
be  so  particular  about  it. 

Mr.  Depew.  No,  sir ;  you  take  a  line  like  the  New  York  Central  ot 
about  450  miles  in  length  and  the  Canada  Southern — how  far  is  it,  Mr. 
Hickson,  from  the  Niagara  frontier  to  the  Detroit  Kiver  f 

Mr.  Hickson.  Two  hundred  and  twenty-live  miles. 

Mr.  Depew.  Two  hundred  and  twenty-live  miles,  and  then  the  Mich- 
igan Central  of  300  or  250  miles.  Then  in  the  same  line  yon  i)ut  all  the 
roads  running  to  the  southwest  from  Detroit,  and  the  Cansida  Southern 
is  only  one  tenth  of  the  mileage.  1  take  it  that  the  (irand  Trunk  projM  r 
in  Canada  is  not  over  one-tenth  of  the  mileage  of  the  lines  with  ^^hi(•i» 
it  connects. 

Mr.  Hickson.  A  little  more,  perhai)s. 

Senator  Platt.  Do  you  not  believe  we  would  be  better  off  to-day  as 
American  people,  as  United  States  people,  if  this  svMtem  had  never 
sprung  up  of  allowing  goods  destined  to  points  in  the  United  States  to 
go  through  Canada? 

Mr.  Depew.  If  we  had  to  go  back  to  that,  I  think  1  should  say  yes. 

Senator  Platt.  But  having  sprung  up,  do  vou  not  think  it  ought  to 
be  stopped  1 

Mr.  Depew.  No,  sir;  1  do  not  think  you  could  stop  it. 

THE  question   OF  POOLING. 

Seriator  Hiscock.  Recurring  to  the  question  of  jK.oling;  as  I  under 
stand  It,  pooling  was  prohibited  because  it  was  supposed  that  it  was  a 
means  of  agreeing  upon  excessive  rates  bv  the  railroads. 

Mr.  Depew.  Yes,  that  was  the  sole  reason  for  prohibiting  it. 

Senator  Hiscock.  Now,  as  1  understand  it,  vour  pool  in  respect  to 
rates,  or  your  agreement,  rather,  in  respect  to  'rates,  is  just  as  perfect 
now  as  It  ever  was >      .'  i 

Mr.  Depew.  Just  the  same. 

rn.fZf^Z^.T''''^'^^^^  '^  *^^^  ^«  t^«  ^'''''  •«  interfering  with  an  ar- 
rangement  between  the  trunk  lines  in  respect  to  rat^s,  that  is  done  now 


THE    UNITED    STATES    AND    CANADA.  79 

the  same  as  it  always  was  done,  and  the  only  difference  between  the 
present  system  and  the  old  system  is  that  you  can  not  make  a  division 
of  the  freight  which  each  trunk  line  is  to  take.  The  result  is  that  there 
is  always  an  inducement  on  the  part  of  rival  trunk  lines  to  cheat  in 
some  way  in  getting  an  excess  of  freight. 

Mr.  Depew.  We  are  deprived  of  that  part  of  the  pool  which  enabled 
us  to  pay  a  road  not  to  give  a  rebate  or  advantage  to  some  shipper  or 
locality. 

Senator  HiscoCK.  That  part  of  the  pool  is  prohibited  which  removed 
the  inducement  to  cheat  and  to  cut  under  and  to  give  to  large  freighters, 
large  concerns  which  ship  an  immense  amount  of  freight,  an  undue  ad- 
vantage. That  is  prohibited,  and  that  is  the  only  part  of  the  pool 
which  is  prohibited. 

Mr.  Depew.  That  is  the  only  part  of  the  pool  which  is  prohibited. 

Senator  Platt.  Well,  that  was  all  there  was  in  the  pool. 

Mr.  Depevp^.  Yes,  sir ;  that  was  practically  all  there  was  in  the  pool. 

Senator  Harris.  The  testimony  of  the  President  of  the  Erie  railroad 
yesterday  developed  the  fact  that  under  the  operations  of  the  pooling 
system  that  existed  prior  to  the  passage  of  the  interstate  commerce  act 
that  road  received  $500,000  annually  which  it  did  not  earn  but  which 
was  contributed  by  the  other  carriers  under  the  operation  of  that  pool- 
ing system.  Now,  that  being  true,  does  it  not  show  conclusively  that 
the  shippers  of  this  country  had  to  pay  $500,000  a  year,  not  for  serv- 
ices performed  in  the  carrying  of  products  or  merchandise,  but  in  or- 
der to  sustain  a  road  that  was,  perhaps,  unnecessarily  in  existence? 
In  other  words,  does  it  not  show  that  the  other  carriers  who  contributed 
that  $500,000  had  to  charge  rates  to  enable  them  to  contribute  it,  which 
would  have  been  unnecessary  if  it  had  not  been  compelled  to  so  con- 
tribute ? 

Mr.  Depew.  That  was  not  the  practical  operation  of  it,  Senator.  It 
did  not  affect  the  rate  at  all.  The  rate  was  agreed  upon  entirely  inde- 
pendent of  any  consideration  to  be  paid  to  the  Erie  road,  but  the  Erie 
road  said,  "  Our  conditions  are  such  that  we  can  not  maintain  that  rate, 
or  any  equal  rate.  Whatever  rate  you  fix  we  have  got  to  charge  a  cer- 
tain percentage  under  it,  in  order  to  get  what  we  think  our  share  of 
the  business,  and  unless  you  make  up  that  i^ercentage  we  will  keep 
going  below  what  you  charge."  That  kept  up  until  we  gave  that  cer- 
tain percentage ;  so  that  the  shippers  of  the  country  were  not  taxed  that 
amount.  It  made  no  difference  to  the  shipper  what  sum  was  allowed 
the  Erie  road.  It  was  a  contribution  that  came  from  the  other  carriers 
in  order  to  have  any  rate  at  all. 

Senator  Harris.  That  I  understand  to  have  been  the  motive  for  al- 
lowing the  road  half  a  million  a  year  for  services  not  performed.  But 
let  me  put  my  question  in  a  little  different  way.  If,  under  the  rate  fixed 
by  your  road,  you  could  contribute  your  proportion  of  that  $500,000  a 
year,  if  you  were  not  compelled  to  so  contribute,  would  you  not  hav^e 
been  justified,  and  would  it  not  have  been  your  duty,  to  have  fixed  a 
lower  rate  to  the  public  than  the  rate  you  did  fix  1 

Mr.  Depew.  It  did  not  come  to  us  in  that  way.  Let  me  illustrate. 
The  five  roads  meet.  They  say  what  is  a  living  rate,  for  instance,  on 
grain  from  Chicago.  The  unanimous  agreement  is  that  a  living  rate  and 
one  that  can  fairly  be  maintained  against  a  competition  of  water  would 
be  25  cents  a  hundred.  Now  the  Erie  road  says:  "We  agree  with  you 
that  25  cents  a  hundred  is  a  proper  rate,  but  we  can  not  get  business  at 
equal  rates,  and  therefore  we  can  not  get  what  we  regard  as  our  share 
of  the  business.     Therefore  we  want  a  concession  made  to  us,  either  in 


80  TRANSPOKTATION   INTERESTS    OP 

the  privilege  of  cbargiiig  2  cents  a  hundred  less  than  you  do,  or  else  re- 
ceiving what  that  amounts  to  in  money.  If  yon  do  not  do  that,  if  you 
fix  the  rate  at  20  cents  we  will  charge  18  cents;  if  you  fix  it  at  12 
cents  we  will  charge  10  cents;  if  you  fix  it  at  8  cents  we  will  charge  6 
cents,  and  if  you  fix  it  at  5  cents  we  will  charge  3  cents.  We  will  equal- 
ize this  matter  by  chareiug  2  cents  a  hundred  under  you,  no  matter 
what  your  rate  may  be."  So  that  the  eflect  of  the  demand  was  not 
to  affect  the  rate  itself  at  all.  We  simply  met  not  a  theory,  but  a  con- 
dition. 

Senator  Blair.  Did  the  Erie  road  do  business  at  the  same  rate 
that  you  did  under  this  arrangement,  or  did  it  charge  the  lesser  tarifl" 
at  the  same  time  ? 

Mr.  Depew.  It  has  the  same  tariff,  but  it  was  guarantied  a  certain 
amount  of  tonnage.    That  tonnage  was  arbitrarily  transferred  to  it. 

Senator  Blair.  And  now,  instead  of  getting  the  $500,000  a  year 
it  charges  the  lesser  rate  ? 

Mr.  Depew.    It  charges  the  same  rate. 

Senator  Harris.  Your  road  was  a  ineiuber  of  that  pool,  was  it  not  ? 

Mr.  Depew.  Yes,  sir. 

Senator  Harris,  And  as  such  member  did  it  contributo  to  that 
$500,000 1 

Mr.  Depew.  I  think  Mr.  King  made  a  mistake  in  stating  that  it  was 
paid  in  money  during  this  wliole  ])eriod.  For  some  time  tonnage  was 
arbitrarily  transferred  to  the  Erie  road.  After  that  money  payments 
were  arranged  for.  When  he  speaks  of  being  behind  $.")00,0(M>,  what  he 
means  is  that,  under  the  operation  of  the  interstate-commerce  act  and 
the  maintenance  of  equal  rates,  the  diOeiential  which  he  has  has  dropped 
his  percentage.  Even  with  the  differential  his  percentage  has  dropped 
down  so  that  he  has  $5(K),000  less  in  his  treasury  than  he  w(»uld  have 
had  under  the  old  arrangement,  where  his  i»eieentage  had  been  main- 
tained by  the  arbitrary  transfer  of  freight  to  his  line. 

Senator  Gorman.  That  was  his  statement  exactly. 

Senator  Harris.  I  call  your  attention  to  the  fact  that  Mr.  King's 
statement  was  distinct,  in  answer  to  a  (jnestion  i>ropounded  by  the 
chairman,  as  well  as  a  question  propounded  by  myself,  that  the  $500,- 
000  was  paid  his  road— well,  to  use  his  own  language— for  being  virtuous. 
He  further  explained,  in  answer  to  additional  ciuestion,  that  it  was  paid 
not  for  service  performed,  it  was  paid  not  for  any  work  or  earnings  of 
his  road,  but  paid  under  the  pooling  agreement.  So  that  my  under- 
standing of  Mr.  King's  statement  is  the  payment  of  that  sum  of  money 
by  the  pool,  paid  mouth  by  month. 

Mr.  Depew.  That  was  correct  during  part  of  the  period. 

Senator  Harris.  Then,  if  I  understand  vour  stat^iiueut,  there  was 
no  contribution  of  money  actually  to  that  road? 

Mr.  Depew.  His  road,  was  allowed  18  per  cent,  in  the  division  of 
tonnage.  Mr.  Fmk  would  report  at  the  end  of  the  week  that  the  Erie 
had  only  got  16  per  cent.,  and  that  the  New  Y'ork  Central  was  over  2 
per  cent.  Then  we  arbitrarily  transferred  to  Mr.  King's  road  that 
amount  of  tonnage.  If  the  Pennsylvania  was  over  2  per  cent,  it  traus- 
terred  that  amount  to  him. 

Senator  Blair.  But  where  did  the  money  come  in  ! 

Mr.  Depew.  The  money  came  in  the  handling  of  that  tonnage. 

beuator  Blair  Did  the  Erie  get  the  money  Nvithout  doing  the  work  ? 
w.^;.V  ?H-  ^^^  ^''^  ^'^^  t^^  ^^«^^-  ^t  i^«t  the  tonnage;  onlv  it 
hv  nm  i.f  5  ^"^  ^'"^  """"^^^  tonnage.  It  was  tonnage  intended  to'  go 
by  our  hue,  and  we  sent  it  by  that  road. 


THE    UNITED    STATES    AND    CANADA.  '  81 

Senator  Hi«cock.  The  money  went  into  his  treasury? 

Mr.  Depew.  The  money  went  into  his  treasury,  but  we  did  the  work. 

Senator  HiscocK.  The  money  went  into  his  treasury  from  the  other 
roads,  rather  than  it  went  directly  into  his  road  from  the  shippers 
themselves  ? 

Mr.  Depew.  Yes,  sir. 

Senator  Blair.  They  shipped  over  your  line,  and  you  sent  it  over  the 
Erie? 

Mr.  Depew.  Yes,  sir. 

Senator  Hiscock.  And  paid  the  Erie  for  carrying  it. 

Mr.  Depew.  Yes,  sir. 

Senator  Blair.  You  hired  another  man  to  do  the  work,  that  was  all. 

Mr.  Depew.  Yes,  sir ;  we  paid  another  man  for  doing  it. 

CANADIAN  STEAM-SHIP  LINES. 

Senator  Gorman.  Suppose  the  conditions  applying  to  the  American 
roads  were  applied  to  the  Canadian  roads  and  the  Canadian  roads  came 
under  the  supervision  of  the  Interstate  Commerce  Commission  and  they 
were  forced  to  accept  them,  how  much  advantage  would  they  still  have 
by  theirarrangement  with  the  steam-ship  lines,  say  with  respect  to  freight 
between  China  and  Liverpool  ? 

Mr.  Depew.  That  is  an  absolute  advantage  to  the  extent  of  the  ton- 
nage which  they  feel  required  to  give  to  those  lines.  Under  the  arrange- 
ment which  they  have  with  their  steam-ships  they  can  take  away  from 
the  American  lines  whatever  tonnage  is  required  to  keep  the  line  run- 
ning. 

Senator  Gorman.  You  do  not  see  any  way  of  reaching  that  by  legis- 
lation ! 

Mr.  Depew.  I  see  no  way  of  reaching  it. 

Senator  GbRMAN.  Would  that  have  the  effect  of  diverting  any  con- 
siderable portiou  of  the  trade  from  Chicago  or  any  i)ortion  of  the  United 
States  ? 

Mr.  Depew.  Of  course  it  diverts  a  very  large  amount  of  export  busi- 
ness that  would  naturally  come  to  New  York,  or  Boston,  or  Baltimore. 
It  diverts  it  by  this  superior  advantage  via  Montreal  and  partly  to  Port- 
laud. 

Senator  Gorman.  By  the  subsidizing  of  ships  ? 

Mr.  Depew.  The  subsidizing  of  ships  makes  the  ocean  rate  nominal, 
for  it  is  necessary  to  give  a  nominal  rate  in  order  to  get  the  tonnage. 

Senator  Gorman.  How  are  our  American  ships  to  meet  that?  What 
is  the  solution  of  it? 

Mr.  Depew.  TheluterstateCommerceCommissionhad  the  same  prob- 
lem up  in  regard  to  shipments  from  Philadelphia  and  from  Baltimore 
under  the  same  conditions.  Philadelphia  and  Baltimore  were  taking 
the  whole  of  the  export  traffic  away  from  every  other  American  port, 
because  of  contracts  made  with  the  steam-ship  companies,  and  the  steam- 
ship companies  making  the  concession. 

The  Interstate  Commerce  Commission  attempted  to  reach  it,  and  felt 
that  the  act  as  it  stood  did  not  meet  the  case.  One  of  the  amendments 
of  the  present  act  was  intended  to  give  them  the  power  to  meet  that 
condition.  I  have  no  doubt  that  if  the  Interstate  Commerce  Commis- 
sion- I  have  not  looked  at  the  amendment  enough  to  satisfy  my  own 
mind  about  it — I  am  satisfied  that  if  the  Interstate  Commerce  Commis- 
sion had  the  power  to  equalize  rates  to  Liverpool — what  I  mean  by 
equalizing  rates  is  not  to  give  any  advantage  to  any  shipper  on  freight 
6543 6 


32  TRANSPORTATION    INTERESTS    OF 

to  Liverpool— if  they  had  that  power  then  there  is  no  doubt  that  in  the 
couditions  which  they  imposed  upon  the  Canadian  roads  for  the  privi- 
lege of  doing  business  in  the  United  States  they  could  make  that  one 
of  them,  that  there  should  be  no  rebate  or  advantage  given  by  the 
steamship  companies. 

Senator  Gorman.  That  is,  on  the  through  bill— sending  through  Irom 
any  point  in  the  United  States  on  a  through  bill.  Do  you  think  that  is 
feasible  ! 

Mr.  Depew.  I  think  so. 

Senator  Gorman.  Looking  at  the  map  of  the  Canadian  Pacific,  and 
with  your  statement  that  there  is  no  railroad  in  the  world  wliich  lias 
had  the  same  amount  of  subsidy,  in  other  words,  that  it  is  built  with 
public  money,  and  possibly  could  be  run  without  regard  to  the  money 
received  from  the  ordinary  commercial  transactions,  do  you  not  regard 
it  as  a  political  or  mditary  route,  built  by  a  foreign  government,  and  the 
commercial  part  only  incidental  ? 

CANADA  A  RIPENING  PLUM. 

Mr.  Depew.  Why,  the  only  reason  that  permits  the  existence  of  such 
a  condition  as  that  for  one  moment  is  the  power  of  the  United  States 
and  the  weakness  of  Canada.  If  we  were  two  great  nations  of  equal 
power,  with  the  border  situated  that  way,  and  that  road  running  that 
way,  a  government  line,  it  would  get  no  advantages  in  the  United 
States.  But  the  American  impression  of  Canada  seems  to  be  that  it  is 
a  ripening  plum,  and  that  it  is  bound  to  fall  into  our  hat  some  time  or 
other,  whenever  we  want  it.     [Laughter.] 

Senator  Gorman.  Do  you  think  that  these  roads,  coming  in  at  all 
competing  points  on  our  border,  such  as  the  road  running  across  the 
upper  corner  of  Maine  and  then  on  to  Ualifax,  has  a  tendentjy  in  that 
direction  f 

Mr.  Depew.  What  do  you  mean.  Senator? 

Senator  Gorman.  Whether  it  has  a  tendency  to  ripen  this  pUimT 
[Laughter.] 

Mr.  Depew.  Political  union  follows  commercial  union  very  rapidly. 
I  am  a  great  believer  in  the  American  destiny. 

Senator  Gorman.  Do  you  think,  then,  that  the  general  policy  of  this 
country  would  be  promoted  by  permitting  this  develoi)ment  to  go  on 
under  proper  restrictions '? 

Mr.  Depew.  Yes,  sir ;  under  proper  restrictions. 

Senator  Gorman.  And  you  do  not  apprehend  any  serious  trouble  to 
our  carrying  trade,  so  far  as  the  policy  of  the  r.ritish  Government  is  to 
subsidize  a  line  of  steamers  running  from  ChiJia  and  Japan  to  the  Sound, 
and  on  the  other  hand  from  Ilalifax  to  Liverpool  ? 

Mr.  Depew.  I  think  that  will  take  away  from  us  the  Asiatic  trade. 

Senator  Gorman.  My  question  was,  then,  how  would  vou  meet  it  ? 

Mr.  Depew.  Well,  1  believe  in  subsidizing  steamers." 

Senator  Blair.  Would  not  that  prevent  the  ripening  of  the  plum! 
[Laughter.] 

Mr.  Depew.  No  ;  I  think  not. 

Senator  Blair.  What  do  you  think  of  a  ripening  procesH  that  imts 
fortifications  in  Puget  Sound  ? 

Mr.  Depew.  That  is  a  matter  about  whi<h 

Senator  Gorman.  As  a  business  i)roposition,  without  regard  to  the 
ripening  of  the  plum,  simply  the  business  proposition,  do  vou  think  it 
IS  sound  policy  ou  our  part  to  permit  the  Canadians  to  come  down  and 


THE  UNITED  STATES  AND  CANADA.  83 

tap  US  at  every  center  and  take  our  products  from  our  own  territory 
into  tbeir  country,  and  then  brin^  them  back  into  our  country,  to  New 
York,  for  instance,  without  a  tax  of  any  sort  or  description,  while  they 
prohibit  our  vessels  from  landing  at  Halifax! 

Mr.  Depew.  Unless  there  was  absolute  reciprocity  I  think  it  would 
be  bad  policy  for  us  to  extend  any  concession  that  does  not  receive  a 
corresponding  concession  on  the  other  side. 

Senator  Eeagan.  Do  you  happen  to  know  what  the  traffic  arrange- 
ment is  between  the  Canadian  Pacific  and  our  transcontinental  roads  as 
to  differentials  ? 

Mr.  Depew.  I  do  not  know.  I  think  they  have  no  arrangement.  I 
do  not  think  there  is  any  arrangement  between  our  transcontinental 
roads  and  the  Canadian  Pacific.  If  there  is  one  I  do  not  know  any- 
thing about  it. 

Senator  Eeagan.  I  was  informed  by  the  Interstate  Commerce  Com- 
mission that  there  was  such  an  arrangement,  and  I  did  not  know  but 
what  Mr.  Depew  might  know  of  it. 

Mr.  Depew.  I  know  nothing  about  it. 

the  PROHIBITION  OF  DIFFERENTIALS. 

Senator  Eeagan.  In  speaking  of  the  interstate  commerce  law,  Mr. 
Depew,  you  suggested  that  its  operations  tended  to  the  destruction  of 
the  weak  roads  and  to  transfer  the  business  to  the  strong  roads,  I  be- 
lieve. 

Mr.  Depew.  Yes,  sir;  I  did. 

Senator  Eeagan.  And  that  one  of  the  means  of  preventing  that  was 
the  employment  of  differentials. 

Mr.  Depew.  Yes,  sir ;  that  is  my  opinion. 

Senator  Eeagan.  You  spoke  of  the  danger  to  existing  lines  by  the 
building  of  new  and  unnecessary  lines,  did  you  not  ? 

Mr.  Depew.  Yes,  sir. 

Senator  Eeagan.  Now,  if  the  plan  of  adopting  differentials  were 
prohibited,  would  not  the  tendency  on  the  part  of  the  roads  be  to  refuse 
concessions  to  unnecessary  roads  and  therefore  to  discourage  their  con- 
struction ? 

Mr.  Depew.  No,  sir  ;  its  immediate  operation  would  be  to  break  up 
the  relations  between  the  strong  lines  and  the  weak  ones  already  in 
existence. 

Senator  Eeagan.  But  if  the  proposed  new  lines  promised  themselves 
to  be  sustained  by  differentials  would  it  not  discourage  the  construction 
of  new  lines  without  the  aid  of  law  ! 

Mr.  Depew.  No  ;  I  do  not  think  a  road  is  ever  built  with  an  idea  of 
the  differential  it  will  get.  I  do  not  believe  any  line  is  constructed  in 
competitive  territory  where  the  promoters  rely  upon  concessions  from 
the  other  roads.  New  roads  are  built  for  two  reasons.  One  is  to  com- 
pel the  existing  line  to  buy  it.  It  is  a  direct  and  pure  piece  of  black- 
mail. The  other  is,  there  are  enthusiastic  people  who  believe  there  is  a 
necessity  for  the  new  line  in  a  business  which  will  develop  to  justify 
the  investment. 

The  building  of  the  first  class  of  roads,  I  think,  public  sentiment  has 
pretty  thoroughly  discouraged  since  the  Nickle  Plate  and  West  Shore 
experiments.  The  building  of  the  second  class  of  roads  is  going  on 
constantly,  and  the  promoters  of  such  roads  are  of  two  kinds,  the  en- 
thusiasts of  the  locality,  who  do  not  know  anything  about  the  operation 


84  TRANSPORTATION   INTERESTS    OF 

of  railroads,  and  the  speculators  in  the  securities,  who  hope  to  plaster 
them  upon  the  public  here  and  abroad. 

The  Chairman.  If  the  Senator  will  allow  nie  to  sujjgest  the  inquiry 
right  there,  I  should  like  to  ask  whether  or  not  there  Iiua'C  been  a  good 
many  miles  of  railroad  built  into  new.countries  by  different  corporations 
for  the  purpose  of  acquiring  the  territory  for  future  development, 
although  it  would  not  pay  to  build  them  now  ! 

Mr.  Depew.  Well,  extensions  of  roads  by  existing  roads,  such  as  the 
Northwestern,  the  Chicago,  Burlington  ami  (Juincy,  the  St.  Paul,  and  the 
Eock  Island,  do  not  come  in  this  category  of  which  I  speak. 

The  Chairman.  Why  not? 

Mr.  Depew.  They  are  built  by  peoi)le  who  are  thoroughly  familiar 
with  the  country,  people  who  always  build  in  advance  of  tlio  settlement 
of  the  country,  with  experience,  however,  as  to  the  develo|)ment  of  such 
territory.  For  instance,  the  Xorth western  road,  of  which  1  am  a  di- 
rector, built  a  road  350  miles  in  length  to  St.  Pierre,  in  Dakota,  and 
there  was  not  an. inhabitant  on  the  line.  But  wo  knew  perfectly  W(  11 
from  experience  what  the  course  of  settlement  would  Ik',  and  the  result 
has  entirely  justified  the  (construction.  In  other  words,  the  road  tilled 
up  the  country  and  the  filling  up  of  the  country  sustaine*!  the  road. 

Senator  Eeacian.  I  believe  1  understood  you  to  say.  in  answer  to 
Senator  Gorman,  that  you  thought  it  feasible  l<>  arr;.nge  for  through 
rates  to  Liverpool,  for  instance,  from  our  various  trunk  lines. 

Mr.  Depew.  Yes,  sir. 

Senator  Reagan.  That  would  have  to  be  done  by  reducing  inland 
rates,  would  it  not  ? 

Mr.  Depew.  No.  What  I  meant  by  tiiat  was  to  prevent  a  line,  which 
has  a  subsidized  steamship  company,  making  through  the  steam  ship 
company  a  rebate  or  drawback  to  the  shipper,  and  thereby  giving  the 
shipper  by  that  line  an  advautage  over  the  shipper  by  another  line. 
Now,  the  New  York  Central  has  no  relation  with  any  steam  ship  com- 
pany. We  come  to  New  York  and  send  by  any  steam  ship  line  coming 
here.  We  have  no  relation  to  it,  and  we  tell  them  we  want  so  much 
space  for  Saturday.    They  tell  us  what  the  charge  will  be  i)er  bushel. 

Senator  Reagan.  Then  your  idea  on  that  subject  is  that  you  can  not 
regulate  it  by  the  regulation  of  rates  on  interior  commerce, "but  by  pre- 
venting steam-ship  lines  from  discriminating  uiiou  American  exports! 

Mr.  Depew.  Yes,  sir;  on  American  exports. 

THE   RAILROADS   AND   THE   WATER-WAYS. 

The  Chairman.  I  think  we  have  all  neglected  to  ask  you  anv  ques- 
tion in  relation  to  our  water-ways.  There  is  a  provision' in  theVesolu- 
tion  under  which  we  are  oi)erating  which  says  the  committee  shall  as- 
certain— 

Whether  there  is  any  tliscrimination  in  the  charges  made  fnr  tolls,  or  otherwise, 
against  American  vessels  which  pass  through  the  Welhuul  and  St.  Lawrence  canals. 

Have  you  any  information  on  that  subject  ? 

Mr.  Depew.  No,  sir;  1  am  not  informed  on  that. 

Ihe  Chairman.  I  do  not  know  that  there  are  any  more  questions. 

Mr.  Depew.  I  will  state  one  thing.  There  is  a  IcM-ling  that  the  rail- 
ways are  hostile  to  the  water-ways.  I  want  to  sav  that  that  is  not  true. 
Ihere  has  always  been  a  feeling  that  the  New  York  Central  was  hostile 
to  the  Ji.rie  Canal.  I  should  regard  it  as  a  great  calamity  if  the  Erie 
Canal  ceased  to  be  operated  as  it  is. 


THE   UNITED    STATES   AND   CANADA.  85 

Personally  I  voted  for  a  free  caual.  Tbe  Erie  Canal  forces  to  New 
York  an  immense  traffic,  and  in  addition  to  the  traffic  that  we  ordinarily 
get  we  get  the  surplus  that  comes  to  Buffalo  by  lake  se«^king  the  canal. 
I  am  speaking  as  a  New  York  Central  man  now.  Whatever  helps  '^ew 
York  helps  the  New  York  Central  road.  The  Erie  Canal  helps  New 
York  and  therefore  we  are  in  favor  of  the  Erie  Canal. 

The  Chairman.  At  the  same  time  it  is  an  immense  regulator  of  rail- 
road rates. 

Mr.  Depew.  Yes,  sir;  it  is  an  immense  regulator  of  rates. 

The  Chairman.  So  generally  you  are  in  favor  of  transportation  by 
canals,  and  rivers,  and  lakes,  as  regulators  of  rates "? 

Mr.  i)EPEW.  Yes,  as  far  as  consistent.  Of  course  every  canalman 
and  steamshii)  owner  makes  his  own  rates  to  fill  his  boats,  and  he  be- 
comes a  factor  in  the  making  of  rates  to  the  extent  of  his  capacity  to 
carry. 

Senator  Hiscock.  It  amounts  to  this,  practically,  that  with  the  ad- 
vantage in  your  favor  in  point  of  time,  and  that  the  water-way  can  only 
be  operated  during  a  certain  season  of  the  year,  although  the  cost  of 
transportation  upon  the  water- way  is  lower,  you  do  not  fear  it  at  all  as  a 
competitor,  and  you  are  willing  to  have  it  as  a  competitor,  on  account  of 
the  large  volume  of  business  which  it  induces "? 

Mr.  Depew.  Yes ;  that  is  it  exactly. 

POLITICAL  RELATIONS  VS.  MATERIAL  DEVELOPMENT. 

Senator  Blair.  May  I  ask  you  one  or  two  questions  on  another 
branch  ! 

Mr.  Depew.  Certainly. 

Senator  Blair.  Probably  no  one  has  studied  the  conformation  of  the 
continent  with  a  view  to  business  development  more  than  you.  I  would 
like  to  inquire  whether  the  natural  avenues  and  tendencies  of  commerce, 
taken  in  connection  with  Canadian  development,  would  not  be  to  the 
employment  of  routes  running  southerly  rather  than  the  transconti- 
nental routes,  assuming  that  no  international  questions  were  in  the  way 
and  it  was  all  under  one  political  control,  and  then  would  not  the  rail- 
road system  of  Canada  tend  to  make  connections  southerly  rather  than 
by  these  transcontinental  routes  ? 

Mr.  Depew.  Yes,  sir. 

Senator  Blair.  Then  existing  political  relations  are  at  warfare  with 
natural  material  development  ? 

Mr.  Depew.  Yes. 

Senator  Blair.  Do  you  think,  Mr.  Depew,  that  that  great  line  run- 
ning across  these  naturally  separated  regions  by  boundaries  extending 
northerly  and  southerly  is  put  there  by  a  power  which  contemplates 
political  union  with  the  United  States? 

Mr.  Depew.  No,  sir ;  quite  the  reverse. 

Senator  Blair.  Do  you  think  there  is  any  necessity  for  putting  these 
extraordinary  fortifications  in  Puget  Sound  except  for  warlike  i^ur- 
poses,  and  who  is  there  to  fight  but  the  United  States  ? 

Mr.  Depew.  I  understand  there  has  been  a  great  change  of  senti- 
ment in  England  on  that  question  within  a  year. 

Senator  Blair.  Who  is  to  assail  those  fortifications  1 

Mr.  Depew.  Nobody  but  the  United  States. 

Senator  Blair.  Do  yon  think  that  any  prudent  people  would  allow 
the  erection  of  such  fortifications  or  that  any  nation  on  the  continent 
of  Europe  would  permit  any  other  nation  to  erect  such  fortifications 
without  demanding  an  explanation,  officially  and  diplomatically  ? 


gg  TRANSPORTATION  INTERESTS  OF 

Mr.  Depew.  No,  sir.  ,, ,,     . 

Senator  Hiscock.  Iu  theliglitof  that  question  I  would  like  to  ask  you 
this  question,  whether  Paget  Sound  is  the  weak  point  of  attack  by  the 
United  States  on  Canada  ?  .,,,..,         •      x,    . 

Mr.  Depew.  Well,  as  to  that,  we  come  right  back  to  the  point  that 
our  American  people  do  not  regard  Canada  as  an  enemy,  if  she  wanted 
to  be.  There  is  a  general  impression  that  a  couple  of  days  would  close 
up  the  campaign.     [Laughter.]  ,..,.,,      ,,^ 

Senator  Blair.  Well,  we  have  made  mistakes  ot  that  kind.  \\  e 
might  well  remember  that  there  are  a  great  many  millions  in  Euroi)e, 
and  a  great  many  millions  in  Asia,  and  that  Canada  and  this  country  are 
half  way  between. 

Mr.  Depew.  Of  course  it  would  be  a  different  question  if  that  vast 
territory  in  which  that  road  is  built  was  developed  and  settled  as  iti  our 
northwestern  country. 

Senator  Gorman.  Is  it  not  capable  of  development  and  settlement  f 

Mr.  Depew.  Yes,  sir. 

The  Chairman.  And  it  will  be  some  time. 

Mr.  Depew.  I  think  it  will  be  when  we  are  full.  It  is  not  the  cli 
maticbut  the  political  conditions  which  prevent  the  settlement  of  Can- 
ada. 

The  Chairman.  Do  those  political  conditions  prevent  the  peoi)le  from 
going  iu,  or  is  it  that  when  they  get  there  they  go  out  into  the  United 
States  ? 

Mr.  Depew.  It  prevents  the  people  from  going  iu.  People  in  Europe 
understand  the  significance  of  our  centennial. 

The  Chairman.  I  have  heard  it  staled  that  when  eflbrts  have  been 
made  to  put  people  into  that  country  that  the  first  thej'  knew  they 
had  drifted  down  into  the  United  States.  I  do  not  know  whether  that 
is  true  or  not. 

Mr.  Depew.  I  think  that  the  ordinary  immigrant  thinks  that  he  will 
weigh  a  great  deal  more  in  the  United  States  than  he  would  weigh  over 
there. 

The  Chairman.  I  think  so,  too. 

STATEMENT  OF  JOSEPH  HICKSON. 

Mr.  Joseph  Hickson,  general  manager  of  the  Grand  Trunk  Railway 
of  Canada,  appeared. 

The  Chairman.  You  are  a  resident  of  Canada,  are  you  not  f 

Mr.  Hickson.  I  am  an  Englishman  residing  in  Canada. 

The  Chairman.  Where  in  Canada  do  you  reside? 

Mr.  Hickson.  Montreal. 

The  Chairman.  What  is  your  general  business  t 

Mr.  Hickson.  I  am  the  general  manager  of  the  Grand  Trunk  Rail- 
way ot  Canada.    I  have  charge  of  all  their  properties  in  this  country. 

The  Chairman.  What  are  the  termini  of  that  road? 

Mr.  Hickson.  In  the  east,  Quebec,  Portland,  and  Rouse's  Point.  In 
the  west,  the  St.  Clair  and  Detroit  Rivers,  and  then  we  have  Hues  run- 
ning up  the  Georgian  Bay  and  ports  on  Lake  Huron. 

The  Chairman.  You  did  not  mention  Chicago. 

Mr.  Hickson.  They  are  separate  lines  west  of  the  river.  I  should 
have  mentioned  Detroit  and  Jackson.  The  line  to  Chicago  is  a  sepa- 
rate corporation,  managed  separately,  although  it  is  controlled  bv  the 
Urand  iruuk,  as  is  also  the  Detroit,  Grand  Haven  aud  Milwaukee  line 
from  Detroit  to  Grand  Haven. 


THE  UNITED  STATES  AND  CANADA.  87 

The  Chairman.  You  say  the  line  from  Chicago  to  Port  Huron  is  a 
separate  line. 

Mr.  HiCKSON.  Yes,  sir. 

The  Chairman.  Is  it  not  controlled  and  operated  by  the  Grand 
Trunk  ? 

Mr.  Hickson.  Practically  it  is  controlled  by  a  certain  interest  in  the 
Grand  Trunk  holding  the  securities ;  but  there  is  a  board  of  directors 
composed  partly  of  men  resident  along  the  line  and  partly  of  officers 
of  the  Grand  Trunk.  The  same  is  the  case  with  the  Grand  Haven  line 
running  from  Detroit  to  Grand  Haven. 

LINES   CONTROLLED  BY  THE   GRAND   TRUNK. 

The  Chairman.  Now,  will  you  name  distinctlj^  each  line  of  road 
that  connects  or  is  controlled  by  the  Grand  Trunk  in  any  degree,  which 
runs  in  the  United  States  ? 

Mr.  Hickson.  Yes,  sir ;  I  will  try  to. 

The  Chairman.  Begin  with  the  East. 

Mr.  Hickson.  There  is  the  Atlantic  and  St.  Lawrence  line,  running 
from  Portland  to  the  boundary  between  Canada  and  Vermont. 

Senator  Platt.  That  used  to  be  the  Vermont  Central. 

Mr.  Hickson.  No  ;  it  has  always  been  the  Atlantic  and  St.  Law- 
rence.    It  terminates  about  16  miles  on  the  west  side  of  Island  Point. 

The  Chairman.  What  is  the  length  of  that  road? 

Mr.  Hickson.  One  hundred  and  hfty-four  miles. 

The  Chairman.  It  is  stated  in  the  pamphlet  I  hold  in  my  hand  to  be 
one  hundred  and  sixty-six  and  lifty-eight  one-huudredths  miles. 

Mr.  Hickson.  I  expect  that  is  correct.  I  am  speaking  only  from 
memory.    No  doubt  that  is  quite  right. 

The  Chairman.  Does  that  belong  to  the  Grand  Trunk '? 

Mr.  Hickson.  No,  sir;  it  is  a  separate  corporation,  but  it  was  leased, 
I  think,  in  1853  for  nine  hundred  and  ninety-nine  years.  The  lease  was 
sanctioned  by  the  legislatures  of  the  three  States  through  which  it  runs. 

The  Chairman.  What  are  the  estimated  earnings  of  that  road? 
Have  you  any  figures  with  you  that  would  indicate  the  same  ?  It  is 
stated  here  in  the  printed  opinion  of  the  Interstate  Commerce  Commis- 
sion to  be  $1,107,764.77.  It  is  stated  in  this  report  that  the  capital  is 
$8,443,000;  gross  earnings  from  operation,  $1,107,764.77,  and  total 
freight  tonnage  of  836,152. 

Mr.  Hickson.  That  is  probably  correct  as  at  June  30,  1888,  as  the 
figures  were  no  doubt  supplied  by  the  company  to  the  Commission. 

The  Chairman.  That  road  practically  belongs  to  the  Grand  Trunk, 
although  controlled  by  a  separate  corporation,  does  it  not  ? 

Mr.  Hickson.  It  is  leased;  it  is  a  separate  corporation. 

The  Chairman.  Who  makes  the  rates  for  that  road  ? 

Mr.  Hickson.  The  Grand  Trunk  Company.  It  is  worked  as  a  por- 
tion of  their  system,  and  Portland  is  the  winter  port  of  the  road. 

The  Chairman.  Where  is  the  summer  port  ? 

Mr.  Hickson.  Montreal  and  Quebec,  Montreal  principally. 

The  Chairman.  What  is  the  next  road  that  you  control  that  is  en- 
tirely in  the  United  States? 

Mr.  Hickson.  There  is  a  short  line  running  off  the  Atlantic  and  St. 
Lawrence  line  to  Lewiston,     I  think  it  is  about  5  miles  long. 

Senator  Gorman.  Is  that  a  link  in  your  connection  with  St.  John  ? 

Mr.  Hickson.  No,  sir. 

The  Chairman.  How  did  you  happen  to  build  that? 


gg  TRANSPORTATION    INTERESTS    OF 

Mr  HiCKSON  The  local  parties  found  the  capital  for  it.  There  is 
considerable  local  traffic  there.    It  is  a  feeder  of  the  Atlantic  and  St. 

Lawrence.  ,     .^,  ,        „„  i  j. 

The  Chairman.  Does  it  connect  with  any  other  road  1 

Mr  HiCKSON.  I  thiDk  not.  I  think  at  Lewiston  and  1  am  speaking 
from  recollection,  and  that  it  is  on  a  different  level.  I  think  there  is  no 
physical  connection  with  any  other  road.  There  is  also  a  little  piece  of 
road  running  to  Norway,  on  the  same  Atlantic  and  St.  Lawrence  line, 
built  by  local  people ;  a  separate  corporation.  The  road  is  about  a  mile 
and  a  half,  or  something  like  that. 

The  Chairman.  You  say  that  is  only  a  mile  and  a  half  long! 

Mr.  HiCKSON.  I  think  that  is  the  length  of  it. 

The  Chairman.  What  is  the  purpose  of  that  road  ? 

Mr.  HiCKSON.  It  is  simply  to  accommodate  the  local  traffic. 

The  Chairman.  Does  it  connect  with  any  of  your  main  lines! 

Mr.  HiCKSON.  With  the  Atlantic  and  St.  Lawrence. 

The  Chairman.  Under  what  arrangement  do  you  hold  that  road? 

Mr.  HiCKSON.  We  merely  work  it ;  we  do  not  owu  it.  It  is  held  by 
local  parties  who  wanted  to  extend  their  business  there,  and  we  simply 
work  it. 

The  Chairman.  You  have  a  lease  of  it  for  ninety-nine  years,  as  you 
have  of  the  other  piece  of  road,  have  you  not ! 

Mr.  HiCKSON.  We  lease  it,  but  I  forget  for  what  time. 

The  Chairman.  But  you  absolutely  control  it ! 

Mr.  HiCKSON.  Yes. 

The  Chairman.  What  other  road  have  you  ? 

Mr.  HiCKSON.  Going  westward  there  is  a  small  piece  of  Hue  in  Ihe 
State  of  New  York  at  Rouse's  Point  running  from  the  boundary. 
Originally  it  was  constructed  from  the  boundary  of  Canada  down  to 
the  lake  to  form  a  connection  with  the  lake.  A  portion  of  it  was 
afterward  taken  up,  but  I  think  there  is  a  mile  and  a  (piarter  of  it  still. 
That  runs  from  the  Canadian  boundary  to  Kouse's  Point.  It  was  built 
about  forty  years  ago  by  a  company  that  was  subsequently  absorbed 
into  the  Grand  Trunk. 

The  Chairman.  That  now  belongs  to  you  ! 

Mr.  HiCKSON.  Belongs  to  us. 

The  Chairman.  What  is  the  length  of  that,  do  you  say  ! 

Mr.  HiCKSON.  I  think  there  is  a  mile  and  a  quarter  of  it  existing; 
there  was  an  extension  of  the  railways  in  the  neighborhood  after  it  was 
built  and  it  was  not  thought  necessary  to  run  all  the  way  up  the  lake, 
but  only  to  a  connection  with  the  Ogdensburg  Railway. 

Then  there  is  a  road  just  completed  which,  although  built  by  a  sep- 
arate corporation,  is  practically  owned  by  the  Grand  Trunk  Company. 
It  extends  from  the  boundary  line  near  Fort  Covington  to  Massena 
Springs,  in  the  State  of  New  York.  It  is  23  miles  long  and  connects  the 
Grand  Trunk  system  with  the  Rome  and  Watertown  Railway.  Over  it 
is  expected  to  pass  a  considerable  quantity  of  bituminous  coal  from  the 
States  to  Montreal,  and  which  has  heretofore  be«n  largely  suin)lie<l  from 
Nova  Scotia.  ^    .      it 

The  Chairman.  What  other  road  ? 

Mr.  HiCKSON.  The  next  lines  are  those  west  of  the  St.  Clair  and  De- 
troit Rivers.  There  is  a  line  called  the  Chicago,  Detroit  and  Canada 
Grand  Trunk  Junction,  which  was  built  for  the  purpose  of  giving  the 
Grand  Trunk  a  connection  with  Detroit. 

The  Chairman.  That  road  was  built  by  whom  ? 


THE    UNITED    STATES    AND    CANADA  89 

Mr.  HiCKSON.  By  iudependeiit  parties.  The  capital  was  found  in 
Eng^Iaud,  and  it  was  leased  to  the  Grand  Trunk,  1  think,  for  ninety-nine 
years.  That  runs  from  Fort  Gratiot,  in  Michigan,  to  West  Detroit,  a 
distance  of  59  miles. 

The  Chairman.  It  is  stated  here  in  the  report  of  the  Interstate 
Commerce  Commission  as  having  a  capital  stock  of  $2,881,14.1.46,  with 
gross  earnings  of  $248,123.52;  total  freight  tonnage,  375,904.  I  sup- 
pose this  sttvtement  in  the  report  is  taken  from  your  own  figures  sub- 
mitted to  the  Commission  and  is  correct. 

Mr.  HiCKSON.  That  is  probably  our  own  report  at  June  30,  1888. 

The  Chairman.  And  that  line  is  leased  like  these  others  ? 

Mr.  HiCKSON.  Yes,  that  is  leased  by  the  Grand  Trunk. 

The  Chairman.  What  other  road  have  you? 

Mr.  HiCKSON.  There  is  a  line  running  from  a  place  called  Lenox,  or 
Ridgewa3\     The  name  has  been  changed  two  or  three  times. 

The  Chairman.  That  is  the  Michigan  Air  Line  Railway  Comjiany, 
extending  from  Lenox  to  Jackson,  Mich.,  is  it  notf 

Mr.  HiCKSON.  Yes.     I  think  it  is  105  miles  in  length. 

The  Chairman.  How  do  you  control  that"? 

Mr.  HiCKSON.  The  stock  of  that  line,  or  a  majority  of  it,  is  controlled 
by  the  Grant!  Trunk. 

The  Chairman.  Is  that  a  separate  corporation  ? 

Mr.  HiCKSON.  That  is  a  separate  corporation. 

The  Chairman.  Who  controls  the  operation  of  the  road  1 

Mr.  HiCKSON.  The  Grand  Trunk. 

The  Chairman.  And  the  Grand  Trunk  makes  the  rates  for  it? 

Mr.  HiCKSON.  Yes. 

The  Chairman.     What  other  line  have  you  in  the  United  States  ? 

Mr.  Hici^soN.  I  think  we  have  no  other  line  in  the  United  States  that 
is  operated  as  a  part  of  the  Grand  Trunk  system. 

The  Chairman.  Who  has  control  of  the  Detroit,  Grand  Haven  and 
Milwaukee"? 

Mr.  HiCKSON.  That  is  an  independent  corporation. 

The  Chairman.  Who  controls  it  ? 

Mr.  HiCKSON.  The  stockholders,  but  a  portion  of  the  stock  in  the  line 
is  held  in  trust  for  the  benefit  of  certain  stockholders  in  the  Grand  Trunk 
Railway. 

The  Chairman.  Has  the  Grand  Trunk  Railway  a  lease  of  it  f 

Mr.  HiCKSON.  Not  of  either  the  Chicago  and  Grand  Trunk  or  the 
Grand  Haven  lines. 

The  Chairman.  Does  not  the  Grand  Trunk  have  anything  to  do 
with  it"? 

Mr.  HiCKSON.  They  have  practically  the  power  of  electing  the  direct- 
ors and  the  management 

The  Chairman.  Practically  you  control  it;  is  not  that  true? 

Mr.  HiCKSON.  Yes,  sir. 

The  Chairman.  Although  they  have  a  separate  corporation  they 
only  go  through  the  form  of  doing  business  on  their  own  account. 

Mr.  HiCKSON.  Yes,  they  go  through  the  necessary  legal  forms. 

The  Chairman.  You  say  the  same  condition  exists  as  to  the  Chicago 
and  Grand  Trunk  Railway  Company? 

Mr.  HiCKSON.  Precisely.  Then  we  have  an  arrangement  with  the 
Toledo,  Saginaw  and  Musk<  gon  Railway  under  which  that  line  is  ope- 
rated as  a  connection  of  the  Chicago  and  Grand  Trunk  Railway. 


90  TRANSPORTATION    INTERESTS    OF 

LINES  CONSTRUCTED   BY   THE   GRAND   TRUNK. 

The  Chairman.  Did  tbe  Grand  Trunk  have  anything  to  do  with  the 
construction  of  any  of  these  lines'? 

Mr.  HiCKSON.  Yes;  they  had  something  to  do  with  the  construction 
of  the  Chicago,  Detroit  and  Canada  Grand  Trunk  Junction  line  from 
Fort  Gratiot  to  Detroit.  That  is  they  promoted  it,  although  they  did  not 
expend  capital  upon  it.  They  were  at  Point  Edward,  on  the  other  side 
of  the  river,  without  access  to  Detroit,  and  it  was  necessary  to  have  con- 
nection with  Detroit. 

The  Chairman.  Has  the  Grand  Trunk,  within  its  own  authority,  ever 
built  any  road  in  the  United  States  ? 

Mr.  HiCKSON.  No ;  when  they  have  <lone  so  at  all,  they  have  built 
them  under  charters  obtained  in  the  States,  or  helped  to  promote  them 
under  such  charters.  1  am  not  aware  that  the  Grand  Trunk  as  a  com- 
pany has  any  legal  status  in  the  United  States. 

The  Chairman.  I  am  not  either,  except  as  it  comes  in  by  permis- 
sion. 

Senator  Blair.  Have  you  not  a  connection  with  Toledo  ? 

Mr.  HiCKSON.  Yes;  through  another  company,  the  Toledo  and  Ann 
Arbor;  we  exchange  traffic  with  them. 

The  Chairman.  Your  con)pany  procured  a  charter  to  build  a  roiul 
through  Maine  by  a  separate  organization,  did  it  not? 

Mr.  HiCKSON.  No,  sir. 

The  Chairman.  An  extension  of  your  line  goes  through  Maine! 

Mr.  HiCKSON.  Well,  the  Atlantic  and  St.  Lawrence,  which  I  say  is  a 
separate  corporation,  starts  in  Vermont  and  runs  through  a  part  of 
Vermont  and  New  Hampshire  and  then  into  Maine. 

The  Chairman.  And  that  road  is  built  bv  (capital  owned  by  the 
Grand  Trunk,  is  it  not  ? 

Mr.  HiCKSON.  No,  sir;  it  was  built  h^  capital  raised  partlv  in  New 
England,  a  considerable  sum  in  the  city  of  Portland,  which  loaned  its 
credit  to  help  to  build  the  road,  and  by  the  sale  of  its  stock  and  bonds 
in  England,  The  stock  is  now  selling  in  the  English  market  at  a  high 
premium. 

The  Chairman.  Was  there  any  subsidy  granted  by  the  Canadian 
government  or  any  other  to  assist  in  building  it? 

Mr.  HiCKSON.  No,  sir;  not  in  building  that  line. 

The  Chairman.  Has  any  subsidy  been  given  to  assist  in  the  building 
ot  these  feeding  roads  anywhere  within  the  United  States? 

Mr.  HiCKSON.  You  mean  for  building  the  lines  owned  or  controlled 
by  the  Grand  Trunk  in  the  United  States  ? 

The  Chairman.  Yes. 

Mr.  HiCKSON.  None.  Parties  interested  in  the  Grand  Trunk  have 
taken,  in  some  instances,  the  securities  as  they  would  take  any  other 
securities.  '  •' 

The  Chairman.  I  do  not  understand  that  your  road  has  bad  much 
^^M     L         ^'^"^  ^^"  government  at  any  time,  has  it? 

Mr  iiiCKSON.  In  the  original  construction  of  the  Grand  Trunk  line, 
which  was  incorporated,  I  think,  about  1852,  the  government  of  Canada 
loaned  some  three  million  pounds  sterling  toward  the  construction  of  a 
railway  from  Eiver  du  Loup  to  Point  Edward,  which  is  opposite  to 
Fort  Gratiot,  to  the  city  of  London,  from  the  boundary  between  Ver- 
iT«li  '^"^.^^."^d^-the  junction  of  the  Atlantic  Line-and  Eichmond, 

nvpi\or'''li^'r.^''7  1^*  "^*^^^^«t  «"  t^^^t  for  a  time  and,  like  othei- 
investors  in  the  Grand  Trunk,  they  afterward  ceased  to  get  interest, 


THE  UNITED  STATES  AND  CANADA.  91 

but  tlicy  still  consider  themselves  part  owners  of  the  Grand  Trunk  to- 
day au(i  to  that  amount. 

LINES   TKIBUTARY   TO    THE   GRAND   TRUNK. 

The  Chairman.  About  how  much  territory  in  the  East  and  West  also 
pays  tribute  to  your  lines  of  road — have  you  any  idea?  I  mean,  of 
course,  in  the  United  States. 

Mr.  HiCKSON.  We  have  360  miles,  I  think,  that  are  worked  as  part 
of  the  Grand  Trunk  system,  and  then  these  aflQliated  lines  amount  to 
617  miles,  making  nearly  a  thousand  miles  of  road  in  the  United  States. 

The  Chairman.  liuuuing  through  a  pretty  large  section  of  United 
States  territory'? 

Mr.  HiCKRON.  Through  Maine,  New  Hampshire,  Vermont,  a  very 
little  of  New  York,  Michigan,  Indiana,  and  Illinois. 

The  Chairman.     How  about  Ohio  and  Pennsylvania'? 

Mr.  HiCKSON.  None  in  Ohio  or  Pennsylvania. 

Senator  Platt.  Do  you  not  control  a  road  clear  through  to  Chicago  1 

Mr.  HiCKSON.  That  is  the  Chicago  and  Grand  Trunk  running  from 
Port  Huron  to-  Chicago,  By  the  way,  I  omitted  to  mention  a  little 
piece  of  line  in  Chicago  which  was  constructed  for  the  purpose  of  afford- 
ing terminal  facilities.  It  is  some  four  or  five  miles  in  extent.  The 
total  distance  is  about  331  miles  from  Port  Huron  to  Forty-ninth  street 
in  Chicago,  including  the  piece  of  road  I  have  just  mentioned. 

The  Chairman.  But  the  business  done  over  the  business  end  of  the 
Chicago  terminus  of  the  Grand  Trunk,  if  I  may  call  it  so,  is  simply  a 
continuation  of  the  business  of  the  Grand  Trunk  proper  between  Port- 
land and  Chiciigo,  is  it  not?  It  is  practically  all  one  line  for  doing 
the  business. 

Mr.  HiCKSON.  Yes,  and  between  the  Niagara  frontier  and  Chicago 
also,  but  of  course  there  is  a  local  trafiSc  upon  it,  as  there  is  upon  all 
lines. 

Senator  Platt.  But  you  make  rates  from  Chicago  to  Portlantl. 

Mr.  HiCKSON.  Undoubtedly,  in  connection  with  other  American  com- 
panies carrying  eastward. 

Senator  Platt.  Do  you  not  control  the  rates  between  Chicago  and 
Portland  on  your  line  ? 

Mr.  HiCKSON.  We  make  rates.  I  wish  to  add,  however,  that  we 
make  them  in  connection  with  the  other  companies.  It  is  a  common 
rate  in  fact. 

Senator  Gorman.  It  is  a  mere  form.  While  you  observe  the  sepa- 
rate organization  it  is  in  fact  a  mere  form,  and  the  Grand  Trunk  actually 
makes  the  rate. 

Mr,  HiCKSON.  The  Chicago  and  Grand  Trunk  makes  the  through  rate 
for  east-bound  traffic  and  the  Grand  Tri^mk  makes  the  through  rates 
westward  over  this  route. 

Senator  Platt.  What  is  the  connection  of  the  Grand  Trunk  corpor- 
ation with  the  line  from  Fort  Gratiot  to  Chicago? 

Mr.  HiCKSON.  It  is  that  a  large  portion  of  the  bonds  and  stocks  are 
held  for  stockholders  of  the  Grand  Trunk  by  which  they  have  a  majority 
vote. 

Senator  Platt.  So  you  make  the  rate  over  that  road  practically  the 
same  as  over  the  Grand  Trunk  proper? 

Mr.  HiCKSON.  Yes,  practically;  but  I  want  the  committee  to  under- 
stand that  there  is  a  separate  organization. 

The  Chairman.  Still,  your  power  is  comi)lete  over  all  these  lines,  if 
you  want  to  exercise  it  ? 


92  TRANSPORTATION    INTERESTS   OF 

Mr.  Htckson.  Undoubtedly. 

Senator  liL AIR.  You  are  the  father  of  the  family?  ,     ,       , 

Mr.  HiCKSoN.  I  do  not  know  that  we  are  the  father;  we  are  the  head 
of  it.    A  good  deal  of  the  traffic  comes  to  us. 

RELATIONS  WITH  THE  TRUNK  LINES. 

Tlie  Chairman.  Have  you  any  relation  with  the  trunk  lines  between 
the  East  and  West— the  American  trunk  lines? 

Mr.  HiCKSON.  Undoubtedly. 

The  Chairman.  Tell  us  what  that  is. 

Mr.  HiCKSON.  We  generally  co-operate  with  them  and  have  been  a 
party  to  their  agreements  and"  to  the  pooling  arrangements  when  there 
have  been  such,  and  we  are  parties  now  to  the  making  of  rates  with 
them. 

The  Chairman.  A  party  to  the  rates  agreed  upon  between  your 
roads  and  the  other  roads? 

Mr.  HiOKSON.  Yes,  sir. 

The  Chairman.  Tell  the  committee  what  the  actual  arrangement 
now  is  between  you  and  these  other  trunk  lines  as  to  tlie  rates  of  freight 
east  and  west  l)ound. 

Mr.  HiCKSON.  I  am  speaking  somewhat  from  recollection,  but  I  can 
say  that  we  charge  rates  which  are  agreed  to  by  the  other  lines  at  the 
present  time. 

Whilst  in  the  room  I  heard  Mr.  Depew  refer  to  the  difterential  rate 
question.  I  think,  as  regards  that,  there  is  only  one  ditlerential  rate  on 
our  line  for  east-bound  traffic,  and  that  is  on  dress(Ml  meat  going  into 
New  England;  and  really  it  is  hardly  adilferential  rate,  for  some  other 
lines  are  making  the  same  rate. 

The  Chairman.  Is  it  or  not  true  that  your  lines  of  road  transjjort 
from  the  West  to  the  East  or  from  the  P^ast  to  the  West,  generally,  at 
the  diflterential  rate  in  your  f  ivor,  allowing  you  to  i)ublish  rates  that 
are  lower  than  the  rates  published  by  the  other  lines  ? 

Mr.  PIiCKSON.  We  have  had  dilferential  rates  on  certain  articles  re- 
quiring quick  transportation,  because  we  have  a  longer  route  via  our 
main  line.  We  have  not,  as  a  rnle,  claimed  any  dilferential  via  the 
Niagara  lines.  These  differentials  have  varied  at  different  times,  ac- 
cording to  circumstances.  It  has  been  a  matter  of  agreement  with  the 
other  companies. 

The  Chairman.  Do  you  think  you  ought  to  have  this  differential 
rate — this  right  to  charge  less  than  the  other  roads  ? 

Mr.  HiCKSON.  Yes.  It  is  not  a  novelty.  There  are  other  roads 
that  compete  for  traffic  under  adverse  circumstances  and  who,  to  a 
more  or  less  extent,  have  differentials. 

The  Chairman.  But  you  say  the  existing  differential  is  only  on  one 
article. 

Mr.  HiCKSON.  I  think  on  dressed  beef 

The  Chairman.  How  much  is  that,  if  you  know? 

Mr.  HiCKSON.  I  think  that  by  the  Chicago  and  Grand  Trunk  and 
the  main  line  (via  Toronto  and  Montreal)  of  the  Grand  Trunk  into  New 
England,  the  rate  is  45  cents  a  hundred  pounds,  and  unless  I  am  mis- 
taken, it  is  50  cents  by  the  other  lines.  1  think,  however,  the  Chicago 
and  Atlantic  line  is  carrying  at  the  same  rate  as  we  are,  in  connection 
with  the  Erie. 

The  Chairman.  I  think  it  was  stated  here  yesterday  by  some  one 
that  you  had  a  differential  rate  on  Ireight  going  wost,  "but  not  on 
freight  going  east. 


THE    UNITED    STATES    AND    CANADA.  93 

Mr.  HiCKSON,  There  are  difit'erential  rates  on  freight  going  west  from 
l^ew  Enghmd,  which  I  forgot  to  mention.  What  they  are  I  do  not 
know  ;  the  Central  Veroiont  Company  settles  them  with  the  New  Eng- 
land roads.    I  was  referring  heretofore  to  east-bound  traffic. 

The  Chairman.  Suppose  this  differential  were  not  given  to  you  by 
this  agreement  between  you  and  the  other  trunk  lines,  could  you  do 
business? 

Mr.  HiCKSON.  We  should  lose  a  portion  of  the  business  that  we  carry, 
undoubtedly. 

OBSERVANCE   OF   THE  INTERSTATE  LAW. 

The  Chairman.  What  relation  do  you  sustain  to  the  interstate  com- 
merce act  in  your  transactions  and  business  in  connection  with  busi- 
ness in  the  United  States. 

Mr.  HiCKSON.  We  consider  all  our  business  interchanged  with  the 
United  States  and  all  our  business  carried  through  Canada  from  State 
to  State  is  subject  in  the  fullest  degree  to  the  interstate  commerce  act. 
We  have  never  assumed  any  other  position. 

The  Chairman.  You  mean  to  say,  taking  the  bu.siness  between  Chi- 
cago and  Portland,  for  instance,  that  you  publish  the  rates  I 

Mr.  HiCKSON.  Yes. 

The  Chairman.  And  abide  by  them  absolutely  j  is  that  so  ? 

Mr.  HiCKSON.  Certainly. 

The  Chairman.  In  doing  that  do  you  take  advantage  of  what  our 
roads  can  not  do — recoup  on  local  traflfic  in  your  own  country  ? 

Mr.  HiCKSON.  Now,  you  must  put  that  a  little  differently,  for  I  am 
not  quite  sure  what  you  mean.  1  want  to  give  the  fullest  information 
I  can. 

The  Chairman.  Our  American  railroads  are  forbidden  to  charge 
more  for  the  shorter  than  for  the  longer  haul.  They  are  forbidden  to 
charge  more  for  a  short  distance  on  their  line  than  for  a  long  distance — 
a  larger  aggregate  sum.  Now  so  far  as  your  business  in  Canada  is  con- 
cerned, having  no  relation  or  reference  to  the  United  States  whatever, 
as  I  understand,  you  have  no  law  regulating  you,  and  you  can  charge 
what  you  please,  consistent  with  your  obligation  to  the  people,  between 
local  i)oints  or  points  between  Detroit  and  Montreal. 

Mr.  HiCKSON.  Not  between  Detroit  and  Montreal.  Where  we  have 
traffic  between  Detroit  and  Montreal,  we  consider  it  under  the  inter- 
state law  and  that  we  are  bound  to  obey.  But  as  regards  purely  Ca- 
nadian traffic  we  are  in  the  same  position  to-day  as  the  New  York 
Central.  They  can  make  what  rates  they  like,  so  far  as  the  interstate 
law  is  concerned,  within  the  State  of  New  York.  We  are  in  the  same 
position  with  regard  to  the  provinces.  For  local  rates  through  the  prov- 
inces, of  course,  we  are  not  amenable  to  the  interstate  act,  but  as  a 
matter  of  fact  I  believe  that  the  local  rates  in  Canada  on  the  Grand 
Trunk  are  as  low,  if  not  lower,  than  the  rates  on  United  States  lines,  for 
the  reason  that  for  nearly  the  whole  length  of  the  Grand  Trunk  system 
we  have  water  routes  that  regulate  the  rates. 

The  Chairman.  What  you  mean  to  say  is,  that  the  transportation  of 
business  between  the  United  States,  or  as  to  any  business  that  comes 
to  you  in  the  United  States  and  goes  anywhere  into  your  countrj^,  you 
regard  the  interstate  act  ? 

Mr.  HiCKSON.  Certainly. 

The  Chairman.  And  as  to  any  business  that  begins  in  the  United 
States  and  goes  through  your  country  and  into  the  United  States 
again,  you  obey  the  interstate  act  in  the  transaction  of  that  business? 


94  TRANSPORTATION  INTERESTS  OF 

Mr.  HiCKSON.  Certainly.  .,    ^  ».     • 

The  Chairman.  As  I  uuderstaud  you,  you  mean  to  say  that  business 
orginating  in  Detroit,  which  is  in  the  United  States,  and  going  to  Mon- 
treal, you  regard  as  under  the  interstate  act  *? 

Mr.  HiCKSON.  Certainly. 

The  Chairman.  And  therefore  you  obey  it. 

Mr.  HiCKSON.  Yes,  sir. 

The  Chairman.  And  with  respect  to  any  business  originating  in 
Chicago  and  going  to  Port  Huron  and  through  the  Dominion  of  Canada 
and  then  down  to  Portland,  you  regard  as  under  the  interstate  act  of 
the  United  States '? 

Mr.  HiCKSON.  Yes,  sir. 

The  Chairman.  And  act  accordingly  ? 

Mr.  HiCKSON.  Yes,  sir. 

Senator  Platt.  But  that  does  not  prevent  you  from  charging  a 
greater  rate  on  local  business  ? 

Mr.  HiCKSON.  I  think  I  answered  as  to  that. 

The  Chairman.  Do  you  regard  that  business  on  those  lines  that  are 
entirely  within  the  Dominion  of  Canada  as  at  all  under  the  interstate 
act  of  the  United  States '? 

Mr.  HiCKSON.  Certainly  not.  You  mean  from  one  place  in  Canada 
to  another  place  in  Cauada  ? 

The  Chairman.  Yes. 

Mr.  HiCKSON.  ISTo,  sir;  but  1  regard  that  as  not  placing  us  in  a  posi- 
tion difierent  from  the  American  roads.  Our  position  in  regard  to  that 
is  not  dissimilar  to  the  position  of  the  American  Trunk  lines  in  regard 
to  State  business,  I  mean  in  relation  to  the  interstate  act.  The  inter- 
state act  docs  not  apply  to  roads,  for  instance,  between  I'ulTak)  and 
New  York,  wholly  in  the  State  of  New  York. 

Senator  Reaoan.  That  depends  on  where  the  traffic  originates. 

Mr.  HiCKSON.  Certainly ;  1  mean  that. 

Senator  Reagan.  If  commerce  should  start  by  lake  from  Chicago 
and  go  to  Buffalo  and  then  go  to  New  York,  though  it  only  went  from 
Buffalo  to  New  York  by  railroad,  we  understand  that  it  would  be  sub- 
ject to  the  interstate  act. 

Mr.  HiCKSON.  Certainly;  and  in  our  case  it  would  be  subject  to  the 
interstate  act,  also. 

THE   COAL   CASE. 

Senator  Gorman.  Is  it  not  a  fact  that  on  coal  and  other  products- 
Mr.  HiCKSON.  Not  other  products ;  that  case  was  specially  with  re- 
gard to  coal. 

Senator  Gorman.  Well,  on  coal  received  by  you  at  Suspension 
Bridge  and  destined  for  points  in  Canada,  you  do  not  observe  the  in- 
terstate act  ? 

Mr.  HiCKSON.  I  desire  to  give  you  all  the  information  I  possess  in 
that  case.  It  has  been  stated  in  the  press  and  elsewhere  as  relating 
to  all  our  traffic.  It  does  not.  "We  are  carriers  from  Buffiilo,  and  our 
tariffs  are  all  sent  to  the  Interstate  Commerce  Commission,  and  they 
are  not  changed  without  our  sending  them  to  the  Commission,  and  there 
IS  a  strict  compliance  with  the  law.  This  coal  is  purchased  by  dealers 
in  coal  in  Cauada,  and  they  make  their  own  arrangements  for  trans- 
portation up  to  the  international  bridges.  AVe  know  nothing  about 
their  arrangements  or  rates.  We  have  been  taking  it  from  the  United 
fcitates  side  of  these  international  bridges  and  we  luve  made  (w,.  nite^ 


THE    UNITED    STATES    AND    CANADA.  95 

in  some  instaoces.  Tbere  lias  been  no  secrecy  about  it.  There  has 
really  been  no  rebate  of  the  rate  charged.  We  considered  that  we  were 
entitled,  where  large  shippers  were  taking  great  quantities,  and  having 
facilities  of  their  own,  with  yards  lor  discharging  the  cars  quickly,  to 
make  a  less  rate ;  we  were  so  advised  by  counsel,  and  acted  under  ad- 
vice of  counsel.  A  case  was  taken  before  the  Interstate  Commerce 
Commission  by  the  Michigan  Central,  and  1  may  mention  that  the  only 
company  that  had  an  interest  in  it  was  another  Canadian  company. 
The  matter  went  before  the  Commission  and  the  Commission  held  in  op- 
position to  the  advice  of  our  counsel  and  said  that  the  tariff  should  be 
submitted  to  them,  and  we  have  since  then  sent  the  tariffs  to  the  Com- 
missioners and  have  asked  if  they  were  in  conformity  wilh  the  law,  and 
if  they  prove  not  to  be  in  conformity  to  law  we  have  said  that  they 
Avould  be  made  so.    That  case  was  solely  in  regard  to  coal. 

Senator  Gorman.  So  far  as  that  one  case  is  concerned  it  only  applied 
to  coal,  but  the  principle  would  apply  to  any  other  trafiic,  would  it  not? 

Mr.  HiCKSON.  There  is  no  other  trafBc  so  dealt  with  at  the  present 
time.  Other  trafBc  comes  to  us  from  other  companies  and  is  dealt  with 
in  the  ordinary  way. 

Senator  Gorman.  I  understand  that  since  this  decision  of  the  Inter- 
state Commerce  Commission  you  have  made  up  your  mind  to  act  in  com- 
pliance with  the  instruction  of  the  Commission,  and  have  treated  all 
products  that  originate  m  the  United  States  alike,  whether  coal  or  other 
wise. 

Mr.  HiCKSON.  Every  other  product  was  so  dealt  with  heretofore,  and 
that  would  have  been  dealt  with  in  the  same  wny  if  we  had  not  been 
advised  by  our  counsel  that  we  might  do  otherwise.  The  tariffs  have 
since  gone  to  the  Commission  and  we  have  asked  them  to  say  if  they  are 
in  conformity  to  law,  and  if  they  are  not  we  will  make  them  so. 

Senator  Platt.  All  freight  originating  in  New  York  is  charged  a 
less  rate  if  it  goes  by  the  Grand  Trunk  than  if  it  goes  over  other  lines. 
Freight  from  New  York  to  Chicago,  if  it  goes  by  the  Grand  Trunk,  is 
charged  a  lower  rate  than  if  it  goes  over  an  American  line,  is  it  not  ? 

Mr.  HiCKSON.  No,  sir.  No  freight  goes  from  New  York  to  Chicago 
except  what  goes  by  American  lines.  There  is  some  little  interchange 
of  traffic  with  us  via  Portland,  but  practically  all  the  freight  from  New 
York  is  transported  by  the  American  lines  and  a  part  of  it  is  delivered 
to  the  Grand  Trunk  at  the  Niagara  frontier. 

THE  LONG  AND  SHORT  HAUL  CLAUSE. 

Senator  Harris.  In  reference  to  the  short  and  long  haul  provision, 
you  answered  a  question  of  the  chairman  that  in  respect  to  all  freights 
going  from  the  United  States  to  Portland,  Me.,  you  respect  the  inter- 
state commerce  act  and  conform  to  it ;  also  in  respect  to  freights  going 
from  the  United  States  to  any  part  of  Canada  you  conform  to  the  in- 
terstate act  ? 

Mr.  HiCKSON.  Yes,  sir. 

Senator  Harris.  Now,  I  want  to  ask  you  in  respect  to  freights  going 
from  any  part  of  Canada  to  Portland,  Me. 

Mr.  FliCKSON.  We  comply  with  the  interstate  act,  and  consider  we 
are  bound  by  it.  We  have  to  submit  our  tariffs  to  the  commission,  and 
do  everything  in  conformity  with  the  act. 

Senator  Harris.  In  respect  to  all  freights  originating  in  Canada  and 
going  to  Portland,  Me.,  you  hold  yourselves  bound  to  the  interstate 
act? 

Mr.  HiCKSON.  YeSj  sir,    I. would  like  to  give  tjje  committee  'A>  cop,y 


96  TRANSPOKTATION  INTERESTS  OF 

of  a  circular  of  instructions  that  I  issued  wlicii  the  interstate  act  went 
into  force.  It  will  show  the  spirit  in  which  we  received  the  act  and 
acted  upon  it.    I  will  furnish  it  to  day. 

Senator  Harris.  Though  it  may  be  true,  as  1  think  it  is,  that  com- 
merce that  begins  in  Canada  and  ends  in  Canada  is  not  subject  to  the 
provisions  of  the  interstate  act,  as  a  matter  of  fact  do  you  make  your 
local  rates  in  respect  to  that  commerce  higher  or  largely  higher  than 
the  rates  you  make  in  respect  to  this  commerce  that  is  controlled  by 
the  interstate  act? 

Mr.  HiCKSON.  The  local  rates  arc  undoubtedly  higher  in  proportion 
than  the  through  rates,  but  I  do  not  think  they  are  higher  than  the 
local  rates  in  the  States,  and  they  are  simply  ma<le  in  relerence  to  the 
exigencies  of  the  business.  I  will  give  you  the  reason  wliy  our  rates 
are  very  low  in  Canada,  and  that  is  because  during  the  season  of  open 
navigation  we  are  running  along-side  the  carriers  on  the  St.  Lawrence 
Eiver  and  the  lakes. 

Senator  Harris.  In  respect  to  traffic  beginning  in  the  United  States 
and  going  to  Canada  and  passing  to  the  sea-board,  do  you  fix  your  rates 
high  enough  to  fully  compensate  the  road  for  the  service  performed! 

Mr.  HiCKSON.  We  think  so  or  we  would  not  take  the  tratiic. 

Senator  Harris.  You  only  publish,  then,  the  rat<"8  that  paj'  you  a 
profit  for  carrying  the  traffic. 

Mr.  HiCKSON.  Yes,  sir;  except  in  timesof  extreme  competition,  when 
all  roads  have  sometimes  charged  rates  that  did  not  pay. 

Senator  Harris.  And  then  you  do  not  try  to  recoup  on  your  local 
traffic  for  any  real  or  supposed  losses  on  the  through  traffic. 

Mr.  HiCKSON.  ISTo,  sir;  that  would  be  unbusinesslike,  because  it  is 
manifest  we  would  be  better  off  without  the  through  traffic. 

Senator  HiscoCK.  I  suggest  tiiat  you  ask  Mr.  llickson,  Mr.  Cliair-[ 
man,  whether,  after  the  adoption  of  the  interstate  law  and  the  makingi 
of  their  rates  under  the  requirements  of  the  interstate  law,  they  raised 
any  of  their  local  rates  ? 

The  Chairman.  You  may  proceed  to  answer  that  question,  Mr.  Hick- 
son. 

Mr.  HiCKSON.  No.  It  is  difficult  for  me  to  remember  all  the  cLanges, 
but  no  general  change  was  made. 

The  Chairman.  Were  your  schedules  rearranged  then? 

Mr.  HiCKSON.  For  the  mternational  traflic  they  had  to  be,  but  for 
the  local  traffic  T  do  not  know  that  they  have  been  revised  generally. 
Of  course  in  particular  cases  the  rates  are  changed  from  time  to  time. 

Senator  HiscoCK.  But  no  change  has  been  made  in  those  local  rates 
on  account  of  your  interstate  commerce  ? 

Mro  HiCKSON.  No,  sir. 

At  1  o'clock  p.  m.  the  committee  took  a  recess  until  2  o'clock. 

At  the  expiration  of  the  recess  the  committee  resumed  it.s  settsiou. 

CIRCULAR  CONCERNING  THE  INTERSTATE  LAW. 

Mr.  HiCKSON.  I  can  give  you  a  circular  that  was  issued,  and  whi«'h 
I  referred  to  before  the  recess  was  taken,  when  the  mtersrate  commence 
act  went  into  operation,  as  an  evidence  of  the  wav  in  wliich  we  regarded 
the  law  and  recognized  it. 

The  Chairman.  It  will  be  put  in  the  record. 


THE    UNITED    STATES    AND    CANADA.  97 

The  circular  is  as  follows : 

Graxd  Trunk  Eailway  Of  Canada, 

General  Manager's  Office, 
General  Order  No.  85.]  Montrval,  March  25,  1887. 

The  coining  into  effect  in  the  United  States  on  the  5th  April  of  the  interstate  com- 
merce act  necessitates  the  cancellation  of  all  contracts  or  arranj^ements  of  an  excep- 
tional character,  or  special  rates  for  the  transportation  of  freight  or  passengers  from 
Canada  to  places  in  the  United  States,  or  from  a  place  in  one  State  to  a  place  in 
another  State  npon  the  lines  of  the  company  within  the  United  States. 

The  act  also  prohibits  the  granting  hereafter  of  special  or  exceptional  rates  or  fares 
for  traffic  between  States,  or  between  Canada  and  the  States,  and  no  such  rates  are 
to  be  made  o;i  and  after  the  5th  April. 

The  tariffs  issned  from  the  general  passenger  and  general  freight  agents'  depart- 
ments must  be  strictly  adhered  to,  and  no  deviation  from  them  must  be  permitted  by 
agents  of  the  company  ;  they  are  only  to  be  changed  by  authority  from  the  general 
passenger  agent,  the  general  freight  agent,  or  district  agents  authorized  to  quote 
rates. 

As  the  carrying  free,  or  under-billing  of  the  weights  carried  in  cars,  would  amount 
to  discrimination  forbidden  by  the  interstate  commerce  act,  agents  must  be  careful 
to  see  that  no  such  infringement  of  its  provisions  takes  place  in  respect  of  traffic  for- 
warded from  or  received  at  their  stations. 

No  free  passenger  tickets  are  to  be  issued  between  interstate  points,  or  between 
places  in  the  United  States  and  places  in  Canada. 

The  issue  of  free  passes  to  others  than  the  officers,  agents,  and  employes  of  the  com- 
pany (which  will  include  the  officers  and  employes  of  the  sleeping  car  and  express 
companies  doing  business  over  the  company's  railways,  the  officers  and  workmen  of 
the  telegraph  companies  who  have  charge  of  the  company's  telegraph  lines,  and 
the  officers  of  the  customs  departments  who  have  to  travel  on  the  railway  in  the 
discharge  of  their  duties),  and  the  officers  and  employes  of  other  railway  companies, 
between  places  in  different  States,  or  between  jjlaces  in  Canada  and  places  in  the 
United  States,  is  by  the  act  forbidden,  and  no  such  passes  are  to  be  issued. 

As  the  issue  of  passes  between  places  on  this  company's  railway  in  Canada  to 
shippers  of  international  or  interstate  traffic  may  be  considered  as  a  violation  of  the 
interstate  commerce  act,  no  such  passes  are  hereafter  to  be  issned. 

All  passes  heretofore  issued  to  others  than  officers  and  employes  of  this  company, 
as  above  defined,  or  the  officers  and  employes  of  other  companies,  are  recalled  ;  and 
if  any  such  should  be  tendered  for  transportation  on  and  after  the  5th  of  April  be- 
tween places  in  Canada  and  the  United  States,  or  between  places  in  different  States 
on  this  company's  railway,  they  must  be  taken  up  and  sent  in  to  my  office. 

While  the  interstate  commerce  law  does  not  forbid  the  issue  of  passes  within  a 
State  (and  does  not,  of  course,  apply  to  passes  issued  on  the  company's  railways  in 
Canada)  w^here  they  are  not  issued  for  the  purpose  of  influencing  the  transportation 
of  international  or  interstate  traffic,  it  is  necessary  that  the  utmost  care  be  observed 
to  prevent  passes  good  in  Canada  or  within  a  State  being  used  conjointly  for  the  pur- 
pose of  traveling  between  Canada  and  the  States,  or  points  in  different  States,  as 
such  would  be  an  infringement  of  the  law,  and  would  subject  the  company  to  heavy 
penalties. 

To  illustrate  :  If  an  applicant  to  whom  it  is  forbidden  under  the  interstate  act  to 
issue  an  interstate  pass  should,  by  applying  through  different  channels,  obtain  a  pass, 
say  in  New  Hampshire,  through  one,  and  a  pass  good  in  the  State  of  Vermont  through 
another,  or  one  pass  in  Canada  and  another,  say  in  Vermont,  which  would  enable 
him  to  make  a  continuous  journey,  that  would  be  held  to  be  a  breach  of  the  law,  and 
would  subject  the  company  to  the  penalties  prescribed  in  it. 

J.  Hickson, 
General  Manager. 

DIFFERENTIAL  RATES. 

The  Chairman.  Have  you  made  a  full  statement  on  the  subject  of 
diftereiitials  between  your  road  and  other  trunk  lines  or  not  ? 

Mr.  Hickson.  My  first  answer  had  reference  to  the  dififerential  rates 
on  east-bound  traffic;  we  were  talking  then  about  the  western  lines  ; 
subsequently  the  question  was  asked  whether  there  were  differentials 
on  west-bound  traffic  out  of  New  England,  and  I  said  yes;  but  that 
these  differentials  were  practically  settled  between  the  Central  Vermont 
6543 7 


98  TRANSPORTATION   INTERESTS   OF 

Company  and  the  other  ISew  England  roads  in  Boston.     I  can  not  tell 
you  what  they  are  at  present  ^    ^,     n     ^.    ^  xr  ., 

The  Chairman.  What  relation  have  you  to  the  Central  Vermont! 

Mr.  HiCKSON.  They  are  our  eastern  connection. 

The  Chairman.  You  have  no  control  of  that  road,  or  have  you  ? 

Mr.  HiCKSON.  We  hold  some  of  its  securities,  but  have  not  a  com- 
])lete  controlling  interest. 

The  Chairman.  But  they  operate  with  you. 

Mr.  HiCKSON.  Yes,  but  not  exclusively. 

The  Chairman.  Your  contract  with  them  is  just  as  with  any  other 
road  ? 

Mr.  HiCKSON.  Yes,  a  business  contract. 

Senator  Gorman.  Mr.  King,  president  of  the  Erie,  yesterday  made 
the  statement  that  on  west-bonnd  trallic  from  here  the  Erie  road  and 
its  connections  were  allowed  a  diflt'rential  ol  5  or  Idcents  a  linndrcd — 
]  do  not  remember  the  exact  sum— and  that  you  shared  in  tliat  trallic. 

Mr.  HiCKSON.  1  know  some  of  the  roads  out  of  New  York  are  alh)wed 
differential  rates,  and  I  dare  say  some  of  the  tratlic;  goes  over  our  line, 
but  we  have  nothing  to  do  with  the  making  of  the  ditferential.  The 
traffic  runs  across  the  Canadian  peninsula  via  Susi)ension  Bridge  and 
Detroit  or  Port  Huron. 

Senator  Gorman.  But  you  have  a  connecting  line  with  the  Erie,  and 
you  expect  your  j)roportiou  of  this  traflic  at  the  reduced  rates  ? 

Mr.  HiCKSON.  Yes,  sir. 

Senator  Gorman.  What  Senator  Piatt  wanted  to  know  was,  why  it 
was  necessary  in  the  case  of  the  Erie  and  your  road  making  one  rate 
from  here;  that  is,  should  you  be  permitted  to  charge  5  cents  a  huu- 
dred  less  than  the  New  York  Central  ? 

Mr.  HiCKSON.  It  is  not  exclusively  with  the  Erie.  I  think  there  are 
other  lines  in  New  York  making  diiferential  rates.  We  are  carrying 
traffic  not  carried  at  differential  rates.  We  never  interfere  ;  being  an 
intermediate  link,  the  roads  here  settle  them. 

Senator  Gorman.  What  he  wanted  to  know  from  you,  as  a  railroad 
man,  was,  what  reason  is  there  that  makes  it  necessary  to  permit  you 
and  the  Erie,  as  one  line  through  to  Chicago,  to  make  this  charge  of  5 
cents  less  than  the  New  York  Central  ? 

Mr.  HiCKSON.  I  seethe  vice-president  of  the  Erie  in  the  room,  and  I 
have  no  doubt  he  can  tell  you.  Perhaps  they  labor  under  disad  van t  ages 
in  the  State  of  New  York  and  here,  and  tha\  is  the  reason;  but  1  do  not 
know  that  as  a  fact. 

Senator  Gorman.  How  is  it  that  you  accept  this  traffic  at  a  less  rate 
over  your  hne  than  you  do  that  which  you  receive  from  the  New  York 
Central,  or  any  other  road? 

Mr.  HiCKSON.  As  a  matter  of  railroad  policy  the  terminal  companies; 
settle  the  rates.  They  are  allies  of  ours  and  we  allow  tliem  to  make 
the  rates  as  they  think  right,  unless  thev  do  us  an  injustice,  and  then 
we  complain.  The  roads  running  out  of  New  York  settle  all  the  differ- 
ent rates  out  of  New  York.  But  for  the  puri)Oses  of  adjusting  matters 
between  the  terminal  roads  and  the  westeiu  roads  there  is  a  joint  com 
mittee.  They  meet  and  adjust  matters  (we  are  nominally  a  member  ol 
that  body,  but  seldom  interfere).    The  committee  settle  them. 

Senator  Platt.  Do  you  suppose  the  Erie  would  get  a  differentia 
unless  they  had  a  connectiou  with  you  ? 


Mr.  HiCKSON.  I  think  it  has  a  differential  bv  its  own  line,  the  ter 
mal  of  which  is  the  Chicago  and  Atlantic  Con".pany.  1  wonhl  like  U 
k  Mr.  helton  about  that.    1  think  he  can  tell  me.     Is  that  so,  Mr 


mi 
ask 
Feltou  ? 


THE  UNITED  STATES  AND  CANADA.  99 

Mr.  Felton.  Yes,  sir. 

Senator  Platt.  The  Pennsylvania  is  a  shorter  line  to  Chicago  than 
the  line  by  the  Erie  and  your  road,  is  it  not  ? 

Mr.  HiCKSON.  Do  you  mean  from  Xew  York,  sir? 

Senator  Platt.  Yes. 

Mr.  HiCKSON.  The  difiference  can  not  be  very  great,  but  I  really  can 
not  tell  you.  The  difference  in  mileage  is  not  a  great  deal,  but  what 
the  figures  are  I  can  not  tell  you  from  memory. 

THE  BONDED  TRANSIT  TRADE. 

The  Chairman.  Will  you  tell  us  something  of  this  transit  trade? 
Describe  to  the  committee  what  is  commonly  known  as  the  United 
States  and  Canada  transit  trade,  whi'  h  we  understand  to  be  generally 
the  reciprocal  right  of  either  country  to  transport  goods  across  the  ter- 
ritory of  either  without  payment  of  duty. 

Mr.  HiCKSON.  To  what  phase  of  the  question  do  you  wish  me  to  ad- 
dress myself  I 

The  Chairman.  What  process  is  gone  through  with  in  carrying  on 
this  transit  trade — do  you  give  bonds  ? 

Mr.  HiCKSON.  Yes.  The  routes  are  bonded,  and  we  give  bonds  first 
and  foremost,  and  then  all  cars  containing  such  traffic  are  sealed  and 
bonded  at  the  frontier  and  unsealed  at  the  exit  frontier  under  the  in- 
spection of  customs  officers. 

The  Chairman.  Which  is  done  at  both  ends  in  both  "countries  ? 

Mr,  HtCKSON.  Yes,  sir.  And  for  the  bonds  given,  for  instance,  at  one 
point — it  may  be  in  Montreal — for  transit  to  Chicago  they  take  the  cer- 
tificate of  the  United  States  customs  officer  in  Chicago  that  the  stuff  has 
been  landed  there  and  that  discharges  the  bond,  and  vice  versa. 

The  Chairman.  Are  these  bonds  given  to  the  United  States  ? 

Mr.  HiCKSON.  Yes,  to  the  United  States  Government. 

The  Chairman.  By  whom  ? 

Mr.  HiCKSON.  By  the  Grand  Trunk  Railway  Company,  if  it  goes  by 
their  route;  by  the  companies  comprising  the  route,  autl  they  have  to 
find  sureties. 

The  Chairman.  These  goods  are  brought  over  from  your  country  to 
this  in  Canadian  cars,  and  are  these  cars  used  in  this  country  outside  of 
the  line  over  which  they  come  into  the  country  I 

Mr.  HiCKSON.  I  do  not  know  that  they  are  used  to  any  considerable 
extent,  but  it  is  a  matter  of  speculation  to  a  certain  extent.  A  car  goes 
away  with  a  load,  and  what  is  done  with  it  before  it  comes  back  it  is  diffi- 
cult to  state.  Our  practice  is,  and  it  is  not  disregarded  with  my  authority 
at  any  rate,  that  a  United  States  car  coming  on  the  Grand  Trunk  sys- 
tem at  Detroit  and  loaded,  it  maj"  be  for  some  place  in  New  Hampshire 
or  Maine,  will  go  through  and  be  discharged,  and  if  on  its  homeward 
journey  there  was  a  load  in  Canada  to  go  to  Detroit  or  on  the  line  to 
which  the  car  belonged,  it  would  be  loaded  back.  I  can  not  quote  the 
figures,  but  I  had  a  statement  made  a  short  time  ago,  and  I  think  it  was 
comparatively  a  small  percentage  of  the  total  mileage  of  cars  that  were 
so  used.  I  take  it  that  that  is  the  practice  in  the  United  States  also, 
but  of  that  I  can  not  speak.  I  know  that  on  our  own  lines  we  prohibit 
them  from  using  those  cars  for  local  traffic.  That  is,  say  between 
Chicago  and  Port  Huron,  we  do  not  permit  the  Canadian  cars  to  be 
loaded  with  local  traffic  between  Huron  and  Lansing,  for  instance,  in  the 
United  States, 


100  TRANSPORTATION    INTERESTS    OF 

CONNECTING  STEAM-SHIP  LINES. 

The  Chairman.  I  forget  whether  you  stated  you  had  a  foreigu 
steam-ship  line  running  from  Portland  to  Liverpool.  ,        ,        ,       , 

Mr  HiCKSON.  I donotthink the  question  wasasked,but  there  has  been 
running  in  connection  with  the  Grand  Trunk  Railway  a  tirst  class  line 
of  steamers  for  some  twenty-seven  or  twenty-eight  years,  with  the  ex- 
ception of  one  winter.  Of  course  they  only  run  m  the  winter.  They 
come  up  the  St.  Lawrence  in  summer.  It  has  been  a  sort  of  .joint  serv- 
ice  latterly.  It  is  done  by  the  Allan  Line  and  Dominion  Line  steamers. 
The  interest  of  the  Grand  Trunk,  of  course,  has  been  to  develop  traffic 
through  Portland,  which  is  the  eastern  terniinus  of  their  system,  and 
the  only  port  that  they  reach  on  the  Atlantic  by  their  own  line. 

The  Chairman.  Has  your  road  any  interest  in  that  line  ! 

Mr.  HiCKSON.  No  managerial  or  i)roprietary  interest  in  the  steam- 
ers.    We  have  an  interest  in  the  trathc. 

The  Chairman.  I  mean  any  ownership  and  control. 

Mr.  HiCKSON.  No,  sir. 

The  Chairman.  What  is  your  traffic  arrangement  with  the  steam- 
ship line? 

Mr.  HiCKSON.  We  carry  traflfic  to  them  in  winter  and  Ihey  bring  it 
to  us.  Until  recently  there  has  been  a  division  of  through  rates  under 
certain  agreed  percentages. 

EXPORT  RATES. 

The  Chairman.  Suppose  you  get  a  lot  of  grain  and  meat  at  Chicago; 
do  you  bill  it  through  to  Liverpool  ? 

Mr.  HiCKSON.  Through  rates  are  made  as  a  rule.  The  quotations  in 
Chicago  are  through  quotations  to  Liverpool,  and  of  course  they  are 
governed  by  the  competition  through  the  various  Atlantic  i)orts. 

Senator  Hiscock.  Will  you  ask  him  in  that  connection,  Mr.  Chair- 
man, if  on  the  division  of  rates  they  receive  less  on  the  transportation 
from  Chicago  to  Portland  than  is  received  by  these  other  trunk-lines? 

The  Chairman.  Yon  can  answer  that,  Mr.  Hickson. 

Senator  Hiscock.  I  mean  less  than  your  published  rate  on  the  divis- 
ion of  rates  with  this  line.  Do  you  receive  a  less  rate  of  freight  than 
your  published  rates  under  the  interstate  law  on  inland  freights? 

Mr.  Hickson.  1  was  going  to  saf  that  a  recent  decision  of  the  Inter- 
state Commerce  Commission  changed  the  system,  and  has  practically 
made  it  that  the  rates  must  be  named  to  the  sea-board.  1  was  speak- 
ing of  a  state  of  things  that  existed  some  time  i)rior  to  that,  wht-n  we 
divided  the  rates  on  a  percentage  basis.  We  would  then  get  somttimes 
less  and  sometimes  more  than  the  taritf  rates.  These  thiough  n'tes 
are  regulated  in  this  way :  If  the  rate  through  New  York  is  so  and  so, 
the  rate  through  Portland  is  a  little  less.  That  is  recognized  by  the 
several  companies,  owing  partly  to  the  disadvantage  of  the  route,  and 
I  think  also  the  higher  rate  of  insurance  for  the  northern  route. 

The  Chairman.  You  get  a  differential  on  that  ? 

Mr.  Hickson.  Yes,  sir;  on  that  account. 

Senator  Hiscock.  In  some  instances  at  least  the  inland  charge,  say 
from  Chicago  to  Portland,  on  ireight  might  be  less? 

Mr.  Hickson.  Yes;  and  at  other  times  it  might  be  more. 

Senator  Hiscock.  How  would  it  average  ? 

Mr.  Hickson.  That  is  a  matter  of  detad,  and  I  can  not  tell  exactly. 

Senator  Hiscock.  On  any  occasion  has  there  been  anv  intention  or 
purpose  in  that  way  to  make  a  cheaper  transportation  to" Portland? 


t 


I 


THE   UNITED    STATES   AND    CANADA.  101 

Mr.  HiCKSON.  No;  the  cheaper  transportation  where  it  existed  via 
Portland  has  been  in  the  throngh  rate  and  not  as  a  consequence  of  our 
arrangement  with  the  steamship  company.  For  instance,  a  shipper  at 
Chicago  might  be  able  to  get  a  certain  rate  through  New  York  and  at 
the  same  time  get  a  slightly  lower  ra,te  through  Portland. 

Senator  Blair.  That  is  to  Liverpool  ? 

Mr.  IliCKSON.  Yes,  sir. 

Senator  Platt.  Do  you  make  a  less  rate  from  Chicago  to  Liverpool 
than  is  made  at  present  at  New  York  on  traffic  to  Liv^erpool  ? 

Mr.  HiCKSON.  That  depends  on  what  the  ocean  rate  is,  over  which 
we  have  no  control.     I  am  not  able  to  say. 

REBATES  OR  OTHER  ALLOWANCES. 

Senator  Hiscock.  Let  me  ask  in  that  connection,  has  there  ever  been 
any  instance  of  this  kind  m  which  there  has  been  a  rebate  paid  to  the 
shipper,  or  any  drawback  returned  to  the  shipper  from  the  published 
rates  since  the  passage  of  the  interstate  commerce  law  ?  Since  the 
passage  of  that  law  has  there  been  a  rebate  paid  to  the  shipj)er? 

Mr.  HiOKSON.  You  mean  in  Canada  ? 

Senator  Hiscock.  In  Canada. 

Mr.  HiCKSON.  Not  at  all. 

Senator  Gorman.  Either  by  the  railroad  or  by  the  steam-ship  com- 
pany ? 

Mr.  HiCKSON.  Not  to  my  knowledge  by  either  the  steam-ship  com- 
pany or  the  railway  company. 

Senator  Hiscock.  Has  there  been  any  instance  of  this  kind,  in  which 
remittances  have  been  made  by  the  railroad  company  on  the  rate  to 
Liveri)ool  in  part  to  pay  the  rate  through  ? 

Mr.  HiCKSON.  No,  sir ;  not  since  the  interstate  law  came  into  opera- 
tion. 

If  you  will  permit  me  to  say  a  word  I  will  try  to  explain.  I  heard  the 
evidence  of  Mr.  Depew  this  morning  in  which  he  spoke  of  the  possibility 
of  Canadian  lines  making  rebates  in  Canada  in  respect  to  through  traffic. 
We  think  that  impracticable,  and  nothing  of  the  kind  has  ever  been 
attempted.  The  interstate  act  provides  that  if  anything  of  the  kind  be 
done,  that  particular  traffic  crossing  the  line  again  when  it  would  come 
under  the  jurisdiction  of  the  Interstate  Commerce  Commission  would 
be  considered  an  importation  and  would  have  to  pay  duty\ 

INCREASE   OF   TRAFFIC   ON  THE   GRAND   TRUNK. 

Senator  Blair.  It  has  been  stated,  and  was  stated  by  Mr.  King  yes- 
terday, that  the  transportation  of  merchandise  from  the  West  to  the 
sea-board  over  the  Grand  Trunk  has  recently  increased  from  20  to  39 
l)er  cent.  If  that  be  a  fact,  state  to  what  extent  it  is  a  fact,  and  how 
you  account  for  it. 

Mr.  HiCKSON.  Do  you  speak  of  Chicago  east-bound  traffic? 

Senator  Blair.  East-bound  traffic  was  what  he  referred  to. 

Mr.  HiCKSON.  It  is  a  very  simple  matter.  All  our  tariffs  for  east- 
bound  traffic  are  submitted  to  the  commission  and  we  have  had  no  pool. 
We  have  not  been  buying  the  traffic  by  any  rebates  or  concessions. 
We  have  made  no  rebates  whatever.  The  traffic  comes  to  us  naturally 
and  it  is  due  to  our  facilities  in  Chicago.  We  have  provided  very  ex- 
cellent facilities  there  for  the  transshipment  of  grain  and  we  have  at- 
tended to  our  business.    I  think  Mr.  Fink  could  supply  the  figures,  and 


102  TRANSPORTATION    INTERESTS   OF 

if  the  wbole  business  that  we  are  getting  to-day  were  added  together 
it  would  be  found  that  it  is  less  than  we  got  last  year.  Whde  we  get 
more  dead  freight,  we  have  lost  a  large  amount  of  live  stock  and  dressed 
meat.  I  do  not  know  that  we  are  any  better  off  now  than  we  were  last 
year.  I  can  assure  the  committee  that  if  tbere  be  any  increase  it  is  not 
in  consequence  of  rebates  that  we  get  that  business  (dead  freight),  nor 
in  consequence  of  differentials.  I  wish  also  to  add  that  the  volume  of 
the  trafhc  is  constantly  changing;  the  next  return  may  show  much  less 
favorably  for  us. 

Senator  HiscoCK.  Do  you  say  you  do  not  in  any  way  subsidize  the 
steam-ship  line  or  in  any  way  pay  part  of  its  rate  and  give  to  the  ship- 
pers the  benefit  of  it. 

Mr.  HiCKSON.  No,  sir. 

Senator  Blair.  Then,  Mr.  Hickson,  I  understand  this  to  be  your 
statement,  that  you  are  conforming  to  the  interstate  law  and  not  in- 
creasing the  charges  upon  local  freights  in  Canada  to  make  up  any 
loss  consequent  upon  obedience  to  the  law;  and  that  yonr  line  is  on 
the  whole  able  to  compete  successfully  with  these  American  lines? 

Mr.  Hickson.  Certainly,  sir. 

Senator  Blair.  It  is  as  good  or  a  better  line,  all  considerations  being 
the  same  ? 

Mr.  Hickson.  I  think  we  are  doing  it  at  the  present  moment  under 
fair  and  legitimate  arrangements,  and  I  do  not  know  that  there  is  the 
slightest  charge  against  us  of  breaking  rates  or  making  rebates,  at  the 
present  moment.  If  it  is  so,  such  charge  has  never  been  made  known 
to  me. 

Senator  Blair.  I  mean  with  reference  to  the  traflBc  that  originates 
westerly  and  is  marketed  in  Liverpool.  I  include  the  ocean  route  as 
well. 

Mr.  Hickson.  As  regards  the  ocean  route  from  Montreal,  we  have  no 
control  over  it.  I  was  speaking  of  the  ocean  route  from  Portland  pre- 
viously. 

Senator  Blair.  But  a  man  can  ship  freight  from  Chicago  to  Liver- 
pool over  your  route  at  as  good  or  better  rate  than  via  the  New  York 
Central  ? 

Mr.  Hickson.  It  is  now  probably  sent  cheaper.  At  certain  times  the 
rates  through  the  St.  Lawrence  are  cheaper  than  the  rates  via  New 
York.  The  rates  through  Montreal  are  based  on  the  rates  through 
Philadelphia;  that  is,  the  inland  rate  is. 

Senator  Blair.  What  proportion  of  your  business  for  Great  Britain 
comes  through  the  United  States  ? 

Mr.  Hickson.  If  I  had  my  statistics  I  think  I  could  answer  your 
question.  My  secretary  is  now  out  of  the  room  and  he  took  with  him 
my  papers.    I  have  sent  for  them. 

Senator  Blair.  I  want  to  know  to  what  extent  the  Canadian  roads 
take  their  business  through  the  United  States  ? 

Mr.  Hickson.  I  will  give  you  that  if  I  can  when  my  secretarv  comes 
m. 

ARRANGEMENTS  WITH  OCEAN  STEAMERS. 

Senator  Gorman.  The  statement  has  been  made  that  you  practically 
subsidize  your  steam-ships  by  agreeing  to  pav  them  for  a  fixed  amount 
ot  space,  which  is  a  permanent  contract  and  enables  them,  necessarily 
having  a  fixed  amount  of  cargo  guarantied,  to  charge  a  less  rate,  say, 
between  Portland  and  Liverpool.  The  statement  has  also  been  made 
that  with  this  understanding,  or  without  it  for  that  matter,  the  fact  is 


THE   tJNlTED    STATES   AND   CANADA.  103 

that  the  steam-sbip  company  frequently  allows  a  drawback  to  the  ship- 
per.    Now,  what  is  there  in  that  iussertion  or  charge  ? 

Mr.  HiCKSON.  We  do  not  under  our  arrangements  subsidize  the 
steamers  and  we  do  not  buy  space  in  them.  Portland  is  a  place  which, 
I  dare  say  all  realize,  has  not  a  great  deal  of  local  traffic.  We  have  en- 
tered into  engagements  with  steamers  to  find  them  a  cargo.  It  simply 
amounts  to  this,  that  we  have  to  find  them  cargoes  if  we  can  and  we 
pay  no  penalty  for  it  if  we  do  not. 

Senator  Blair.  1  thought  you  owned  those  steamers. 

Mr.  HiCKSON.  No,  they  belong  to  the  Allans  and  the  Dominion 
Company.  We  knbw  the  tonnage  of  their  steamers  and  we  contract  to 
do  our  best  to  give  them  a  load,  otherwise  they  would  not  run  to  Port 
land. 

Senator  HiscoCK.  Who  makes  their  rates  ? 

Mr.  HiCKSON.  Other  ports  make  them.  They  change  them  from  day 
to  day 

Senator  HtscocK.  Why  would  they  change  them  if  they  depended 
almost  exclusively  on  your  business? 

Mr.  HiCKSON.  They  would  not  go  to  Portland  if  we  did  not  give  them 
traffic. 

Senator  His'Cock.  I  know  they  go  to  Portland  because  of  their  ar- 
rangement with  you.  Now  you  being  the  only  party  that  ships  over 
their  line,  why  do  they  change  their  rates  at  all  1 

Mr.  HiCKSON.  They  must  do  so  to  meet  the  competition  through 
other  ports.  If  they  put  up  their  rates  unduly  we  could  give  them  no 
traffic. 

Senator  Hiscock.  You  mean  that  instead  of  your  making  a  fixed  con- 
tract with  them  to  furnish  them  with  so  much  freight  at  a  certain  price 
their  rates  are  practically  fixed  by  Boston  and  New  York  ! 

Mr.  HiCKSON.  Practically  so.  They  have  to  meet  the  competition, 
otherwise  lower  rates  would  be  prevailing  through  New  York,  Balti- 
more, or  Philadelphia,  and  we  should  be  out  of  the  market. 

Senator  Gorman.  So  you  have  no  reason  to  believe  that  these  steam- 
ship companies  allow  any  drawback  either  to  the  producer  or  the  ship- 
per? 

Mr.  HiCKSON.  None  ;  they  do  not  to  my  knowledge. 

Senator  Hiscock.  And  to  your  knowledge  no  contribution  has  ever 
been  made  to  meet  the  same  purpose  as  a  rebate? 

Mr.  HiCKSON.  No,  sir. 

The  Chairman.  The  interstate  law  requires  that  rates  shall  be  pub 
lished,  and  during  their  existence  they  shall  not  be  varied  from,  either 
below  or  above,  and  it  requires  three  days'  notice  before  you  can  reduce 
the  rates,  and  ten  days'  notice  before  you  can  increase  them.  Now,  in 
your  foreign  commerce,  as  I  understand  it,  the  steam-ship  lines,  for  in- 
stance, at  Portland,  charge  one  rate  to  day  and  another  to-morrow,  and 
are  not  governed  by  any  law  practically,  except  the  law  of  competition. 
Then  how  do  you  manage  to  do  business  with  those  lines  when  you  are 
required  to  publish  your  rates  in  the  United  States,  and  state  what  they 
are  inland,  separate  and  distinct  from  the  through  rate,  when  the  rates 
are  changing  on  the  steam-ship  line  from  Portland  to  Liveri^ool  ?  How 
do  you  get  along  with  that? 

Mr.  HiCKSON.  We  do  the  same  thing  as  the  other  lines.  We  are  in 
the  same  position  as  the  other  lines.  1  believe  the  Interstate  Com- 
merce Commission's  decision  is  that  the  ratt'S  to  the  seaboard  shall  be 
charged  (but  I  am  not  perfectly  clear  on  that),  and  the  ocean  rate  has 
to  be  published  separately  and  apart  from  the  inland  rate. 


104  TRANSPORTATION   INTERESTS    OF    . 

Senator  Platt.  Do  you  pnblisli  the  throngli  rate  ami  post  it  from 
Chic-ago,  say,  to  Liverpool! 

Mr.  HicivSON.  We  did  do  it,  but  1  thiuk  a  recent  decision  of  the  Com- 
mission changed  matters.  I  am  under  the  im])ression  that  when  a 
through  rate  is  made  the  inland  rate  has  to  be  stated. 

The  Chairman.  If  you  want  to  ship  1,000  bushels  of  grain,  for  in- 
stance, from  Chicago  to  Liveri)Ool  does  your  agent  at  Chicago  make  a 
contract  to  ship  at  a  given  rate,  without  first  communicating  with  the 
steam  ship  line  to  know  what  rates  you  can  get  on  the  ocean  ? 

Mr.  HiCKSON.  He  is  in  constant  communication  with  the  steam-ship 
lines. 

The  Chairman.  Your  rates  from  Chicago  to  Portland  are  fixed  be- 
cause you  can  not  change  them,  under  the  law,  within  a  given  date. 

Mr.  HiCKSON.  That  is  so. 

The  Chairman.  Now  you  can  not  tell  what  you  are  going  to  charge 
the  man  who  has  a  cargo  of  grain  to  ship  to  Liverpool  until  you  com- 
municate by  telegraph  with  the  steam  ship  line  at  Portland? 

Mr.  HiCKSON.  I  suppose  we  are  all  in  that  position  now. 

The  Chairman.  And  you  get  the  rate  and  add  it  to  what  tlie  pub- 
lished rate  is  between  Chicago  and  Portland  for  the  transportation  in- 
land.    Is  that  the  way  ,\ou  do  it? 

Mr.  HiCKSON.  Yes,  sir ;  the  ocean  rate  is  added  to  the  inland  rate. 

Senator  Blair.  Tlien  it  is  for  the  steam-ship  companies  to  compete, 
and  they  go  up  or  down  just  enough  to  get  the  traffic  at  the  port. 

Mr.  HiCKSON.  They  do  go  up  and  down  very  often  and  it  is  a  diffi- 
cult thing  to  follow. 

Senator  Blair.  It  seems  that  the  individuals  who  make  a  road,  own 
the  stock  in  another,  and  thus  there  is  a  practical  consolidation.  Is 
there  not  something  similar  with  reference  to  these  ocean  lines!  Do 
not  the  men  who  own  the  Grand  Trunk  have  a  large  interest  in  the 
ocean  line? 

Mr.  HiCKSON.  I  can  not  tell.  A  Mr.  Smith  who  is  a  holder  of  stock 
in  the  Grand  Trunk  may  be  a  stockholder  in  the  steam-ship  line,  but 
there  is  no  corporate  holding  of  an  interest  in  these  lines.  There  is  no 
control  over  the  action  of  these  lines  by  the  railroad  company,  directly 
or  indirectly. 

Senator  Blair.  But  if  these  same  men  are  interested  in  the  two  en- 
terprises, the  steam-ship  enterprise  and  the  railroad  enterprise,  their 
conduct  may  be  diflerent  from  what  would  be  the  conduct  on  the  part 
of  men  who  were  interested  in  the  management  of  two  separate  cor- 
porations. 

Mr.  HiCKSON.  The  Allan  Steam-ship  Company  is  very  much  a  family 
arrangement,  the  family  practically  control  it. 

Senator  Blair.  Do  jou  know  whether  they  own  any  Grank  Trunk 
stock  ?  *^  -^ 

Mr.  HiCKSON.  I  have  at  times  looked  over  the  list  of  Grand  Trunk 
stockholders,  and  I  thiuk  they  do  not  own  much,  if  any  :  I  can  not  say 
positively. 

TRAFFIC   OUT   OF   CHICAGO. 

The  Chairman.  You  say  that  your  business  now  is  no  better  than  it 
was  last  year.    I  believe  you  stated  that. 

T  ^^^\  SiCKSON.  I  think  you  are  speaking  of  the  traffic  out  of  Chicago. 
1  said  1  thought  that  if  you  took  all  the  business  going  out  of  Chicago 
we  are  not  getting  more  than  we  were  getting  last  year. 

Ihe  Chairman.   With  reference  to  this  alleged  increase  of  traffic 


THE  United  states  and  canada.        105 

over  your  road,  T  will  ask  you,  is  it  due  to  any  differentials,  or  in  what 
does  it  consist'? 

Mr.  UiCKSON.  1  have  already  endeavored  to  explain  that.  We  have 
very  excellent  facilities  in  Chicago  for  the  transhipment  of  grain  from 
other  railroads,  and  we  have  been  getting  a  large  proportion  of  the 
trafiic;  and  whilst  we  have  had  a  large  increase  in  what  is  known  as 
dead  freight,  we  have  had  a  less  proportion  of  dressed  meat;  the  busi- 
ness is  constantly  fluctuating.  I  have  the  figures  for  1888  and  1887. 
They  are : 


1888. 


1887. 


Dead  freight., 
nressed  lueat. 
Live  stock 


Terns. 
400,  651 
99,  8.'i7 
5,880 


Tons. 
301,  895 
167, 103 
12  516 


Total 


506,  3C8 


481,  514 


Percentage  of  total  shipments: 

1888 14.84 

1887 14.95 

Senator  Hariris.  What  are  we  to  understand  by  your  expression  of 
"dead  freight?" 

Mr,  HiCKSON.  Grain,  provisions,  and  general'freight. 

Senator  Harris.  Is  it  a  term  used  simply  in  contradistinction  to  live 
stock? 

Mr.  HiCKSON.  As  against  live  stock  and  dressed  meats. 

The  Chairman.  Your  terminal  facilities  are  not  better  this  year  than 
they  were  last,  are  they  ? 

Mr.  HiCKSON.  Yes,  we  have  been  improving  them  all  the  time.  We 
have  an  elevator  for  elevating  grain  out  of  cars  and  an  apparatus  for 
shifting  cars.  I  think  there  was  a  State  law  passed  that  required  the 
railroads  to  give  receipts  for  specific  weights  in  Chicago,  and  with  that 
law  we  complied  very  promptly. 

Senator  Gorman.  I  understand  you  to  say  that  your  increased  facil- 
ities for  transporting  dead  freight  and  other  freight  from  Chicago  have 
been  very  much  increased  in  the  last  year,  and  that  that  accounts  for 
the  increased  trafhc  going  over  your  route. 

Air.  HiCKSON.  I  did  say  so,  and  I  hope  it  is  a  fact  that  we  do  our 
bUvSiness  satisfactorily. 

Senator  Gorman.  Is  there  any  decrease  in  the  cost  to  the  shipper 
by  these  increased  facilities  ? 

Mr.  HiCKSON.  No,  sir. 

Senator  Gorman.  Taking  a  thousand  tons  of  grain  for  instance,  how 
much  saving  in  time  is  there  ? 

Mr.  HiCKSON.  I  am  not  able  to  tell  you.  I  know  the  object  is  to  get 
a  quick  delivery  and  to  give  a  bill  of  lading  for  specific  quantities  with- 
out delay.  All  roads  do  not  give  them.  Again  we  have  hoppers  for 
weighing  grain. 

Senator  Gorman.  And  that  is  how  you  account  for  the  increased 
trafiic  over  your  line  ? 

Mr.  HiCKSON.  I  only  know  that  we  have  not  been  resorting  to  any 
illicit  or  improper  means  to  get  the  tratfic. 

Senator  Hiscock.  And  you  say  the  dead  freight  received  by  you  at 
Chicago  is  not  discharged  at  Liverpool  at  less  cost  than  by  way  of 
Boston  and  New  York. 


106  TftANStORTAtlOiJ    INTERESTS   OF 

Mr  HiCKSON.  I  do  not  tliink  you  understood  me.  The  tliioujjh  nxU^ 
is  made  up  of  two  rates,  the  inhind  and  the  ocean  rates.  They  are 
quoted  rates  and  known  in  Chicago. 

Senator  IIiscocK.  1  understood  you  to  say  that  sometimes  they  are 
less  and  sometimes  more  ? 

Mr.  HiCKSON.  Certainly.  .,    .  ., 

Senator  HiscocK.  And  I  understood  you  to  say,  also,  that  the  rate 
from  Portland  was  regulated  or  based  upon  the  rates  from  New  York 
and  Phiiadclphia. 

Mr.  UiCKSON.  The  ocean  rates,  yes,  more  or  less. 

Senator  HisoocK.  It  is  your  understanding  that  dead  freight  can 
be  delivered  in  Liverpool  from  Chicago  at  less  cost  by  your  route  than 
it  can  by  way  of  Philadelphia,  New  York,  or  Baltimore! 

Mr.  HicKSON.  In  some  instances  it  may.  As  a  general  rule  I  do  not 
know  that  there  is  a  very  great  difference. 

Senator  Harris.  If  I  understand  you,  the  rate  to  Liverpool  depends 
on  whatever  the  steam-ship  rate  may  be  at  the  time,  added  to  your 
published  rates  frOm  Chicago  to  Portland. 

Mr.  IJiCKSON.  That  is  as  I  understand  the  practice,  sir,  at  the  pres- 
ent time. 

Senator  IIiscoCK.  And  you  further  stated  that  in  no  instance  was 
the  steam-ship  company  allowing  a  rebate  or  was  any  compensation 
made  to  them  by  the  railroad  company. 

Mr.  IIicksonI  I  said  nothing  of  the  kind  was  done  to  my  knowledge. 

Senator  Gorman.  Or  a  rate  fixed  by  which  they  could  make  a  re 
bate  to  the  shipper.     I  understand  j'ou  further  to  say,  Mr.  Ilickson, 
that  in  the  adjostment  between  your  railroad  company  and  the  steam- 
ship company  you  do  not  fix  their  ])ro[)oition  with  a  view  to  enabling 
them  to  give  a  rebate  or  drawback  to  any  of  the  shippers. 

Mr.  IIiCKSON.  Certainly  not. 

Senator  Platt.  Is  your  rate  to  Portland  the  same  as  your  rate  to 
New  York "? 

Mr.  HiCKSON.  The  inland  rate  you  mean  ? 

Senator  Gorman.  Yes. 

Mr.  HiCKSON.  Yes,  the  same  as  the  New  Yark  rate,  I  am  informed. 

RELATIONS  TO  THE  CANADIAN  PACIFIC. 

The  Chairman.  Have  you  any  competition  in  business  with  the 
Canadian  Pacilic? 

Mr.  HiCKSON.  Oh,  yes. 

The  Chairman.  Where? 

Mr.  HiCKSON.  We  are  in  places  almost  parallel  linos.    They  have  a 
line  running  from  Montreal  to  London,  in  Ontario,  and  they  are  build- 
ing a  line  from  Loudon  down  to  Detroit.     That  will  be  a  competitive 
line  of  about  520  miles,  I  suppose. 
^     The  Chairman.  All  in  your  own  country  ? 

Mr.  HiCKSON.  Yes. 

The  Chairman.  Do  you  find  any  difficulty  in  competing  with  them  ! 

Mr.  HiCKSON.  We  have  not  found  very  much  so  far. 

The  Chairman.  You  can  take  care  of  yourself? 

Mr.  HiCKSON.  1  think  so. 

Senator  Blair.  Their  line  is  not  finished  yet,  is  it  ? 

Mr.  HiCKSON.  No,  sir;  but  tliey  have  been  working  in  connection 
with  the  Michigan  Central  for  western  traffic. 


THE    tJNiTED    STATES    AND    CANADA  lO? 

SUBSIDIES  TO   THE   CANADIAN  PACIFIC. 

The  Chairman.  As  we  uiideistaiid  it  iu  this  country  generally,  the 
Dotniuion  Governmeut  very  largely  aided  the  constructiou  of  the  Gaua- 
diaD  Pacitic.     Is  that  so,  or  do  yon  know  the  facf? 

Mr.  HiCKSON.  It  i-s  undoubtedly  so. 

The  Chairman.  Do  you  know  to  what  extent  ? 

Mr.  HiCKSON.  I  will  give  you  the  figures  to  the  best  of  my  knowl- 
edge if  you  will  take  them  in  that  way  ;  if  not  I  had  rather  not  quote 
them.  There  were  lines  constructed  by  the  Dominion  Government  to 
the  extent  of  nearly  thirty-seven  millions,  which  were  turned  over  to 
the  Canadian  Pacific. 

The  Chairman.  Constructed  by  the  Government  outright  ? 

Mr.  HiCKSON.  Yes,  sir. 

Senator  Platt.  Which  were  existing  at  the  time  the  Canadian  Pa- 
cific started  ? 

Mr.  HiCKSON.  Partly  existing  and  partly  completed  afterwards. 
There  was  in  cash  I  think  $25,000,000.  And  there  were  lands  given 
worth,  perhaps, — it  depends  upon  what  you  value  them  at — $50,000,000. 

Senator  HiscocK.  In. connection  with  this  subsidy,  Mr.  Chairman,  I 
would  like  you  to  call  the  attention  of  the  witness  to  the  tact  that  the 
railroad  companies  on  this  side  seem  to  think  that  inasmuch  as  the 
Canadian  roads  have  an  advantage,  there  have  been  suggestions  made 
here  of  legislation  that  would  protect  our  roads  againsfr^an  evil  of  that 
kind,  if  it  exists,  and  ascertain  what  Mr.  Hickson's  views  are  with  re- 
gard to  proper  legislation  on  that  subject,  and  which  he  thinks  they 
would  be  willing  to  carry  and  beaj:,  and  which  would  insure  our  roads 
against  these  evils.  However,  I  do  not  wish  the  question  pressed  at 
this  time,  but  merely  make  the  suggestion  for  the  purpose  of  getting 
Mr.  Hickson's  views  before  he  finishes  his  statement  before  us  this 
afternoon.  I  do  not  wish  to  interrupt  the  line  of  inquiry  of  the  chair- 
man at  this  time. 

The  Chairman.  At  the  suggestion  of  Senator  Hiscock  we  will  leave 
the  matter  referred  to  by  him  for  the  time  being. 

Were  there  not,  Mr.  Hickson,  twenty-five  millions  in  bonds  as  a  lien 
upon  the  lands"? 

Mr.  HiCKSON.  I  think  I  have  mentioned  the  whole  value  of  the  lands. 
I  think  I  know  now  to  what  you  refer.  The  government  guarantied  a 
loan  of  the  Canadian  Pacific  of,  1  think,  fifteen  millions  last  year  issued 
on  the  securitv  of  the  unsold  portion  of  the  lands,  and  I  think  they  got 
the  money  at  3^  per  cent. 

The  Chairman.  What  is  the  total  amount  that  went  into  that  road 
in  construction,  support,  guaranty,  etc.,  on  the  part  of  the  Canadian 
Government'? 

Mr.  HiCKSON.  The  last  mentioned  is  not  a  direct  liability  of  the  gov- 
ernment. It  was  only  an  assistance  to  borrow.  The  total  of  the  figures 
I  have  given  you  (apart  from  the  $15,000,000)  is  one  hundred  and  twelve 
millions  on  about  twenty-six  hundred  miles  of  railway.  I  hope,  how- 
ever, you  will  not  question  me  too  much  on  the  affairs  of  a  couipetitor. 
Besides,  having,  as  I  understand  you  will,  the  president  of  that  company 
before  you,  I  am  sure  he  will  give  you  all  the  information. 

REGULATION   OF   CANADIAN  COMMERCE. 

The  Chairman.  We  will  go  back,  then,  to  this  question  of  the  regu- 
lation of  commerce.    Your  roads  are  doing  a  vast  amount  of  business 


108  TRANSPORTATION   INTERESTS   OF 

iu  tbcUuited  States.  We  are  undertaking  to  regulate  com  inerceamoug 
the  several  States  under  our  Constitution,  and  under  it  have  a  right  to 
reo-ulate  commerce  with  foreign  countries  by  the  United  States.  Now, 
suppose  the  United  States  should  determine  that  the  regulation  that 
now  exists,  as  it  reaches  to  the  traffic  of  your  road  or  of  Canadian  roads 
generally,  is  not  sufficient,  and  we  should  require  that  before  you  could 
do  business  iu  this  country  that  you  should  iu  your  owu  country  come 
under  the  interstate-commerce  act  of  the  United  States  and  obey  it; 
what  say  you  to  that  ? 

Mr.  HiCKSON.  I  think  that  involves  an  international  question  which 
no  railroad  company  would  be  permitted  to  deal  with  alone.  It  might 
be  attempted  by  an  agreement  between  the  American  and  Canadian 
companies,  or  by  the  Canadian  roads  giving  some  bond  binding  them- 
selves to  do  so  and  so;  that  is  all  that  could  be  done.  1  do  not  con- 
sider it  would  be  practicable. 

Senator  LIiscock.  What  would  you  suggest  with  respect  to  our  giving 
power  to  the  Inte;-state  Commerce  Commission  with  regard  to  the  trans- 
portation of  traffic  from  this  country  into  Canada,  that  woulil  delegate 
to  the  Commission  the  right  of  inspection  of  and  supervision  over  that 
trade,  so  as  to  insure  against  these  rebates  or  ilrawbarks  being  },nven. 

Mr.  IIiCKSON.  I  could  not  suggest  anything  to  ivmedy  an  i-vil  that  I 
think  does  not  exist.  I  hdve  said  that  these  rebates  and  allowances  are 
not  made,  and  as  regards  the  international  naffic  we  recognize  to  the 
fullest  extent  the  power  of  the  commissioners.  We  are  willing  to  lay 
our  books  and  papers  before  them  at  any  time,  and  give  them  all  the 
information  in  regard  to  anything  that  affects  the  international  traffic 
and  traffic  going  from  and  to  Ihe  States  of  the  Union  through  Canada. 

Senator  HiscoCK.  Then  you  would  not  object  to  the  law  imposing  as 
a  condition  that  you  should  do  that  ? 

Mr.  HiCKSON.  That  is  what  we  understand  the  law  to  impose  today. 
We  recognize  the  right  of  the  commissioners  to  do  that  in  regard  to 
such  traffic. 

The  Chairman.  To  go  into  your  country  and  make  an  examination 
of  your  books'? 

Mr.  EiCKSON.  We  have  no  objection  to  their  doing  so  iu  regard  to 
international  traffic.  They  can  take  us  to  Washington,  and  have  the 
right  to  make  us  exhibit  our  books  which  relate  to  such  traffic. 

Senator  Blair.  Suppose  they  examine  your  books  to  see  if  you  get 
an  advantage  iu  regard  to  international  business  ? 

Mr.  HiCKSON.  We  let  them  have  all  our  tariffs.  We  think  that  we 
stand  in  the  same  position  to-day  as  does  the  New  York  Central,  for 
instance.  I  say  further  that  I  think  the  local  rates  in  Canada  are  not 
more  than  the  local  rates  on  the  American  lines. 

COMPARATIVE  EXPENSES  OF  CANADIAN  ROADS. 

Senator  Blair.  Are  not  your  operating  expenses  in  the  way  of  rolling 
stock  and  labor  and  material  such  that  you  can  at  the  same  rate  as  the 
American  roads  have  an  advantage  over  the  American  roads  ? 

Mr.  HiCKSON.  In  some  things  we  would  be  a  little  cheaper.  Wages 
would  be  a  little  less,  but  we  labor  under  (he  disadvantaue  of  a  more 
severe  climate,  entailing  upon  us  a  good  deal  of  expense  ii)  winter.  As 
a  matter  of  fact,  I  had  occasion  a  few  davs  ago  to  go  into  figures  in  re- 
gard to  the  expenditure  of  the  Grand  Trunk,  and  comparing  our  ex 
peuditure  with  that  of  the  Erie  and  the  Pennsylvania  Railways;  and 
taking  into  consideration  that  we  pay  a  verv  much  higher  rate  for  coal, 


THE  UNITED  STATES  AND  CANADA.  109 

our  expenses  are  just  about  the  same  as  the  Erie  ami  Pennsylvania, 
perhaps  a  little  higher. 

Senator  Blair.  Are  the  expenses  on  this  local  business  in  Canada 
as  much  as  in  the  United  States  ? 

Mr.  HiCKSON.  1  think  quite  so. 

Senator  Blair.  The  expense  of  running  your  road,  you  say,  is  not 
less  than  running  a  road  doing  a  corresponding  business  in  the  United 
States'? 

Mr.  HiCKSON.  I  do  not  think  so.  On  the  whole  it  is  higher.  If  in 
one  thing  our  expenditure  is  lower  in  another  it  will  be  higher,  but  on 
the  average  it  will  be  higher. 

Senator  Blair.  Your  wages  are  not  more  than  two-thirds  of  what 
they  are  in  this  country "? 

Mr.  HiCKSON.  Oh,  yes. 

Senator  Blair.  Take  labor  on  the  full  length  of  your  road,  do  you 
think  it  costs  more  than  two  thirds  of  what  it  is  over  a  corresponding 
distance  on  the  New  York  Central  or  Pennsylvania? 

Mr.  HiCKSON.  I  think  on  the  American  divisions  of  our  railroad  we 
pay  laboring  men  10  cents  a  day  more  than  similarl  abor  is  i^aid  in 
Canada.     I  am  speaking  of  the  average. 

mileage  of  the  grand  trunk. 

The  Chairman.  What  is  the  total  mileage  of  your  Grand  Trunk 
proper  and  its  feeders'? 
Mr.  HiCKSON.  I  think  I  have  it  here.    It  is  as  follows: 

Miles. 
Lines  in  Canada  owned  and  leased 3, 119 

Lines  in  the  United  States: 

Leased  and  operated  as  a  part  of  the  Grand  Trunk  system 360 

Controlled  and  operated  in  harmony  with  the  Grand  Trunk G17 

4, 09H 

Senator  Platt.  Do  you  have  much  export  trade  by  way  of  Portland  ? 

Mr.  HiCKSON.  I  think  it  consists  simply  of  lumber  going  to  the  West 
Indies  and  South  America. 

Senator  Platt  And  the  ocean  rates  at  Montreal  are  about  the  same 
as  at  Philadelphia  ? 

Mr.  HiCKSON.  1  had  reference  to  the  inland  rate  when  I  spoke.  The 
inland  rate  to  Montreal  is  based  on  that  to  Philadelphia.  The  Phila- 
delphia rate  is  a  little  less  than  New  York.  I  see  that  in  the  six  mouths 
ending  the  31st  of  December,  1888,  the  total  number  of  tons  carried  bj^ 
the  Grand  Trunk  was  practically  four  millions. 

The  Chairman.  That  is  the  entire  trafidc  done  by  your  system  ? 

Mr.  HiCKSON.  Yes,  sir. 

The  Chairman.  You  do  not  know  what  portion  of  that  you  got  from 
the  United  States. 

Mr.  HiCKSON.  That  is  all  the  work  done  on  the  Grand  Trunk  system 
in  both  countries — local  and  general. 

Senator  Blair.  You  say  so  many  tons ;  you  mean  tons  that  have 
been  received  and  discharged,  or  does  it  have  any  relation  to  the  dis- 
tance each  ton  was  carried! 

Mr.  HiCKSON.  The  tons  we  handled  and  not  the  number  carried  a  mile. 

Senator  Blair.  Without  reference  to  the  distance  carried. 

Mr.  HiCKSON.  Yes  ;  for  the  year  1888  it  is  7, ;^k  (),(]((►  tons  of  2,000 
pounds.    The  tonnage  hauled  from  points  iti  the  United  States  through 


no  TRANSPORTATION    INTERESTS    OF 

Canada  to  points  in  the  United  States  again  by  the  main  line  of  tho 
Grand  Trunk  was  792,000  tons.  Between  the  rivers,  that  is  Niagara  and 
Detroit  and  St.  Clair,  1,380,000  tons. 

The  Chairman.  I  see  it  stated  in  this  pamphlet  issued  by  the  Inter 
state  Commerce  Commission,  in  connection  with  the  tonnage  of  the 
United  States  railroads,  which  you  recognize  as  being  part  of  your  sys- 
tem, the  tonnage  is  3,087,054. 

Mr.  HiCKSON.  That  would  be  for  tonnage  beyond  the  Detroit  and  St. 
Clair  Rivers,  in  the  States. 

The  Chairman.  Is  that  included  in  your  7,000,000? 

Mr.  HiCKSON.  No,  sir;  only  part  of  it. 

Senator  Gorman.  How  many  tons  in  one  year,  according  to  that 
statement,  go  across  our  border  or  via  the  points  where  you  connei-tT 

traffic  between  CANADA  AND  THE  UNITED  STATES. 

Mr.  HiCKSON.  That  I  can  not  tell;  it  is  a  very  large  amount.  IJut  I 
am  going  to  make  a  statement,  which  1  make  after  a  good  dral  of  thought, 
and  that  is  that  the  receipts  that  the  American  lines  get  for  carrying 
traffic  to  and  from  Canada  are  as  great,  if  not  greater,  than  the  Cana- 
dian hues  get  for  carrying  United  States  traQic. 

Senator  Gorman.  What  do  you  mean  by  that  ? 

Mr.  Dickson.  I  mean  they  are  carrying  traffic  to  and  from  the  sea- 
board to  Canada  all  the  time,  and  they  are  carrying  traffic  generally  to 
and  from  Canada,  and  that  the  receii)ts  on  that  traffic  are  as  great  if 
not  greater  than  our  receipts  for  carrying  Ameiican  traffic.  1  can  not 
demonstrate  it  by  figures,  but  I  think  it  i)robably  yields  as  large  or 
larger  income  to  the  American  transportation  companies  than  the  re- 
ceipts the  Canadian  lines  get  for  carrying  traffic  from  one  part  of  tbe 
United  States  through  Canada  into  another  part  of  the  United  States. 

Senator  HiscocK.  You  mean  the  freight  that  originates  in  Canada 
which  is  cairied  to  our  sea-board,  is  larger  than  the  amount  of  American 
freight  taken  from  the  sea-board  to  Canada  and  st()p|)ing  there.  To  put 
it  more  plainly,  you  mean  that  the  volume  of  freight  taken  from  the 
United  States  into  Canada  and  stopping  there  is  greater  tban  tiie 
amount  of  ireight  that  is  carried  from  a  point  in  the  United  States  to 
Canada  and  then  into  another  part  of  the  United  States. 

Mr.  lIiCKSON.  I  think  the  receipts  of  the  American  comi)anies  on ' 
traffic  carried  to  and  from  Canada  are  as  large  or  larger   than    the 
receipts  which  the  Canadian  companies  derive  from  United  States  traf- 
fic carried  through  Canada. 

The  Chairman.  That  is,  the  foreign  trade  of  Canada  through  the 
United  States  is  greater  than  the  foreign  trade  of  the  United  States 
through  Canada;  is  that  it  ? 

Mr.  HiCKSON.  Yes,  sir,  1  think  it  is;  but  I  referred  to  all  traffic  to 
and  from  Canada  handled  by  the  American  companies. 

Senator  Gorman.  Can  you  give  the  figures  for  traffic  going  across 
the  border  f  -r  1888  ? 

Mr.  HiCKSON.  I  saw  a  statement  the  other  day  partly  compiled  from 
statistics  of  the  government  statistician  and  partly  from  other  sources 
which  makes  it  about  3,000,000  tons  to  and  from  Canada  a  year,  and  I 
calculate  that  it  was  carried  on  an  average 300  miles,  and  that  at  a  rate 
of  seven  parts  of  a  cent  a  mile  would  make  over  $6,000,000.  Of  course 
these  figures  are  to  some  extent  estimates. 

The  Chairman.  But  you  can  furnish  the  exact  number  of  tons  von 
received  at  the  bridge  at  Niagara  which  passed  both  ways  ? 


THE    UNITED    STATES    AND    CANADA.  Ill 

Mr.  HiCKSON.  That  would  be  a  very  elaborate  statement  to  prepare, 
because  it  comes  iu  great  detail  aud  is  mixed  up  with  other  cousigu- 
meuts. 

The  Chairman.  Going  East  there  is  nothing  passes  over  that  bridge 
except  American  products,  is  there  ? 

Mr.  fliCKSON.  Yes,  trafiQc  to  and  from  Canada  for  Europe,  the  States, 
etc.  The  estimateot  tons  for  the  year  ending  the  30th  of  June,  1887, 
going  to  and  from  the  whole  line  of  the  Grand  Trunk  Eailway  iu  Can- 
ada over  United  States  lines  is  1,534,000  tons.  In  addition  to  all  that 
there  is  a  trafiSc  going  to  and  from  the  lower  j^rovinces  by  the  Maine 
Central,  and  there  is  traffic  passing  over  the  Canadian  Pacific,  the  Can- 
ada Southern,  and  the  Canada  Atlantic,  and  business  at  different  other 
])oiiits. 

The  CIIAIR3IAN.  Are  you  building  a  line  from  any  point  to  Halifax, 
or  is  it  the  Canadian  Pacific  that  is  building  itf 

Mt.  Hickson.  It  is  tbe  Canadian  Pacific  that  is  building  what  is 
known  as  the  sboit  line  through  Maine.  It  is  the  Atlantic  and  North- 
western properly  speaking,  but  it  is  leased  by  the  Canadian  Pacific. 

The  Chaiuman.  Tbe  Canadian  Pacific  controls  it  1 

Mr.  fliCKSON.  Yes,  sir. 

The  Chairman.  It  runs  through  Maine  also,  does  it  not  ? 

Mr.  HiCKSON.  Yes,  sir;  it  runs  through  the  State  of  Maine  about 
145  miles. 

The  Chairman.  When  that  road  is  completed  it  will  be  a  strong 
competitor  of  yours,  will  it  not "? 

Mr.  HiCKSON.  Yes,  sir ;  it  will  be  a  competitor. 

NEWLY   SUBSIDIZED  LINES. 

The  Chairman.  Do  you  know  anything  in  reference  to  a  subsidized 
steamship  line  from  Halifax  to  Europe  ? 

Mr.  HiCKSON.  At  the  session  of  the  Dominion  Parliament  just  closed, 
a  subsidy  was  voted  for  a  fast  steam-ship  line,  but  the  port  of  arrival 
and  departure  is  not  settled.  It  would  be  Montreal  in  summer,  prob- 
ably. 

Senator  Blair.  It  will  not  be  Portland,  I  suppose. 

Mr.  HiCKSON.  No,  sir. 

The  Chairman.  How  much  is  the  subsidy,  if  you  know  ? 

Mr.  HiCKSON.  I  think  it  is  one  hundred  thousand  pounds  per  annum, 
for  which  the  line  would  have  to  carry  the  mails. 

The  Chairman.  Does  the  Dominion  Government  pay  the  Canadian 
Pacific  any  subsidy  for  the  line  that  crosses  the  State  of  Maine  ? 

Mr.  HiCKSON.  The  sum  of  $250,000  a  year  was  voted  by  Parliament 
to  be  paid  for  twenty  years  to  secure  a  short  commercial  route  to  the 
lower  provinces.  It  was  subsequently  divided  into  three  sections,  one 
section  embracing  the  line  from  the  neighborhood  of  the  St.  Lawrence, 
at  Montreal  to  Lennoxville  iu  the  eastern  townships;  the  eastern  sec- 
tion from  Lennoxville,  crossing  tlie  State  of  Maine  lo  Mattawamkeag; 
the  next  was  from  a  point  named  Harvey  to  Salisbury,  near  Monctou, 
on  the  Intercolonial  Railway.  The  subsidy  in  respect  to  the  first  two 
sections  when  earned  will  be  $71,100  and  $115,500  per  annum  respect- 
ively. 

The  Chairman.  How  much  of  that  subsidj'  does  the  road  through 
Maine  get  ? 

Mr.  HiCKSON.  It  is  not  separated  entirely  from  a  jvart  of  the  line  in 
Canada,  but  the  portion  Avhich  includes  that  through  Maine  I  think  is 


112  TRANSPORTATION    INTERESTS    OF 

subsidized  to  the  extent  of  $115,000  a  year.  The  piece  uot  construct. mi 
was  subsidized  to  the  extent  of  $63,000.  It  is  uot  built,  and  not  likely 
to  be  built  under  that  arrangement. 

The  Chairman.  That  road  going  east  is  intended  to  have  a  termi- 
nal at  Halifax,  is  it  not "?  I  refer  to  that  road  that  goes  across  the  State 
of  Maiue. 

Mr.  HiOKSON.  They  arranged  for  a  terminal  at  St.  John.  The  ex- 
port traffic  can  reach  Halifax  by  going  over  the  Intercolonial,  but  it  is 
not  apt  to  go  that  way. 

The  Chairman.  But  with  that  sort  of  subsidized  line  and  with  a  sub- 
sidized steam-ship  line  to  meet  it,  you  will  have  pretty  rough  sailing, 
will  you  uot  ? 

Mr.  HiCKSON.  We  look  upon  it  that  we  shall  lose  a  certain  portion  of 
the  traffic. 

The  Chairman.  Did  you  state  the  amount  of  subsidy  to  the  steam- 
ship lino  ? 

Mr.  HiCKSON.  To  the  best  of  my  recollection  it  is  £100,000  a  year. 

Senator  Platt.  But  the  steamship  line  is  not  designated. 

Mr.  HiCKSON.  No,  sir,  and  the  port  is  not.  In  summer  it  will  un- 
doubtedly be  Montreal.  For  winter  I  do  uot  kuowthat  the  port  is  set- 
tled upon. 

Senator  Gorman.  You  will  share  in  that  benefit  in  Montreal  in  sum- 
mer? 

Mr.  HiCKSON.  To  the  extent  that  it  increases  the  traffic  and  we  get  a 
part  of  it,  but  our  competitors  are  there  to  get  ])art  of  it  also.  I  am 
not  sanguine  that  it  is  going  to  increase  anything  very  much  except 
the  expeuses  of  the  Dominion. 

Senator  Gorman.  Ought  it  not  decrease  the  cost  of  moving  a  ton  of 
freight  from  Montreal  ? 

Mr.  HiCKSON.  No,  sir;  I  do  not  think  it  will,  because  they  are  to  bo 
boats  suitable  tocarry  the  mails  and  passengers  and  notsuited  to  carry- 
ing freight.    Mail  boats  and  freight  vessels  are  not  the  same  thing. 

Senator  Platt.  You  say  a  line  of  road  that  commences  at  Lenox- 
ville  and  ends  at  Mattawamkeag,  the  larger  mileage  being  in  Maine,  is 
to  receive  $115,000  a  year  for  twenty  years  ? 

Mr.  HiCKSON.  Yes,  sir. 

TRAFFIC  from  THE  UNITED  STATES  OVER  THE  GRAND  TRUNK. 

The  Chairman.  Coming  back  to  the  question  of  tonnage,  is  it  not 
practicable  for  you  to  give  the  number  of  cars  and  the  amount  of  tonnage 
that  passes  out  of  this  country— from  New  York,  for  instance— over 
your  Imo,  or  at  every  point  in  this  country  the  tonnage  that  passes  over 
your  line  and  gets  into  Canada?  Is  not  that  a  practicable  thing  for 
you  to  give  us  ? 

Mr.  HiCKSON.  These  statistics  that  I  was  quoting  from  were  in  part 
collected  by  the  government  statistician,  andthev  make  out  the  tonnage 
coming  to  and  going  from  the  Grand  Trunk  Kailway  to  the  American 
railways  for  the  year  ending  June  30,  1887,  to  be  1,531,000  tons. 

Senator  Blair.  But  wo  get  no  idea  of  the  assistance  that  you  draw 
trom  the  production  of  the  United  States  from  those  figures. 

Mr.  HiCKSON.  I  gave  the  figures  to  you.  One  set  was  by  the  main 
nneot  the  Grand  Trunk  and  one  between  the  Detroit  and  Niagiira 
rivers,  and  I  think  I  can  give  you  the  tonnage  to  Montreal  froni  the 
Western  States.  In  1888  the  tonnage  from  the  Western  States  to 
Montreal  amounted  to  71,993  tons. 


THE    UNITED    STATES    AND    CANADA.  113 

Senator  Blair.  Over  your  road? 

Mr.  HiCKSON.  Yes.  The  same  year  to  Portland  it  was  92,241  tons. 
These  figures  include  the  export  traffic. 

Senator  Blair.  How  much  do  you  draw  from  the  West  easterly  from 
Montreal  via  Rouse's  Point? 

Mr.  HiCKSON.  Very  little  goes  through  Eouse's  Point,  except  the 
Montreal  traffic.  I  gave  what  comes  over  the  main  line  coming  on  at 
Windsor  and  Point  Edward,  and  going  eastward  to  the  Portland  line 
and  the  Central  Vermont  district,  and  also  by  the  Niagara  frontier,  and 
wee  versa,  and  repeat  the  figures:  seven  hundred  and  ninety-two  thou- 
sand in  one  case,  and  one  million  three  hundred  and  seventy-nine  thou- 
sand in  the  other. 

Senator  Blair.  What  proportion  of  the  entire  business  done  on  your 
road  originates  in  the  United  States,  without  reference  to  where  you  dis- 
charge it  ? 

Mr.  HiCKSON.  That  would  mean  the  importations  into  Canada  from 
the  Uuited  States,  and  that  I  am  unable  to  give. 

Senator  Blair.  I  mean  to  what  extent  your  Canadian  road  is  de 
pendent  on  the  United  States  for  existence. 

Mr.  HiOKSON.  I  can  not  give  you  that. 

Senator  Blair.  Do  you  believe  that  one-tenth  of  the  business  of  the 
Grand  Trunk  Eailroad  originates  in  the  production  of  Canada  ? 

Mr.  HiCKSON.  O,  yes. 

Senator  Blair.  Do  two  tenths? 

Mr.  HiCKSON.  Much  more. 

Senator  Blair.  Well,  what  proportion  I 

Mr.  HiCKSON.  It  is  only  guess-work.  I  think  probably  of  the  seven 
millions  and  odd  tons  between  60  and  70  per  cent,  is  Canadian. 

Senator  Blair.  Then  you  are  six-tenths  a  Canadian  road  and  four- 
tenths  a  United  States  road.  In  reference  to  the  real  questions  here,  it 
is  important  for  us  to  know  to  what  extent  you  are  a  United  States  road 
and  to  what  extent  a  Canadian  road  in  earning  power, 

Mr.  HiCKSON.  I  can  not  give  you  these  figures  accurately,  because 
the  tonnage  I  am  quoting  is  partly  on  the  American  lines.  The  seven 
millions  of  tons  would  take  in  a  portion  of  Canadian  traffic  carried  over 
the  Atlantic  district,  for  instance. 

TRAFFIC   ORIGINATING  IN   THE  UNITED   STATES. 

Senator  Platt.  Could  you  not  furnish  us  with  a  statement  of  the 
amount  of  tonnage  carried  by  your  road  in  Canada  which  originates  in 
the  United  States  ?  I  do  not  mean  to-day,  but  can  you  not  furnish  it 
at  some  time  ? 

Mr.  HiCKSON.  Do  you  mean,  sir,  the  tonnage  that  originates  in  the 
United  States,  or  that  comes  through  and  from  the  United  States  into 
Canada  ? 

Senator  Platt.  All  that  goes  over  your  road  in  Canada  that  origi- 
nates in  the  United  States — hauled  on  your  road. 

Mr.  HiCKSON.  I  have  quoted  those  figures  to  you — I  mean  the  through 
traffic — but  I  think  you  are  asking  me  for  something  else.  I  want  to 
be  clear  as  to  what  is  wanted,  because  1  have  no  objection  to  giving 
you  anything  that  I  can  give  you.  Are  you  speaking  of  traffic  that 
comes  from  the  United  States  into  Canada  and  stays  there,  or  traffic 
that  comes  from  the  United  States  and  goes  through  Canada  into  the 
Uuited  States  again  ? 
6543 8 


1 


i 


J 14  TEANSPOETATION    INTERESTS    OF 

Senator  Platt.  What  I  am  talking  about  is  biisiuess  that  originates 
in  the  United  States  that  is  hauled  ou  your  road  iu  Canada. 

Senator  Gorman.  No  matter  what  is  its  final  destination. 

Senator  Harris.  Whether  lor  a  foreign  port  or  what  not? 

Senator  Platt.  Business  that  originates  in  the  United  States  and 
hauled  on  your  road.  .^  t  ,         ..u    •  i? 

Mr.  HiCKSON.  I  shall  give  you  that  if  I  can ;  if  I  have  the  informa- 
tion i  will  furnish  it.  The  difiaculty  is  that  there  is  traffic  which  comes 
through  the  United  States  from  foreign  countries. 

The  statement  is  as  follows  : 

Yeak  1888. 

Tons. 

The  tounage  from  the  Uuited  States  comiug  into  Canada,  which  includes 
importations  from  Europe  aud  elsewhere  through  the  United  States,  it 
being  impracticable  to  separate  such  from  the  geucr;il  business.     (The 

figures  include  G0;?,59'.i  tons  of  coal  carried  as  freight;..,...    1,073,000 

There  are,  iu  addition  to  the  foregoing,  about  480,000  tons  of  coal  per 

annum  purchased  by  the  Grand  Truuk  Company  in  the  United  States  aud 

brought  into  Canada,  very  nearly  all  of  which  comes  iu  by  railway. 

The  tonnage  carried  bv  the  company  through  Canada,  from  States  to 

States,  was,  iu  1888,  about 2,171,000 

The  tonnage,  purely  local,  to  the  United  States  roads,  the  operations  of 
which  are  included  in  the  Grand  Truuk  returns  (i.  e.,  in  the  7,3^0,000 
tous) 371,000 

3, 615,  000 
The  tonnage  originating  in  Canada,  and  apart  from  importation  from  the 

United  States,  was 3,715,000 

The  receipts  of  the  Grand  Trunk  Company  in  (/anada,  iu  1888,  were $16,900,000 

On  traffic  originating  in  the  United  States,  which  includes  foreign  impoi:- 
tatious  througji  the  United  States  from  Europe  and  elsewhere,  via 
Portland,  Boston,  etc.,  for  Canada $5,300,000 

On  traffic  originating  in  Canada ll.iiOO,  000 

10, 000, 000 

Senator  Blair.  You  do  business  between  the  St.  Lawrence  and  St. 
Clair  Eivers  and  Port  Huron,  and  you  do  local  business  all  through 
Michigan,  do  you  not? 

Mr.  HiCKSON.  Yes,  sir. 

Senator  Blair.  You  control  lines  in  Michigan,  do  you  nott 

Mr.  HiCKSON.  Yes,  sir. 

Senator  Blair.  Aiid  some  of  your  roads  which  you  control  begin  and 
end  in  that  country  ? 

Mr.  HiCKSON.  Yes,  sir. 

Senator  Blair.  And  that  is  a  very  valuable  part  of  your  business. 
You  do  a  business  beginning  and  terminating  in  Canada,  and  in  New 
England  you  do  a  local  as  well  as  a  through  business.  1  would  like  to 
know  to  what  extent  the  income  of  your  road  comes  I'rom  business  that 
originates  in  the  United  States,  regardless  of  the  place  where  it  ter- 
minates, whether  in  Canada  or  in  a  foreign  country,  or  whether  it  be 
through  business  or  local  business.  I  would  like  to  know  the  business 
you  do  and  the  money  you  get  from  the  business  coming  from  the 
United  States. 

Mr.  HiCKSON.  The  difficulty  iu  givingthat  is  to  separate  the  business 
that  comes  through  the  United  States  from  that  which  originates 
there. 

Senator  Blair.  It  does  not  make  any  diflference. 
Mr.  HiCKSON.  You  spoke  of  business  originating  iu  the  United  States. 
45usiness  coming  through  New  York  is  European  business  aud  carrlea 


THE    UNITED    STATES    AND    CANADA.  115 

overTJnited  States  lines  into  Canada,  and  that  makes  it  difficult  to 
make  the  analysis. 

Senator  Blair.  You  know  how  much  you  ship  over  your  roads  from 
the  port  of  New  York  that  comes  from  abroad,  do  you  not? 

Mr.  HiCKSON.  Ko.  sir ;  we  are  not  a  line  in  New  York. 

Senator  Blair.  You  have  a  connection  in  New  York  ? 

Mr.  HiCKSON.  Yes. 

Senator  Blair.  Do  you  participate  in  the  profits  ? 

Mr.  HiCKSON.  There  is  business  going  from  New  York  City  to  Can- 
ada and  business  coming  to  the  port  of  New  York  from  abroad  going 
into  Canada,  and  my  difficulty  is  to  separate  it  so  as  to  tell  which  is 
which.  A  large  portion  of  the  business  coming  into  Canada  does  not 
originate  in  tbe  United  States. 

Senator  Blair.  Looking  at  this  map  and  knowing  your  country  as 
well  as  ours  you  will  observe  that  nearly  all  the  connections  of  your 
road  originate  in  the  United  States.  Your  connections  extend  all  over 
the  Northwest  and  Southwest.  This  section  between  Montreal  and 
Detroit  can  not  produce  one-twentieth  part  of  the  business  that  your 
road  gets. 

Mr.  HiCKSON,  In  that  I  think  you  are  mistaken,  because  there  is  an 
immense  lumber  business  done  in  that  region. 

Senator  Blair.  Well,  a  good  deal  of  that  is  brought  into  the  United 
States,  is  it  not  ? 

Mr.  HiCKSON.  Yes,  sir;  and  a  great  deal  shipped  at  Montreal. 

Senator  Blair.  When  that  same  business  reaches  the  United  States 
it  is  United  States  business,  and  your  income  from  that  business  which 
you  did  in  the  United  States  in  transporting  property  which  came  from 
Canada  should  be  added  to  the  United  States  business  of  your  road,  to 
show  to  what  extent  you  are  a  Canadian  road  and  to  what  extent  you 
are  a  United  States  road.  1  think  I  could  make  as  good  a  guess  as  you 
in  saying  that  the  Grand  Trunk  is  at  least  four-fifths  a  United  States 
institution. 

Mr.  HiCKSON.  You  mean  in  its  traffic  ? 

Senator  Blair.  In  its  aggregate  traffic  and  income. 

Mr.  HiCKSON.  Well,  I  can  only  say  that  is  not  my  impression. 

EFFECT   OF   THE   CANADIAN  SUBSIDIES. 

The  Chairman.  Let  me  ask  you  another  question.  We  were  talking 
a  while  ago  about  subsidies.  According  to  your  statement  there  were 
some  $000,000  a  year  subsidy,  or  nearly  that,  guarantied  to  the  rail- 
roads and  steamers  of  this  Canadian  Pacitic  system,  the  i)urpose  of 
■which  seems  to  be  to  get  a  road  through  the  Canadian  Dominion,  termi- 
nating at  Halifax  or  St.  John,  or  somewhere  in  that  locality.  Now  that 
is  a  tremendous  subsidy,  and  the  purpose  of  it  would  seem  to  be  to 
divert  from  the  ports  of  Portland  and  Boston  the  foreign  trade  that 
now  belongs  naturally  to  those  places  into  Canadian  jurisdiction,  is  not 
that  so  I 

Mr.  HiCKSON.  I  doubt,  sir,  if  that  will  be  the  effect  of  the  subsidy 
that  is  proposed  to  be  granted  to  a  line  of  steamers.  The  object  is  to 
get  a  fast  line  of  steamers  for  passenger  traffic  and  mails.  The  Canadian 
Pacific  are  looking  to  improving  the  transportation  through  Canada  to 
tbe  East,  and  to  attracting  a  portion  of  the  traffic  from  Europe  across 
this  continent.  But  I  do  not  think  a  fast  line  of  steamers  is  calculated 
to  attract  a  great  deal  of  freight. 

The  Chairman.  They  are  not  onl^^  it  seems  to  me,  subsidizing  rail- 
roads of  which  they  are  building  portions  through  the  United  States, 


IIQ  TRANSPORTATION  INTERESTS  OF 

but  are  subsidizing  steam-sbip  lines,  tbe  purpose  of  wbicb  would  seem 
to  me  to  be  to  divert  trade  from  Americau  ports  to  ports  belonging  to 
tlie  Canadian  Government.  ,   , 

Mr.  HiCKSON.  Are  you  asking  me  for  an  expression  of  opniion  ? 

The  Chairman.  I  am  expressing  my  own  opinion  now,  and  I  would 
like  to  know  of  you  whether  the  effect  is  not  to  take  away  from  the  ports 
of  Portland  and  Boston  a  very  large  amount  of  the  foreign  trade  they 

now  have? 

Mr.  BiCKSON.  Ihavenot  the  least  hesitation  in  expressing  an  opinion 
on  that  subject.  There  is  already  an  excellent  line  of  steamers  running 
to  Portland  in  winter  and  the  St.  Lawrence  in  summer,  and  doing  a 
freight  business  satisfactorily,  and  there  are  other  lines  in  the  summer 
running  between  Loudon  and  other  ports  and  the  St.  Lawrence  ami 
other  ports  in  this  country ;  and  I  do  not  think  that  a  fast  line  of  steam- 
ers, carrying  mails  and  passengers  to  St.  John  or  Halifax,  will  seriously 
divert  freight  traffic  from  any  port  in  this  country.  It  may  divert  some 
passengert',  that  is  all. 

The  Chairman.  Then  the  subsidies  do  not  apply  to  freight  vessels ! 

Mr.  HiCKSON.  No ;  only  to  passenger  and  mail  steamers,  which  are 
not  freight-carrying  boats  ;  and  the  line  will  not,  in  my  opinion,  affect 
the  traffic  of  Boston  and  Portland  at  all.  i'or  my  own  part  I  would 
rather  see  this  line  of  steamers  running  into  Halifax  or  St.  John,  and 
have  a  thiougli  line  running  straijjht  into  Portland,  than  otherwise; 
that  is,  than  have  the  Portland  boats  calling  at  these  ports.  I  think 
Portland  would  get  the  freight  under  such  an  arrangement. 

The  Chairman.  If  you  have  a  subsidized  railroad  running  clear 
through  Canada  from  one  end  to  the  other,  its  terminal  being  at  St. 
John,  and  the  Government  sustaining  it  by  subsidies,  that  railroad 
would  be  pretty  apt  to  carry  a  good  deal  of  freight  there  to  the  shii)s 
coming  to  take  it. 

Mr.  HiCKSON.  Efforts  have  been  made  at  times  to  carry  freight 
through  Halifax  for  years  past.  On  one  or  two  occasions  some  years 
ago  we  agreed  that  the  Grand  Trunk  might  be  used  to  try  the  experi- 
ment, and  it  was  abandoned  as  impracticable. 

The  Chairman.  Why? 

Mr.  HiCKSON.  No  one  could  afford  to  take  it. 

The  Chairman.  Why  not? 

Mr.  HiCKSON.  Because  the  ocean  rates  from  Halifax  to  Euroi)e  were 
not  sufficiently  lower  than  the  ocean  rates  from  Portland  or  Boston  to 
comi)ensate  for  500  miles  of  extra  railway. 

MILEAGE  AND  CAPITAL  STOCK  OF  THE   GRAND  TRUNK. 

Senator  Gorman.  What  is  the  mileage  of  the  Grand  Trunk  road  in 
Canada  ? 

Mr.  HiCKSON.  Three  thousand  one  hundred  and  nineteen  miles. 

Senator  Gorman,  Now,  what  mileage  do  you  control  in  the  United 
States? 

Mr.  HiCKSON.  We  have  3G0  miles  worked  as  part  of  the  Grand  Trnnk 
system  in  the  United  States.  I  will  give  you  the  figures  as  to  the  lines 
that  are  worked  in  connection  with  us. 

Senator  Gorman.  It  is,  I  believe,  1,000  miles,  in  round  numbers. 

Mr.  HiCKSON.  Six  hundred  and  seventeen  miles  of  such  lines. 

Senator  Gorman.  You  reported  to  the  Interstate  Commerce  Commis 
sion  that  you  controlled,  one  way  or  another,  railwavs  to  the  extent  of 
about  1)00  miles. 


THE    UNITED    STATES    AND    CANADA.  117 

Mr.  HiCKSON.  Yes,  that  might  be  at  some  previous  date.  According 
to  the  figures  I  have  given  you  it  would  be  977. 

Senator  Gorman.  ]Slow,  what  is  tlie  capital  stock  of  the  Grand  Trunk 
in  Canada  f    How  much  is  there  in  all  of  it! 

Mr.  IliCKSON.  The  Grand  Trunk — all  its  Canadian  lines — eighty  mil- 
lions of  loans  and  debenture  stock,  ninety-two  millions  of  preferred 
stock,  one  hundred  and  eight  millions  of  ordinary  stock,  making  alto- 
gether, in  round  figures,  two  hundred  and  eighty  millions. 

Senator  Gorman.  On  3,000  miles  of  road  ? 

Mr.  riiCKSON.  On  3,119  miles. 

Senator  Gorman.  Now,  the  capital  that  you  have  in  these  lines  wholly 
in  tbe  United  States  is  put  down  in  this  report  at  $46,277,472;  is  that 
correct  ? 

Mr.  HiCKSON.  That  statement,  I  think,  is  a  little  wrong.  The  Chi- 
cago and  Grand  Trunk  is  put  down  here  as  twenty-two  millions.  It  has 
eighteen  millions  six  hundred  thousand  of  total  capital.  I  do  not  see 
tbe  Grand  Trunk  Junction  Company  mentioned,  and  it  has  a  capital  of 
about  $4,000,000.  The  Grand  Haven  is  about  right,  and  so  is  the  Mus- 
kegon Kailway.  I  do  not  know  whether  the  Atlantic  road  is  given 
there  or  not. 

Senator  Gorman.  I  think  not. 

Mr.  HiCKSON.  The  only  one  I  see  which  is  not  clearly  stated  is  the 
Chicago  and  Grand  Trunk.     It  is  not  $22,000,000,  but  $18,000,000. 

Senator  Gorman.  That  makes  the  aggregate  capital  of  your  roads 
in  this  country  over  fifty  millions  ? 

Mr.  HiCKSON.  The  aggregate  capital  of  the  American  lines  in  which 
the  Grand  Trunk  Company  is  interested  is  about  forty-seven  millions. 
I  see  on  looking  again  at  the  statement  that  someihing  for  the  Termi- 
nal Company  in  Chicago  is  added  to  the  Chicago  and  Grank  Trunk.  It 
does  not  alter  the  aggregate  materially. 

earnings  of  THE  GRAND  TRUNK. 

Senator  Gorman.  Then  the  gross  earnings  of  the  Grand  Trunk  in 
Canada,  taking  the  year  of  1888,  for  instance,  were  what  ? 

Mr.  HiCKSON.  In  1888  they  were  $18,318,906. 

Senator  Gorman.  That  is  the  Grand  Trunk  proper? 

Mr.  HiCKSON.  That  does  not  include  the  Chicago  and  Grand  Trunk, 
or  the  Grand  Haven,  or  the  Muskegon  lines. 

Senator  Gorman.  I  am  dividing  it.  I  asked  for  the  gross  receipts 
for  1888  for  the  Grand  Trunk  in  Canada. 

Mr.  HiCKSON.  I  misunderstood  you  ;  in  round  figures  it  is  $16,900,000. 

Senator  Gorman.  And  what  on  the  lines  on  the  American  side? 

Mr.  HiCKSON.  One  million  four  hundred  and  sixty-nine  thousand 
dollars,  say  $1,470,000;  but  that  does  not  iui  lude  the  Chicago  and 
Grand  Trunk,  the  receipts  and  expenses  of  which  are  given  separately, 
as  are  also  those  of  the  Grand  Haven  ;  they  are  in  a  statement  fur- 
nished to  the  Interstate  Commerce  Commissioners. 

Senator  Gorman.  It  is  put  down  in  this  statement  that  your  gross 
earnings  on  the  roads  which  you  operate,  lease,  own,  or  control  is 
$0,196,055.29. 

Mr.  HiCKSON.  Well,  those  figures  can  be  got  from  the  returns.  I  am 
afraid  I  have  not  got  them  with  me. 

Senator  Gorman.  I  suppose  that  is  the  return  made  to  the  Commis- 
sion by  your  company. 

Mr.  HiCKSON.  In  all  probability.  You  are  referring  to  a  judgment 
of  Commissioner  Schooumaker,  are  you  not  ? 


11^  TRANSPORTATION   INTERESTS   OP 

Senator  Gorman.  Yes. 

Mr.  HiCKSON.  Probably  compiled  from  some  returns  to  the  Inter- 
state Commerce  Commission,  or  made  up  by  the  clerk  of  the  Commis- 
sion. 

Senator  Gorman.  What  do  you  make  the  receipts  of  all  combined — 
of  everything  you  control  ? 

Mr.  HiCKSON.  I  do  not  think  I  have  that  prepared,  but  I  may  be  able 
To  give  it  to  you  by  going  over  the  several  returns.  I  understand  that 
what  you  want  are  the  receipts  of  the  Grand  Trunk  and  the  American 
lines  combined,  and  the  receipts  of  the  Grand  Trunk  in  Canada,  and 
the  gross  tonnage  ? 

Senator  Gorman.  Yes. 

Mr.  HiCKSON.  It  is  as  follows  : 

Tear  1888. 

Aggregate  receipts  of  the  lines  of  the  Grand  Trunk  Railway  in  Canada.  $16,  900, 000 
Aggregate  receipts  of  the  lines  operated  by  and  in  connection   with  the 
Grand  Trunk  Railway  in  the  United  States 5,839,000 

22,  739,  000 

Aggregate  tonnage  moved  by  the  Grand  Trunk  linee  in  Canada 6,  959,  481 

Aggregate  tonnage  moved  by  the  lines  operated  by  and  in  connection 
with  the  Grand  Trunk  Railway  in  the  United  States 4,604,261 

11,563,742 

Senator  Gorman.  What  percentage  of  receipts  does  it  cost  to  operate 
the  Grand  Trunk  in  Canada? 

Mr.  HiCKSON.  It  varies  Irom  69  to  75  per  cent.  It  depends  on  the 
weather  somewhat. 

Senator  Gorman.  What  does  it  average,  taking  a  period  of  ti ve  years? 

Mr.  HiCKSON.  I  can  not  really  quote  it  without  adding  up  the  gross 
figures  and  making  a  computation.     Perhaps  not  less  than  72  percent. 

Senator  Gorman.  Now,  do  you  get  any  aid  from  the  Canadian  Gov- 
ernment in  any  way  to  keep  up  your  road? 

Mr.  HiCKSON.  Xo,  sir;  none.' 

The  Chairman.  Your  road  is  purely  a  commercial  road? 

Mr.  HiCKSON.  We  get  a  scanty  sum  for  carrying  the  mails. 

The  Chairman.  Your  road  is  a  commercialroad  and  the  Canadian 
Pacific  is  a  political  road;  is  that  not  about  it? 

Mr.  HiCKSON.  I  would  rather  not  characterize  the  Canadian  Pacific 
as  a  political  road,  but  the  Grand  Trunk  is  a  commercial  road,  carrving 
on  business  on  business  principles,  and  operate<l  to  give  facilities  to  the 
country  through  which  it  passes. 

Senator  Gorman.  On  a  capital  of  two  hundred  millions  and  IS  per 
cent,  net  receipts  and  72  per  cent,  operating  expenses  vour  earnings 
are  about  $18,000,000  o       i  . 

xMr.  HiCKi^ON.  You  asked  me  as  to  working  expenses  for  an  av- 
erage. I  wish  to  say  that  what  I  have  stated  as  to  the  average  work- 
ing expenses  is  an  estimate. 

The  Chairman.  If  there  is  nothing  further  to  ask  of  Mr.  Hickson  we 
will  excuse  him.  We  thnnk  you,  Mr.  Hickson,  for  your  kindness  in 
coming  here,  and  your  patience  in  allowing  yourself  to  go  through  such 
a  lengthy  examination.  You  can  add  to  your  statements  here  the  data 
which  have  been  called  for. 

Mr.  HrcKSON.  Now,  gentlemen,  1  wish  to  say  that  if  you  want  me 
at  any  time  I  will  be  glad  to  attend,  and  to  give  yon  any  information 


The  united  states  and  Canada.  11*9 

tliiit  I  can,  and  if  you  are  in  Canada  I  will  be  glad  to  show  you  all  that 
you  may  wish  to  see  about  the  Grand  Trunk  road  and  its  affairs  on  the 
'spot. 

1  would  ask  to  be  supplied  with  a  copy  of  the  evidence  that  I  have 
given,  in  case  I  might  like  to  make  corrections  iu  it. 

Senator  IliscocK.  I  would  like  to  have  Mr.  Hickson  furnished  with 
the  evidence  taken  of  Mr,  King,  and  the  others,  with  reference  to  the 
steps  which  we  think  should  be  taken  to  improve  or  amend  this  inter- 
state commerce  act. 

The  Chairman.  The  testimony  will  be  printed,  and  Mr.  Hickson 
will  see  it. 

Mr.  Hickson.  What  I  want  is  to  have  the  evidence  that  I  have  given 
iu  order  to  correct  it  in  any  particular  in  which  1  may  have  fallen  into 
error. 

STATEMENT  OF  S.  M.  FELTON,  JR. 

Mr.  S.  i\r.  Felton,  Jr.,  first  vice-president  of  the  New  York,  Lake 
Erie  and  Western  Railroad,  appeare«l. 

The  Chairman.  What  is  your  name  and  business  ? 

ilr.  Felton.  S.  M.  Felton,  jr. ;  I  am  first  vice-president  of  the  New 
York,  Lake  Erie  and  Western  E.iilroad. 

The  Chairman.  Have  you  any  special  control  of  the  traffic  business 
of  that  road  ? 

Mr,  Felton.  Yes,  sir;  that  is  under  my  jurisdiction. 

The  Chairman.  You  have  been  listening  to-day  to  what  has  been 
said  here,  and  doubtless  have  read  something  of  what  was  stated  here 
on  yesterday. 

Mr.  Felton.  I  read  what  the  papers  had  to  say  on  the  subject. 

The  Chairman.  Can  you  give  the  committee  any  information,  in  ad- 
dition to  what  we  have  had  from  Mr.  King,  in  relation  to  the  traffic  of 
your  road,  or  do  you  not  know  what  he  said? 

Mr.  Felton.  I  do  not  know  just  what  he  said,  but  I  could  answer 
any  questions  that  you  might  wish  to  ask  me  in  reference  to  it.  * 

The  Chairman.  W^hat  are  the  terminals  of  your  road? 

Mr,  Felton.  New  York,  Buffalo,  Dunkirk,  and  Piermout  on  the 
Hudson.  Those  are  the  terminals  of  the  original  Erie  road,  or  wliat  is 
called  the  Erie  proi)er.  Then  there  is  the  Xew  York,  Pennsylvania, 
and  Ohio  Eoad,  which  goes  to  Cincinnati,  Cleveland,  and,  by  the  Chi- 
cago and  Atlantic,  to  Chicago. 

The  Chairman.     Is  that  a  part  of  the  Grand  Trunk  system  ? 

Mr.  Felton.  No,  sir. 

The  Chairman.  What  is  it,  then  ? 

Mr.  Felton.  It  is  a  line  running  south  of  the  lakes. 

The  Chairman.  Is  it  entirely  in  the  United  States'? 

Mr.  Felton.  Yes,  sir. 

The  Chairman.  Have  you  any  business  relations  or  connections  with 
the  Grand  Trunk  ? 

Mr.  Felton,  Yes,  sir. 

The  Chairman.  Just  the  ordinary  business  connections? 

Mr.  Felton.  VVe  have  quite  intimate  connections  with  the  Grand 
Trunk. 

The  Chairman.  What  are  they? 

Mr.  Felton.  Our  connection  with  them  is  at  International  Bridge 
and  Suspensio'.i  Bridge. 

The  Chairman.  At  those  two  bridges  ? 


120  TRANSPORTATION   INTERESTS   OF 

Mr.  Felton.  Yes,  sir ;  we  exchange  passenger,  freight,  and  coal  traf- 
fic with  them. 

The  Chaiejian.    On  what  terms  ? 

Mr.  Felton.  On  the  basis  of  divisions  that  have  been  in  force  for  a 
number  of  years  by  all  lines  east  of  Bufialo. 

The  Chairman.  Are  you  getting  any  differential  in  your  arrange- 
ment with  these  other  trunk  lines  ? 

Mr.  Felton.  We  have  a  differential  on  our  west-bound  business 
outof  New  York  City  and  out  of  New  England,  ranging  from  5  cents  a 
hundred  pounds  on  first  class  down  to  a  cent  a  hundred  on  sixth  class. 

Senator  Platt.  Whether  the  freight  goes  over  the  Grand  Trunk  or 
not? 

Mr.  Felton.  Yes,  sir;  on  any  of  our  connections. 

The  Chairman.  What  are  your  connections? 

Mr.  Felton.  One  connection  is  by  JSalamanca,  one  by  Buffalo  and 
the  Nickel  Plate,  and  one  by  the  bridges  and  the  Grand  Trunk  road. 

Senator  Platt  (to  the  chairman).  Ask  Mr.  Felton  why  that  differ- 
ential is  necessary'. 

The  Chairman.  Senator  Platt  wants  to  know  why  that  differential  is 
necessary. 

Mr.  Felton.  Prior  to  the  passage  of  the  interstate-commerce  law  we 
had  the  pooling  system,  under  which  we  worked,  and  under  that  sys- 
tem the  Erie  road  was  allowed  a  certain  share  of  the  traffic.  We  found 
that  under  the  operation  of  the  interstate-commerce  hiw  and  its  observ- 
snit-e,  as  we  understood  it,  we  were  losing  gionnd  and  losing  traflic,  and 
we  made  application  to  the  otber  roads  lor  what  is  known  as  a  ditler- 
ential  to  enable  us  to  carry  our  fair  share  of  the  business. 

Senator  Platt.  Have  you  not  as  short  a  line  to  Chicago  as  any  road  ? 

Mr.  Felton.  No,  sir;  the  Pennsylvania  road  has  the  shortest  line. 

The  Chairman.  Why  did  you  lose  business  under  the  operation  of 
the  interstate-commerce  act  or  its  observance  ? 

Mr.  Felton.  It  is  very  difficult  to  say.  We  think  we  lost  a  good 
deal  of  business  because  we  maintained  rates. 

"^he  Chairman.  Do  you  mean  to  say  your  rates  were  higher  than  on 
the  other  trunk  lines? 

Mr.  Felton.  Yes,  sir;  I  think  that  we  i>robably  misinterpreted  the 
law,  or  at  least  interpreted  it  more  rigidly  than  our  competitors  did. 

The  Chairman.  Do  you  mean  to  say  that  you  obeyed  the  law  and 
your  competitors  did  not? 

Mr.  Felton.  That  is  exactly  what  I  mean. 

The  Chairman.  You  do  not  mean  that  your  published  rates  were 
higher  than  those  of  the  other  roads? 

Mr.  Felton.  Our  published  rates  were  the  same,  but  I  think  we  were 
charging  more  than  some  of  our  competitors  charged,  not  more  than 
tbe  New  York  Central,  however. 

The  Chairman.  You  think  that  is  the  reason  you  lost  business? 

Mr.  Felton.  Yes,  sir. 

The  Chairman.  And  it  was  a  violation  of  the  law  by  the  other  roads, 
some  of  them,  at  least,  that  resulted  in  your  losing  a  good  deal  of  busi- 
ness ?  o     » 

Mr.  Felton.  They  did  not  consider  it  a  violation  of  the  law.  I  be- 
lieve the  Interstate  Commerce  Commissioners  themselves  were  in  doubt 
about  the  law  as  applying  to  joint  tariffs;  and  all  the  business  referred 
to  was  done  on  joint  tariffs. 

The  Chairman.  It  was  on  the  joint-tariff  bnsiness  that  this  cutting 
was  done,  if  there  was  any? 


THE   UNITED   STATES   AND    CANADA.  121 

Mr.  Felton.  Yes,  sir. 

Tlie  Chairman.  Do  not  the  amendments  recentlj^  passed  correct 
that? 

Mr.  Felton.  Yes,  sir ;  I  think  they  do. 

The  Chaieman.  Do  you  thinli  you  are  on  as  good  a  footing  now  to 
get  business  as  they  are? 

Mr.  Felton.  I  think  we  are,  if  the  law  is  observed. 

The  Chairman.  Is  there  any  reason,  then,  why  you  should  receive 
that  diftereutial  now  ? 

Mr.  Felton.  Yes';  I  think  so,  until  we  get  back  the  traffic  that  we 
have  lost.  We  are  very  much  behind  on  business  both  east  aud  west 
bound. 

the  operation  of  the  pool. 

The  CHAiRiiiAN.  The  presidentof  your  road  stated  yesterday  that  your 
road  received  about  half  a  million  dollars  a  year  under  the  pooling 
system. 

Senator  Harris.  His  statement  was  that  the  Erie  road  lost  a  half  a 
million  dollars  a  year  by  reason  of  the  abolition  of  the  pooling  system 
under  the  interstate  commerce  act. 

Mr.  Felton.  Well,  1  will  give  you  an  idea  of  just  how  it  has  been 
running  by  going  back  to  the  time  when  pools  were  first  formed.  Od 
the  westbound  business  from  New  York  during  the  i)eriod  from  July 
1,  1877,  to  March  31, 1887 

Senator  Harris.  Was  that  the  beginning  of  the  pooling  system  ? 

Mr.  Felton.  Yes  sir,  up  to  the  taking  effect  of  the  interstate  com- 
merce law.  For  a  period  of  ten  years  prior  to  the  passage  of  the  inter- 
state commerce  law  the  Erie  road  on  west-bound  business  from  New 
York  aggregating  in  gross  revenue  $11,577,000  was  short  $482,103,  as 
computed  under  the  pooling  agreement. 

The  Chairman.  Nearly  a  half  a  million  dollars. 

Mr.  Felton.  Yes,  sir. 

The  Chairman.  In  one  year. 

Mr.  Felton.  Oh,  no;  in  ten  years. 

The  Chairman.  When  you  came  under  the  interstate  commerce  law 
what  was  the  effect. 

Mr.  Felton.  I  will  show  you.  During  the  twelve  months  ending 
March  31,  1888 — that  is  the  first  year  of  the  operation  of  the  interstate 
commerce  law — the  Erie  road  fell  behind  on  New  York  west-bound 
business  the  amount  I  have  referred  to  in  the  former  statement, 
$248,527. 

The  Chairman.  That  was  during  the  first  twelve  mouths  of  the 
operation  of  the  interstate  commerce  law  ? 

Mr.  Felton.  Yes,  sir. 

Senator  Harris.  Both  of  these  statements  refer  to  west-bound  busi- 
ness only  ? 

Mr.  Felton.  Yes,  sir;  they  refer  to  business  from  New  York.  For 
ten  years  the  Erie  shortage  on  that  business  was  about  $425,000,  an 
average  of  $42,500  per  annum.  For  the  one  year  after  the  passage  of 
the  law  it  was  $248,000. 

The  Chairman.  What  was  it  on  freight  coming  this  way  ? 

Mr.  Felton.  I  will  give  that.  On  the  east-bound  dead  freight,  which 
is  a  separate  division  and  which  only  covers  the  period  from  March  15, 
1882,  to  March  31, 1887— that  is  five  years— the  Erie  road  was  $440,000 
behind  under  the  pooling  system ;  an  average  of  $88,000  per  annum. 


122  TRANSPORTATION   INTERESTS    OF 

In  the  first  year  of  the  operation  of  the  interstate  commerce  law  the 
Erie  road  was  short  $157,168  on  this  business. 

The  Chairman.  What  was  the  total  shortage  for  a  year! 

Mr.  Felton.  The  average  was  $88,000  a  year.  I  am  not  giving  you 
Mr.  King's  figures;  I  am  giving  you  the  figures  in  detail ;  he  only  gave 
them  in  the  aggregate. 

This  question  requires  a  good  deal  of  explanation  ;  I  want  to  make  it 
clear.  What  I  saw  stated  in  the  papers  was  not  clear.  Mr.  King  said 
this  morning  that  he  would  like  to  have  me  explain  it  to  the  committee. 

There  is  another  class  of  traffic,  known  as  the  New  York  livestock 
traffic,  that  has  been  Tiept  as  a  separate  division,  or  was  so  under  the 
pooHng  system,  and  on  this  class  of  business  during  the  period  from 
1879  to  1887  the  Erie  road  was  short  $158,ir)2;  an  average  of  $19,770 
per  annum. 

Senator  Platt.  In  what  was  the  Erie  short ! 

Mr.  Felton.  In  revenue;  that  is,  for,  say,  eight  years. 

Senator  Platt.  ,I  was  going  to  ask  what  your  share  was  and  how  it 
was  arrived  at. 

Mr.  Felton.  In  the  first  place,  before  pools  were  formed,  there  was 
a  contest  among  the  various  trunk  lines  over  all  traffic,  and,  as  you 
probably  remember,  they  had  rate  wars  frequently. 

Senator  Platt.  The  share  of  a  road  was  what  it  got  in  the  fight? 

Mr.  Felton.  That  question  went  to  arbitration.  The  practical  re- 
sult of  that  arbitration  was  that  the  roads  were  allowed  the  tonnage 
that  they  were  able  to  carry  under  the  free  fight,  and  in  that  way  the 
Erie  road  secured  the  various  percentages  that  were  awarded  it  under 
these  agreements. 

In  the  live-stock  and  dressed-beef  division,  in  the  first  year  of  the 
operation  of  the  interstate  commerce  law,  the  Erie  road  was  behind 
$169,433,  more  than  the  whole  shortage  in  the  previous  eight  years. 

Senator  HiscoCK.  I  would  like  to  ask  Mr.  Felton,  Mr.  Chairman,  in 
this  connection,  if  it  will  not  interfere  with  your  line  of  examination, 
this  question  :  If  you  recollect,  Mr.  King  and  Mr.  Depew  seem  to  have 
differed  in  respect  to  the  nature  of  this  shortage;  at  least,  some  of  us 
understood  Mr.  King  to  say  that  this  shortage  was  made  up  to  them  in 
the  payment  of  money  by  the  pool  without  the  Erie  road  having  car- 
ried the  freight  which  would  earn  it.  I  understood  Mr.  Depew  to  say 
that  the  freight  to  earn  the  money  was  arbitrarily  tiausferred  to  the 
Erie,  so  that  tuey  carried  their  arbitrary  part  of  the  freight  under  the 
pooling  arrangement,  and  the  other  roads  paid  to  the  Erie  what  the 
carrying  was  worth. 

The  Chairman.  State  the  exact  facts  in  reference  to  the  manner 
in  which  those  things  were  settled  and  the  basis  of  settlement. 

Mr.  Felton.  I  would  like  to  make  just  one  statement,  and  then  I 
will  have  completed  what  1  was  saying. 

The  Chairman.  Certainly. 

Mr.  Felton.  During  the  whole  period  prior  to  the  passage  of  the 
interstate  law  covered  by  all  these  various  pools,  the  Erie  road  was 
behind  $1,080,277. 

Senator  Gorman.  In  what  time? 

Mr.  Felton.  That  covers  in  one  division,  ten  vears;  on  another,  eight 
years ;  on  another,  five  years ;  and  on  another,  three  years.  It  would  be 
pretty  hard  to  make  an  average,  because  the  tonnage  varies  so  That 
IS  an  average  of  seven  years,  I  should  say.  That  shows  the  effect  of 
the  interstate  commerce  act  on  the  revenues  of  the  Erie  road. 


THE    UNITED    STATES    AND    CANADA.  l2^ 

Senator  Platt.  The  basis  of  your  shortage  in  each  case  was  what 
was  allowed  you  by  the  pool,  was  it  not  ? 

Mr.  Felton.  Yes,  sir. 

Senator  Gorman.  That  is  what  Mr.  King  stated. 

Mr.  Felton.  Yes,  sir.  Xow,  Mr.  King  gave  you  the  aggregate  for 
two  jears,  and  made  it  a  million  dollars,  and  from  that  you  draw  the 
inference  that  it  was  a  half  a  million  dollars  a  year. 

Senator  Harris.  Under  the  operation  of  the  pool  was  that  shortage 
made  up  to  the  Erie  road  ? 

]\Ir.  Felton.  That  shortage  was  made  up  to  the  Erie  road  in  two 
ways.  In  one  pool  It  was  made  up  by  paying  the  'entire  revenue  to  the 
Erie  road. 

Senator  Harris.  Paid  in  money  ? 

Mr.  Felton.  Yes,  sir ;  in  money,  representing  its  shortage.  If  the 
Erie  happened  to  run  behind  in  one  month  tive  thousand  tons,  and  the 
ISTew  York  Central  ran  over  five  thou.^and  tons,  the  treasurer  of  the 
JSTew  York  Central  paid  the  treasurer  of  our  road  the  entire  gross  rev- 
enue on  that  shortage.  In  other  word.s,  the  Xew  York  Central  had  to 
pay  for  over  carrying  the  tive  thousand  tons. 

Senator  Hiscock.  And  the  Erie  road  carried  no  freight,  and  received 
that  money  "1 

Mr  Felton.  It  received  it  for  maintaining  rates. 

The  Chairman.  That  is  a  pretty  ea.sy  way  of  getting  money. 

Mr.  Felton.  I  will  explain  that.  The  great  difficulty  we  had  under 
the  pooling  system  was  in  the  fact  that  we  could  not  enforce  our  agree- 
ment, and  we  were  always  living  in  fear  of  some  rupture.  The  result 
was  that  there  was  always  a  temptation  on  the  part  of  some  of  the  lines 
to  keep  up  their  proportion,  to  carry  their  share  of  the  business,  so  that 
if  any  break  came  they  would  not  be  out  of  pocket.  Kow,  if  we  had 
legalized  pooling  we  could  maintain  rates  absolutely,  and  feel  that  we 
were  going  to  get  our  revenue  anyhow. 

Senator  Hiscock.  Was  that  arrangement  at  any  time  changed,  so 
that  if  you  fell  short  on  freight  one  month  that  then  the  pool  trans- 
ferred to  you  arbitrarily  freight  to  carry  to  make  it  up  ? 

Mr.  Felton.  That  was  tried,  but  it  was  so  unsatisfactory  to  the 
shippers  that  it  was  never  carried  out  to  any  extent. 

Senator  Harris,  I  think  you  said  that  there  were  two  methods  of 
making  up  the  amount.     You  have  stated  one;  give  us  the  other. 

Mr.  Felton.  The  other  method  was  by  the  payment  of  the  netearn-- 
ings. 

Senator  Harris.  And  that  was  paid  in  cash  I 

Mr.  Felton.  Y'^es,  sir.  It  was  on  the  east  bound  pool.  The  com- 
missioner tigured  the  net  earnings  accruing  from  the  transportation  of 
the  tratfic,  and  the  road  which  was  short  received  the  net  earnings. 

Senator  Harris.  But  in  each  instance  you  were  compensated  for 
your  shortage  in  cash  and  not  by  carrying  freight  assigned  to  you  by 
the  pool ! 

Mr.  Felton.  As  I  said,  the  pool  made  an  effort  to  divert  freight,  but 
it  was  never  satisfactory. 

Senator  Harris.  It  was  prosecuted  only  to  a  limited  extent  ? 

Mr.  Felton.  Yes,  sir. 

The  Chairman.  So  that,  as  a  matter  of  fact,  the  Erie  road  received 
that  million  of  dollars  without  earning  it? 

Mr.  Felton.  I  should  not  say  without  earning  it. 

The  Chairman.  I  mean  without  carrying  the  traflSc  that  would  earn 
it  if  it  had  the  business. 


124  TRANSPORTATION   INTERESTS   OF 

Senator  Platt.  The  Erie  received  it  for  maintaining  rates,  he  said, 
I  think. 

Mr.  Felton.  That  is  the  answer.  I  want  to  make  this  point,  that  if 
that  pool  had  been  a  legal  pool,  and  one  that  conld  be  enforced,  the 
Erie  road  would  not  have  received  much  of  that  money  from  the  New 
York  Central  and  the  Pennsylvania,  who  practically  paid  it. 

Senator  Harris.  Suppose  you  had  no  pool,  what  would  have  been 
the  result?    Would  you  have  got  that  business  ? 

Mr.  Felton.  The  result  would  have  been  that  we  would  have  had 
that  $1,000,000  in  our  treasury  and  would  have  done  some  extra  work 
for  it,  as  our  range  of  rates  would  have  been  lower. 

The  Chairman.  Would  that  have  hurt  anybody  if  you  had  received 
the  money  you  expected,  and  earned  it,  and  the  rates  were  lower;  the 
people  would  have  got  the  benefit  of  it,  would  they  not? 

Mr.  Felton.  1  think  not. 

The  Cn AIRMAN.  Why  not? 

Mr.  Felton.  For  the  reason  that  there  would  have  been  a  fluctua- 
tion of  rates,  which  is  always  undesirable  to  the  t^hipper.  Our  patrons 
say  that  what  they  want  is  uniform  rates.  They  do  not  want  low  rates. 
They  do  not  want  to  ship  grain  to  the  sea  board  this  mouth  and  have  a 
competitor  come  in  and  sliip  his  grain  next  month  to  the  sea  board  for 
half  the  rate  they  i)aul  the  previous  month. 

Sena.tor  IIiscocK.  Your  understanding  is  that  the  shippers  are  al- 
ways opposed  to  a  war  m  rates  ? 

Mr.  Felton.  Yes,  sir  ;  except  a  few  who  get  the  benefit  of  it.  They 
get  the  benefit  of  it  one  time  and  the  next  time  they  do  not ;  the  next 
time  some  one  else  gets  it. 

Senator  Platt.  Your  efifort  now  is  to  get  back  the  business  which 
you  lost  and  which  you  had  under  the  old  pool. 

Mr.  Felton.  It  is  practically  to  e\en  up  our  tonnage. 

DIFFERENTIAL    RATES. 

The  Chairman.  AVhen  you  get  the  million  dollars  back,  then  will 
they  stop  the  differential  you  are  receiving  ? 

Mr.  Felton.  Yes,  sir ;  we  will  waive  the  differential ;  we  will  give 
it  up. 

The  Chairman.  Do  you  regard  yourselves  now  as  capable  of  com- 
peting with  the  other  lines  without  disadvantage  to  yourselves? 

Mr.  Felton.  No,  sir;  I  think  not;  I  think  there  is  a  featuie  of  the 
case  that  probably  you  will  appreciate.  Since  the  passage  of  the  in- 
terstate commerce  law,  instead  of  going  to  a  man  and  offering  him  a 
rebate  to  secure  his  business,  the  strong  lines  like  the  Pennsylvania 
and  the  New  Yoi;k  Central  go  to  him  and  say,  "  We  will  put  vour 
freight  through  from  New  York  to  Chicago  in  sixty  hours,  or  in  three 
days."  That  fast  time  has  the  effect  of  a  rebate  in  securing  his  busi- 
ness, especially  if  it  is  high-class  business  that  has  to  have  fast  move- 
ment. We  labor  under  a  serious  disadvantage  there.  The  Pennsyl- 
vania and  the  New  York  Central  have  better  facilities  ;  their  lines  are 
double  tracked ;  they  have  lower  grades,  and  their  fund  for  improve- 
ments IS  very  much  larger,  and  they  are  constantly  si>ending  money 
that  the  Erie  can  not  spend. 

..  T^^  Chairman.  So  that  you  think  you  ought  to  have  your  differen- 
tial still?  '^ 

Mr.  Felton.  It  looks  to  me  from  present  developments  that  when 
we  even  up  this  business  which  we  lost  we  will  find  that  the  Pennsyl- 


THE    UNITED    STATES    AND    CANADA.  125 

vania  aud  the  New  York  Central  facilities  are  so  far  ahead  of  ours  that 
we  can  not  keep  up,  and  we  will  have  to  have  the  differential  on  that 
account.  We  are  what  is  called  a  weak  line.  The  Pennsylvania  and 
the  New  York  Central  are  the  only  lines  that  charge  the  full  tariftrate. 
The  Lackawanna,  West  Shore,  Ontario  and  Western,  Lehigh  Yalley, 
and  Grand  Trunk  all  have  differentials. 

The  Chairman.  Do  they  receive  a  differential  now  ? 

Mr.  Felton.  Yes,  sir,  on  west-bound  business;  and  so  does  the  Bal- 
timore and  Ohio,  too. 

The  Chairman.  But  these  roads  do  not  receive  it  on  east-bound 
business. 

Mr.  Felton.  They  do  not,  except  on  dressed  beef. 

The  Chairman.  Why  should  there  be  a  west-bound  differential  and 
not  an  east-bound  differential  ? 

Mr.  Felton.  I  suppose  it  is  for  the  reason  1  gave  you  heretofore, 
that  the  better  facilities  of  the  Pennsylvania  and  New  York  Central 
lines  on  west-bound  business  have  made  that  a  very  important  factor. 
Now,  since  the  act  was  passed  this  condition  has  grown  up,  and  we 
find  ourselves  embarrassed  by  the  better  facilities  of  our  competitors. 

THE   CANADIAN  LINES. 

The  Chairman.  One  of  the  purposes  of  this  investigation,  as  you 
doubtless  understand,  Mr.  Felton,  is  to  ascertain  whether  under  the 
system  of  law  that  we  have,  under  the  interstate  commerce  act,  the 
Canadian  roads  are  getting  any  advantage  over  our  roads.  You  deal 
with  the  Grand  Trunk,  I  believe,  and  you  are  a  competitor  also,  as  I 
understand  Irom  Mr.  King,  of  the  Grand  Trunk. 

Mr.  Felton.  Yes,  sir;  we  are. 

The  Chairman.  I)o  they  get  any  advantage  over  your  road  by  the 
enforcement  of  the  interstate  commerce  act  ? 

Mr.  Felton.  They  do  not  get  any  advantage  with  our  assistance. 
What  I  mean  by  that  is  that  we  do  not  give  them  any  advantage  from 
Buffalo  to  New  York  as  against  our  own  line  from  Chicago  to  New 
York.  Any  advantage  they  would  get  would  be  derived  from  their 
own  line  between  Buffalo  and  Chicago. 

The  Chairman.  It  was  stated  today  that  the  Grand  Trunk  observed 
the  interstate  commerce  act  just  as  rigidly  as  though'they  were  in  the 
United  States  on  all  business  that  comes  into  the  United  States  or 
begins  in  the  United  States  and  goes  into  Canada  or  through  Canada 
and  into  the  United  States  again.  Do  you  know  whether  that  is  true 
or  not  *? 

Mr.  Felton.  I  do  not  know  anything  to  the  contrary. 

The  Chairman.  Do  you  think  there  ought  to  be  any  legislation  to 
protect  American  railroad  interests  as  against  Canadian  railroad  inter- 
ests more  than  we  have  already  I 

Mr.  Felton.  I  think  that  the  Canadian  lines  should  be  j^laced  on 
exactly  the  same  footing  as  are  the  American  lines. 

The  Chairman.  In  what  respect? 

Mr.  Felton.  There  are  several 

Senator  Harris.  1  do  not  think  you  understood  the  chairman's  ques- 
tion. It  was  whether  there  should  be  any  legislation  by  Congress  to 
protect  American  railroad  interests  as  against  Canadian  railroad  inter- 
ests beyond  what  we  have  already. 

Mr.  Felton.  I  take  it,  it  is  within  the  power  of  Congress  to  compel 
the  Canadian  railroads  to  conform  to  our  laws  if  they  want  to  do  busi- 


126  TRANSPORTATION    INTERESTS    OF 

ness  in  the  Uuited  States,  but  I  do  uot  suppose  it  is  witbiu  the  power 
of  Congress  to  rei?ulate  traffic  in  Canada. 

The  Chairman.  The  Canadian  roads  say  they  are  conforming  to  the 
interstate  commerce  act. 

Mr.  Felton.  Then  they  certainly  would  not  object  to  having  the  law 
applied  to  them  as  it  is  to  us. 

The  Chairman.  They  do  not  have  any  objection. 

Mr.  Felton.  1  do  not  suppose  they  would. 

The  Chairman.  You  heard  wbat  Mr.  Hickson  stated  here  today, 
did  you  not  f 

Mr.  Felton.  Yes.    I  think  he  states  the  case  correctly. 

The  Chairman.  Do  you  know  of  any  reason  why  there  should  be  any 
change  of  legislation  in  respect  to  the  railroads  of  the  country  on  ac- 
count of  the  business  whi(;h  it  has  been  shown  is  being  done  on  these 
Canadian  roads  in  the  United  States? 

Mr.  Felton.  I  do  not  know  how  to  answer  that.  I  can  make  this 
statement,  however,  that  I  believe  the  Grand  Trunk  and  the  Canadian 
Pacific,  the  Canadian  Pacific  particularly,  have  profited  by  the  passage 
of  the  interstate  commerce  law. 

The  Chairman.  In  what  respect  ? 

Mr.  Felton.  On  their  traffic  in  the  Uuited  States. 

The  Chairman.  By  violating  the  law  "? 

Mr.  Felton.  I  do  uot  want  to  say  that;  but  take  the  case  of  the 
Canadian  Pacific.  The  Canadian  Pacific  is  in  a  position  to  make  any 
concession  they  want  on  the  traffic  they  draw  from  tlie  United  States, 
and  they  can  manipulate  it  without  our  knowing  anytliing  about  it  and 
without  the  Interstate  Commerce  Commission  knowing  anything  about 
it. 

Senator  Gorman.  What  do  you  mean  by  '••  nianipulating?" 

Mr.  Felton.  1  mean  this  :  They  have  a  hue  now  to  St.  I'aul  and  Min- 
neapolis. The  huge  flour  tonnage  that  we  formerly  received  from  St. 
Paul  and  Minneapolis  is  being  very  largely  diverted  by  the  Canadian 
Pacific  road.  This  tonnage  goes  over  this  new  road  to  the  Sault,  aud 
then  over  the  Canadian  Pacific  for  export,  and  we  practically  do  uot  get 
any  of  it. 

It  is  very  easy,  it  seems  to  me,  for  those  gentlemen  on  their  own  main 
line  in  Canada,  to  make  such  arrangements  as  will  cause  that  business 
to  take  that  route.  1  do  not  know  how,  but  if  I  were  there  I  thiuk  I 
should  find  a  way  to  get  that  busiuess.     [Laughter.] 

The  Chairman.  Would  they  not  naturally  get  it  i 

Mr.  Felton.  Xo,  sir;  I  think  not. 

The  Chairman.  Why  not  ? 

IMr.  Felton.  It  is  a  long  aud  circuitous  route  and  not  the  natural 
road  for  the  business  when  it  has  to  come  through  to  New  England  aud 
New  York. 

The  Chairman.  It  starts  in  Minneapolis  and  lands  in  Portland  or 
Boston  ? 

Mr.  Felton.  Yes,  sir ;  or  Montreal  or  Liverpool,  and  some  of  it  comes 
to  New  York.  ' 

The  Chairman.  According  to  Mr.  Hicksou's  statement,  he  regards 
Ihat  sort  of  shipment  entirely  under  the  iuterstate  commerce  act. 

Mr.  Felton.  I  am  now  speaking  of  the  Canadian  Pacific. 

The  Chairman.  But  [  am  giving  vou  the  view  Mr.  Hickson  takes  of 
his  road  obeyiug  the  law  under  this  state  of  affairs. 

Mr.  Felton.  All  right,  sir. 


THE  UNITED  STATES  AND  CANADA.  127 

THE  GRAND  TRUNK'S  TRAFFIC  FROM  CHICAGO. 

The  Chairman,  There  has  been  a  vast  increase  in  the  traffic  carried 
by  the  Grand  Trunk  this  year  as  compared  with  the  previous  year.  What 
have  you  to  say  about  that? 

Mr.  Felton.  Mr.  King  referred  to  the  dead  freight  movement  on  the 
Chicago  and  Grand  Trunk  out  of  Chicago.  It  has  been  quite  heavy  so 
far  in  1889. 

The  Chairman.  Has  the  freight  been  heavier  than  heretofore  ? 

Mr.  Felton.   fes,  sir;  running  up  one  week  to  39  per  cent. 

The  Chairman.  What  is  the  explanation  of  that? 

Mr.  Felton.  I  do  not  know.  I  am  not  as  familiar  with  the  situation 
at  Chicago  as  I  am  at  this  end,  but  I  have  no  doubt  you  will  get  some 
explanation  from  Mr.  Newell  and  Mr.  Ledyard,  who  are  more  directly 
interested  in  that  question,  as  they,  in  connection  with  the  Pennsylvania 
road,  control  the  strong  roads  out  of  Chicago.  They  are  directly  in 
competition  with  the  Grand  Trunk  system,  and  can  probably'  give  yo 
some  explanation  of  it.  That  business  does  not  go  altogether  through 
Canada,  or  at  least  it  does  not  stay  in  Canada.  It  is  distributed  at  the 
Niagara  frontier,  and  some  of  it  comes  to  Boston  and  Portland  and 
New  York. 

Senator  (jORMAN.  Can  that  enormous  increase  be  accounted  for  by 
the  increased  facilities  of  the  Grand  Trunk  at  Chicago? 

Mr.  Felton.  I  have  never  inspected  their  facilities  at  Chicago.  I 
do  not  know  what  they  are  as  compared  with  the  other  lines  there. 

The  Chairman.  You  mean  at  Chicago  ? 

Mr.  Felton.  Yes,  sir. 

The  CHAIR3IAN.  They  have  as  good  facilities  as  any  road  running 
into  that  city. 

Senator  Gorman.  I  understand  you  to  say,  Mr.  Felton,  that  unless 
an  inducement  is  offered  the  Grand  Trunk  would  not  get  this  vast  in- 
crease as  compared  with  the  other  lines. 

Mr.  Felton.  There  must  be  a  reason  for  it. 

The  Chairman.  But  you  do  not  know  what  it  is,  do  you  ? 

Mr.  Felton.  I  do  not;  I  am  not  familiar  with  that  end  of  the  line. 

Senator  Gorman.  As  a  railroad  expert  and  being  very  well  informed 
of  the  facilities  offered  by  the  different  trunk  lines,  is  it  reasonable  to 
account  for  this  extraordinary  increase  by  simply  saying  the  Grand 
Trunk  have  increased  their  terminal  facilities  at  Chicago? 

Mr.  Felton.  1  should  not  think  that  would  be  a  very  good  exi)lana- 
tion.  1  heard  a  gentleman  before  the  Interstate  Commerce  Commission 
explain  that  the  reason  he  carried  nearly  all  the  grain  to  New  York 
was  because  he  had  a  great  many  emj^ty  cars.  I  do  not  think  the  Com- 
mission thought  that  a  sufiflcient  reason,  especially  when  the  other  lines 
had  empty  cars  everywhere. 

Senator  Blair.  Do  you  know  how  long  the  Grand  Trunk  have  had 
these  superior  terminal  facilities  at  Chicago  ?  Would  these  facilities 
account  for  this  sudden  increase,  in  your  opinion? 

Mr.  Felton.  I  asked  Mr.  Hickson  the  same  question,  and  he  gave 
me  the  same  answer  he  gave  you.  He  told  me,  and  I  have  been  given 
to  understand  the  same  thing,  that  they  have  recently  secured  hopper 
scales  for  transferring  grain.  They  take  the  grain  out  of  the  \A  estern 
car,  weigh  it,  put  it  in  the  Eastern  car,  get  the  weight,  and  issue  a  bill 
of  lading,  and  the  whole  thing  is  done  very  promi)tly.  But  whether 
that  would  make  any  very  great  difference  in  the  tonnage  that  goes  over 


128  TEANSPORTATION    INTERESTS    OF 

that  road  I  do  not  know.    If  it  did,  I  should  think  the  other  roads 
would  get  the  hopper  scales  very  soon. 

Senator  Gorman.  Is  it  not  perfectly  safe  to  assume  if  the  Pennsyl 
vania  road,  or  the  Erie  road,  or  the  Baltimore  and  Ohio,  or  the  Grand 
Trnnk  suddenly  increased  their  business  one-half  on  dead  freiglit  or  on 
any  class  of  freight  that  there  had  been  an  inducement  offered  to  the 
shipper  in  the  way  of  a  drawback  or  otherwise. 

Mr.  Felton.  I  have  never  known  it  to  be  otherwise.  It  has  gener- 
ally turned  out  in  the  end,  after  an  investigation,  that  there  has  been 
some  manipulation.     In  the  old  days  of  the  pool  we  so  found  it. 

Senator  Gorman.  Now,  applying  it  to  the  through  grain  from  Chi- 
cago to  Liverpool,  is  it  within  reasonable  bounds  to  suppose  that  the 
difference  could  be  made  by  the  steam-ship  from  Portland  to  Liverpool 
so  much  less  than  from  New  York  to  Liverpool  ? 

Mr.  Felton.  VVell,Idonotknow.  That  question  is  a  very  difficult  one 
to  answer.  The  Pennsylvania  liailroad  have  a  steam-ship  line  of  their 
own,  practically,  or  one  with  wiiich  they  have  such  close  relations  that  it 
amounts  to  a  control;  and  they  name  ratesout  of  Chicago  to  Liverpool, 
and  the  Grand  Trunk  name  just  about  the  same.  Then  when  the  Grand 
Trunk  name  the  rate  first,  the  Pennsylvania  follow.  They  are  the  only 
two  roads  that  have  relations  with  steam-ship  lines  other  than  the  rela- 
tions we  all  had. 

What  the  understanding  between  those  two  lines  and  their  steam- 
ship connections  was  I  do  not  know,  but  the  fact  was  that  they  both 
got  about  the  same  rates,  and  we  could  not  get  anything  likens  low 
rates.  The  New  York  Central  with  all  their  facilities  here  could  not 
meet  tliem,  the  Erie  could  Lot  meet  them,  the  Baltimore  and  Ohio  could 
not  meet  them. 

Senator  Gorman.  What  is  your  explanation  of  it?  I  would  like  to 
have  your  opinion  of  it. 

Mr.  Felton.  My  theory  has  always  been,  and  it  is  only  a  theory, 
that  there  was  some  understanding  or  contract  or  agreement  between 
the  railroads  and  those  steam-ship  lines  by  which  the  railroads  made  up 
to  them  their  loss,  or  guarantied  certain  results  from  their  oi)erations, 
which  was  practically  the  same,  and  under  that  guaranty  tlie  steam- 
ship was  willing  to  make  whatever  concession  was  necessary  to  get  the 
traffic.     I  think  that  is  generally  accepted  as  the  correct  explanation. 

The  Chairman.  I  was  handed  a  paper  a  few  minutes  ago,  from  which 
I  make  the  following  extract : 

The  east-bound  shipments  of  Hour,  grain,  and  provisions  last  week  by  the  lines  in 
the  Central  Traffic  Association —  T 

What  is  that  Central  Traffic  Association  ? 

Mr.  Felton.  It  is  an  association  that  controls  most  of  the  lines  lead- 
ing east  from  Chicago. 

The  Chairman  : 

ao:gregated  14,163  tons,  against  10,149  for  the  preceding  week,  a  decrease  of  I,!'- 
tons,  and  against  ;V2,.!  13  for  the  corresponding  week  last  year,  a  decrease  of  18,1 
tons.     The  Vauderbiit  lines  carried  49  per  cent,  of  the  total  business,  the  TennNVi- 
vauia  lines,  22.5  ;  the  Chicago  and  Grand  Trunk,  17.9  per  cent. ;  the  Baltimore  and 
Ohio,  10.0  per  cent. 

So  it  seems  that  the  proportion  varies  from  time  to  time. 

Mr.  Felton.  It  would  be  very  interesting  for  vou  to  get  those  week : . 
statements  from  the  1st  of  January  and  to  note 'the  course  of  the  trail 
during  that  time. 

Senator  Gorman.  Get  them  from  Mr.  Fink  t 


THE  UNITED  STATES  AND  CANADA.  129 

Mr.  Felton.  If  you  are  goiug  west  you  cau  get  them  in  Chicago. 
The  Board  of  Trade  stateineuts  are  really  the  correct  ones,  because  they 
embrace  all  the  lines.  The  Central  Traffic  Association  statements  do 
not  embrace  all  the  lines. 

Senator  Blair.  That  statement  is  not  conj&ned  to  dead  freight,  is  it! 

Mr.  Felton.  Yes,  sir  ,•  that  is  supposed  to  apply  to  the  dead  freight. 

OBSERVANCE  OF  THE  INTERSTATE  LAW. 

Senator  Blair.  I  would  like  to  ask  your  opinion  upon  one  point,  and 
that  is,  what  your  opinion  has  been,  from  your  experience  heretofore,  as 
to  the  observance  of  the  interstate-corn mefce  law  ?  Have  you  under- 
stood and  believed  that  the  interstate-commerce  law  was  observed  by 
the  Canadian  roads  since  it  went  into  operation  ? 

Mr.  Felton.  It  has  been  very  difficult  to  get  any  information  about 
it,  and  we  could  not  tell  what  they  were  doing,  if  they  were  doing  any- 
thing. 

Senator  Blair.  Have  you  had  an  impression  that  they  were  observ- 
ing it,  as  were  the  American  lines  ? 

Mr.  Felton.  I  have  had  an  impression  that  they  have  been  observ- 
ing it  since  the  2d  of  March. 

Senator  Blair.  How  was  it  prior  to  that  1 

Mr.  Felton.  I  do  not  think  they  observed  it  any  more  than  the 
American  lines. 

Senator  Blair.  Well,  did  they  observe  it  to  the  extent  the  American 
roads  did  ? 

Mr.  Felton.  I  could  not  answer  that. 

Senator  Blair.  Did  the  American  lines  really  pay  any  attention  to 
it  before  the  2d  of  March  ! 

Mr.  Felton.  I  think  they  did  immediately  following  the  passage  of 
the  law  until  the  fall,  and  then  I  do  not  think  they  paid  any  attention 
to  it  until  the  f.ill  of  1888. 

Senator  Blair.  Why  did  they  cease  to  observe  it  until  the  law  was 
made  more  stringent,  until  the  penalties  were  attached  to  violations? 

Mr.  Felton.  When  it  was  new  everybody  thought  that  the  Ivw  was 
going  to  be  enforced,  and  nobody  wanted  to  be  the  first  to  violate  the 
law.  We  all  tried  to  mantaiu  rates  and  see  what  the  result  would  be. 
Then  some  lines  commenced  to  develop  new  plans  for  evading  the  law, 
which  were  perhaps  not  direct  violations,  and  then  business  became  dis- 
turbed, and  one  line  followed  another  until  everything  became  loose. 
Before  the  law  was  enacted  a  man  was  paid  a  rebate  of  5  cents  a  hun- 
dred pounds  to  get  his  business.  Que  of  the  first  things  that  developed 
after  the  passage  of  the  act  was  that  that  same  man's  clerk  was  under 
salary  from  a  railroad  and  getting  ten  or  twelve  or  fifteen  thousand  dol- 
lars a  year,  and  it  was  not  hard  to  imagine  where  that  money  went. 

The  Chairman.  A  clerk  in  the  railroad  employ,  do  you  mean  ? 

Mr.  Felton.  Xo,  sir;  a  clerk  in  the  employ  of  a  shipper.  After 
that  allowances  were  made  for  the  use  of  terminals,  for  carting  and  for 
draying,  and  all  that  sort  of  thing. 

The  Chairman.  By  the  different  railroads  ? 

Mr.  Felton.  Yes,  sir  j  and  finally  the  Commission  commenced  to  ap- 
preciate what  was  going  on,  and  suggested  some  amendments  to  the 
law,  which  had  the  effect  of  scaring  these  people  badly,  and  I  think 
they  stopped  it. 

Senator  Blair.  If  nobody  is  prosecute^  m^ev  tbe  law,  there  IkS  no 
result  from  the  law, 

6543 9 


130  TRANSPORTATION   INTERESTS   OF 


Mr.  Felton.  IsTo  result. 

Senator  Blair.  Somebody  has  to  be  hung. 

Mr.  Felton.  I  think  the  Commission  should  put  somebody  m  jail,  or 

impose  a  fine.  r.    •  ,  .•        ^  i         ,4.1 

Senator  Blair.  Do  you  know  any  case  of  violation  of  law  where  thoy 

might  apply  it"?  ,  ,         ,    , 

Mr.  Felton.  No,  sir;  I  do  not  from  my  personal  knowledge. 

The  Chairman.  How  is  it  that  men  engaged  in  railroading  are  so 
prone  to  violate  the  law  when  they  think  they  are  not  to  be  punished? 
Other  people  obey  the  law  just  because  they  think  they  ought  to. 

Senator  Hiscock.  Are  you  sure  about  that? 

The  Chairman.  There  seems  to  be  a  different  rule  with  reference  to 
railroad  men,  for  they  only  obey  the  law  when  they  fear  punishment 
for  its  violation. 

Mr.  Felton.  Well,  there  are  a  great  many  lines  in  this  country  that 
do  not  do  enough  business  to  keep  them  going,  and  the  railroad  people 
have  to  watch  the  corners  closely  to  keep  up  earnings  and  to  meet  fixed 
charges  and  pi^y  dividends,  and  when  they  ti.id  trallic  leaving  them  , 
they  make  an  investigation  and  discover  tliat  the  trallic  is  leaving  them 
because  there  is  a  manipulation  of  the  rate,  and  the  result  is  tiiat  the 
road  losing  the  trafiic  meets  the  rates  of  tlie  road  getting  it  in  order  to 
bring  the  traffic  back,  and  in  that  way  they  go  from  bad  to  worse. 

legalized  pooling. 

The  Chairman.  If  the  railroad  employes  all  obeyed  the  law,  do  you 
think  that  you  would  fare  better  ? 

Mr.  Felton.  Yes,  sir;  I  think  we  would  all  fare  better  and  we  would 
have  more  money,  and  1  think  if  we  couhl  have  some  fair  way  of  pro- 
tecting what  are  linown  as  the  weaker  lines,  under  that  hiw,  its  opera- 
tion would  be  periect. 

The  Chairman.  Like  the  other  gentlemen,  .vou  come  back  to  the 
proposition  of  pooUng  as  a  remedy  lor  the  situation.  ■ 

Mr.  Felton.  Legalize  pooling  under  the  restrictions  that  tlie  Inter-  I 
state  Commerce  Commission  would  like  to  throw  about  it.     I  take  it 
from  the  Erie  Kailroad  statistics  that  money  belonging  to  us  has  gone 
to  the  Pennsylvania  and  to  the  New  York  Central,  the  strong  lines. 

The  Chairman.  If  your  road  did  not  exist  at  all,  would  the  public  be  , 
as  well  cared  for  ?  j 

Mr.  Felton.  No,  sir ;  indeed  they  would  not.  \ 

The  Chairman.  Would  it  have  business  enough  along  its  line  that  i 
legitimately  belongs  to  it  to  legitimately  sustain  it  ? 

Mr.  Felton.  No,  sir. 

The  Chairman.  How  much  does  it  lack  of  it? 

Mr.  Felton.  It  is  very  hard  to  separate  the  strictly  local  business  • 
from  through  business;  but  the  Erie  road  as  originally  built,  if  confined 
withm  Its  own  limits,  probably  would  have  had  enough  bu.siness  origi- 
nating on  Its  own  line,  or  at  either  end,  to  take  care  of  the  jjroperties 
existing  then;  but  it  has  grown  and  stretched  out  for  through  business 
and  leased  and  built  lines  and  must  have  through  business  to  sup-  I 
port  it.  ' 

The  Chairman.  That  stretching  out  was  a  mistake,  was  it  not? 

Mr.  Felton.  No;  I  do  not  think  so.  I  think  that  stretching  out 
was  the  natural  outcome  of  all  the  lines  stretching  out  in  the  West. 
The  Pennsylvania  acquired  lines  and  extended  tiieir  route  to  Chicago, 
and  the  Erie  had  to  extend  its  line  West  or  drop  back  into  the  position 


THE    UNITED    STATES    AND    CANADA.  131 

of  a  local  road.  Most  of  the  expenditures  were  made  by  absorbing  lines 
in  existence.  The  Baltimore  and  Ohio  built  a  line  West  as  an  exten- 
sion to  part  of  its  original  line.  The  Vanderbilts  acquired  lines  already 
in  existence,  and  the  Erie  leased  and  built  lines.  The  Pennsylvania 
did  not  build  a  mile  of  new  line  to  reach  Chicago. 

Senator  Gorman.  In  legalizing  the  pool  would  you  go  as  far  as  to 
regulate  the  rates  to  be  fixed  by  the  railroads  by  first  getting  the  ap- 
proval of  the  Commission? 

Mr.  Felton.  I  would  not  hesitate  to  do  that. 

Senator  Gorman.  So  that  the  public  would  participate  in  fixing  the 
rate. 

Mr.  Felton.  We  would  have  stable  rates  then,  because  a  pool  that 
was  legalized  would  be  one  that  we  could  rely  on  always.  No  one 
would  violate  it,  because  there  would  be  no  object  in  doing  it. 

Senator  Gorman.  If  that  were  done  would  not  the  public  be  more 
thoroughly  protected  than  it  is  to  day"? 

Mr.  Felton.  It  would,  because  the  public  to-day  suifer  from  the 
manipulation  of  rates.  Prior  to  the  2d  of  March  I  tliink  the  public  suf- 
fered a  great  deal.  I  know  of  grain  brought  to  New  York  at  a  straight 
cut  of  2  cents  per  hundred  pounds.  The  shipper,  therefore,  on  tliat 
line  had  a  great  advantage  over  his  competitor,  because  the  other  lines 
would  not  make  any  reduction. 

Senator  Blair.  If  this  were  done  through  the  Commission  the  i)ub- 
lic  would  be  represented;  that  is,  the  people  and  the  railroad  would 
agree  upon  tariffs  together,  and  it  would  be  the  work  of  the  two  par- 
ties. 

Mr.  Felton.  Yes;  if  in  the  hands  of  the  Commission. 

Senator  Blair.  By  the  method  suggested  the  people  would  agree 
through  the  Commission. 

Mr.  Felton.  Yes,  sir. 

Senator  Gorman.  Is  it  not  a  fact  that  there  has  been  very  much  less 
discrimination  and  favoritism  in  the  way  of  giving  these  special  draw- 
backs to  individuals  and  firms  sin(;e  the  passage  of  this  act  than  was 
the  case  prior  to  it  ? 

Mr.  Felton.  Since  the  passage  of  the  original  act  ? 

Senator  Gorman.  Yes. 

Mr.  Felton.  Yes,  sir;  I  should  say  so,  treating  the  two  years  as  a 
whole. 

The  Chairman.  Did  they  not  stop  rebates  almost  universally  for  a 
time  ? 

Mr.  Felton.  Yes,  sir ;  for  five  or  six  months.  Then  they  discovered 
ways  to  avoid  the  law. 

The  Chairman.  Do  you  think  they  have  now  got  back  to  as  reckless 
a  condition  as  existed  before  the  passage  of  the  law? 

Mr.  Felton.  Verj-  nearly  so,  betbre  March.  That  demoralization  of 
last  summer,  1  think,  you  can  charge  partially  to  our  Canadian  connec- 
tions. 

The  Chairman.  You  can? 

Mr.  Felton.  Yes;  it  was  in  connection  with  the  lake  and  rail  and 
Canadian  lines  from  New  England  west  bound.  They  made  a  reduction 
in  rates  from  Boston,  and  New  York  had  to  go  below  its  usual  rate; 
otherwise  New  York  would  be  charging  higher  than  Boston,  and  so  it 
led  to  as  much  demoralization  of  our  west-bound  business  as  we  had  at 
any  time  in  the  last  five  years. 

Senator  Gorman.  Then,  as  I  understand,  you  are  an  advocate  of 
maintaiuiug  a  system  of  governmental  supervision  of  rates  f 


132  TRANSPORTATION    INTERESTS    OF 

Mr.  Felton.  Yes,  sir. 

Senator  Gorman.  And  the  pool— I  use  the  vrovd  in  Ihe  railroad 
sense— should  be  legalized,  and  the  rates  made  under  tbat  pool  should 
be  submitted  first  to  the  approval  of  the  Interstate  Counnerce  Commis- 
sion, and  then  after  that  approval  be  put  in  force.  That,  you  think, 
would  be  an  effectual  remedy  for  existing  evils  ? 

Mr.  Felton.  Yes,  sir;  that  would  i)rotect  the  weak  lines,  and  with- 
out that  protection  I  do  not  see  how  you  are  to  stop  demoralization  in 

rates. 

Senator  Gorman.  Under  that  system  you  say  it  would  afford  abso- 
lute uniformity  and  prevent  the  larger  lines  from  absorbing  the  weaker 
lines,  such  as  the  Baltimore  and  Ohio,  the  Erie,  and  so  on  ? 

Mr.  Felton.  Yes,  sir. 

Senator  Gorman.  And  the  result  of  that,  in  your  opinion,  would  be 
what? 

Mr.  Felton.  That  the  public  would  have  just  as  low  rates  as  now, 
undoubtedly.  The  public  would  have  a  greater  stability  of  rates  and 
the  weaker  roads  would  be  able  to  give  the  public  better  service,  for 
the  reason  that  if  they  had  fair  earnings  they  could  spend  more  money 
on  their  properties.  As  it  is  now  they  have  to  save  in  every  way  pos- 
sible, and  that  injures  their  service  and  hurts  the  public,  and  the  pub- 
lic suffer  with  the  railroads. 

WATER  competition. 

Senator  Gorman.  In  making  up  your  through  rates  1m)W  much  of  a 
factor  is  the  Erie  Canal  and  the  transportation  down  the  lakes  and 
through  the  Canadian  canals  and  by  the  j\Iississii)pi  Kiver  in  determin- 
ing the  question  ? 

Mr.  Felton.  During  the  season  of  navigation,  when  the  lake  and 
the  Erie  Canal  are  open,  we  jiractically  ignore  the  water  transporta- 
tion in  making  the  all-rail  rate.  We  do  not  hope  or  pretend  to  com- 
pete with  the  water  rate,  and  look  only  to  the  trallic;  which  comes 
through  by  rail.  We  get  quite  a  large  business  from  lUiff'alo  during 
the  season  of  navigation,  and  that  is  in  competition  with  the  Erie 
Canal. 

Senator  Gorman.  So  it  is  a  trifling  fiictor  on  a  large  proportion  of  the 
freight. 

Mr.  Felton.  Yes,  sir,  during  the  season  of  navigation;  but  it  would 
be  out  of  the  question  for  a  line  from  Chicago  to  New  York  to  attempt 
to  meet  the  water  competition  between  those  two  points,  so  they  do 
not  try  to  do  it. 

Senator  Blair.  What  is  the  actual  difference  in  cost  of  transporta- 
tion by  water  and  by  rail  ? 

Mr.  Felton.  It  varies  from  day  to  day.  It  is  as  low  as  they  can  put 
it.     Sometimes  I  have  known  it  to  be  40  per  cent,  of  the  alTrail  rate. 

Senator  Blair.  That  is,  for  these  six  or  eight  months  of  the  year ! 

Mr.  Felton.  Yes,  sir. 

Senator  Gorman.  Between  the  improvement  of  the  canals  and  the 
enlargement  of  these  Canadian  water-ways  has  it  had  anv  decided 
effect  during  the  summer  months  in  diverting  trade  from  our  American 
ports  ?  " 

Mr.  Felton.  That  has  not  affected  our  business  so  much  as  it  has 
the  business  of  the  northern  lines.  1  think  you  will  get  information  on 
that  subject  from  the  New  England  roads  and  from  the  Michigan  Cen- 
wai,  and  the  iTew  York  Central  too,  probably,    Those  Hues,  being  iu- 


THE   UNITED   STATES   AND   CANADA.  1,^3 

terested  in  the  northern  New  England  business,  feel  it  more  than  we 
do.    We  do  not  feel  it  much  at  New  York. 

THE  DIVISION   OF  TRAFFIC. 

Senator  Harris.  You  say  you  recommend  the  legalizing  of  pooling; 
how  would  you  settle  shortages  1  What  would  be  your  recommenda- 
tion as  to  settling  shortages  and  taking  care  of  the  weaker  roads'? 

Mr.  Felton.  My  preference  would  be  simply  to  turn  the  traffic  over 
and  let  each  road  actually  carry  its  share  of  traffic.  But  as  the  shippers 
object  generally  I  think  the  next  best  thing  would  be  to  regulate  it  by 
cash  payments.  One  of  the  principal  reasons  why  the  shippers  objected 
to  the  diversion  of  their  business  before  the  passage  of  the  law  was  on 
account  of  concessions  that  they  were  receiving.  Now,  with  a  strict 
maintenance  of  rates,  I  do  not  know  that  they  would  care  so  much 
about  it.     It  might  be  a  practicable  plan. 

Senator  Harris.  Tlien  you  think  you  are  drawn  towards  the  conclu- 
sion of  settling  shortages,  where  they  occur,  in  cash. 

Mr.  Felton.  I  say  I  do  not  know  but  what  you  could  do  it  by  trans- 
ferring the  business. 

Senator  Hiscock.  Is  it  not  true,  following  out  the  suggestion  of 
Governor  Harris,  that  if  you  legalize  pooling  and  adopt  the  plan  of* 
settling  the  shortages  of  transportation  in  cash,  it  would  make  it  for 
the  interest  then  of  all  the  railroads — of  all  the  weak  railroads — to 
carry  just  as  little  as  they  could,  instead  of,  in  fact,  doing  all  the  trans- 
portation they  could  ?  Would  they  not  be  entirely  willing  that  the 
stronger  and  better  roads  should  carry  the  traffic,  and  would  not  this 
tend  to  close  up  transportation  on  the  weaker  roads  and  force  the 
stronger  roads  to  carry  it? 

Mr.  Felton.  That  was  the  only  reason  T  had  in  saying  that  I  pre- 
ferred if  it  could  be  adjusted  to  transfer  the  business,  and  if  that  could 
not  be  done  my  second  preference  would  be  to  settle  in  cash.  That 
could  be  left  in  the  hands  of  the  Commission  to  change  the  proportions 
if  they  found  it  expedient  to  do  so. 

Senator  Harris.  If  a  settlement  were  made  according  to  that 
method  the  stronger  road  that  carried  an  excess  of  freight  would  carry 
a  portion  of  that  freight  without  compensation,  and  the  weak  road  re- 
ceive a  bonus  without  doing  anything  whatever  towards  the  transporta- 
tion of  that  excess  of  freight. 

Mr.  Felton.  The  stronger  roads  in  the  old  time  carried  it  for  nothing, 
expecting  that  in  some  uew  re-adjustment  of  the  pool  they  would  get 
an  increased  percentage.  Under  the  operation  of  the  law,  with  a  legal- 
ized pool,  they  could  not  work  with  any  such  thing  in  view.  They 
would  not  want  to  do  business  for  nothing. 

Senator  Harris.  If,  as  a  matter  of  fact,  your  road  fell  short  to  any 
amount,  and  the  New  York  Central  had  to  pay  you  the  amount  of  your 
shortage,  to  that  extent  the  New  York  Central  would  have  carried  that 
freight  without  compensation,  and  you  would  have  received  the  com- 
pensation for  service  that  you  had  not  rendered.     Is  not  that  true "? 

Mr.  Felton.  Yes,  sir;  but  the  New  York  Central  would  not  continue 
that  more  than  one  month.  They  would  very  easily  find  a  way  to  con- 
flue  themselves  to  their  share  of  the  traffic,  and  these  fluctuations  would 
not  exist  under  a  straight  maintenance  of  rates. 

Senator  Harris.  Then,  against  the  will  of  the  shipi)er,  you  would 
force  the  freight  upon  a  road  diiferent  from  the  one  the  freighter  desired 
to  ship  it. 


134  TRANSPORTATION  INTERESTS   OF 

Mr,  Felton.  I  say  if  it  could  be  arranged  satisfactorily  to  even  up 
the  business  it  would  be  the  best  way,  but  if  you  are  going  to  have 
trouble  with  the  shipper  by  so  doing  1  say  settle  in  cash.  If  a  road  did 
a  large  excess  of  business  it  might  pay  tlie  first  mouth,  but  they  would 
fiud  it  very  inconvenient  to  run  ahead  afterward,  so  they  would  curtail 
their  business. 

Senator  Blair.  Would  it  not  be  as  far  as  the  law  ought  to  go  to  pro- 
vide that  there  may  be  differential  tarritt's  to  be  approved  by  the  Commis- 
sion and  enforced  by  the  law?  Would  not  that  be  as  far  as  the  Govern- 
ment ought  to  go,  so  that  yim  would  then  have  the  advantage  of  atarift" 
which  should  be  adapted  to  your  capacity  to  transport  and  to  compete? 
With  such  a  tariff  protected  by  the  law  you  could  go  into  tlie  tield  and 
get  paid  for  what  you  did  and  only  for  what  you  did.  Would  not  that 
be  as  far  as  the  law  ought  to  go,  and  would  not  that  be  suflicicnt? 

Mr.  Felton.  That  might  work  serious  damage  to  the  public  on  the 
east-bound  freight  traftic,  because  that  traflic  is  not  like  the  west- 
bound. Take  parties  shipping  tlour  or  grain,  if  you  please,  and  who 
might  get  a  differential  of  1  or  2  cents  by  the  Erie,  they  would  have  an 
advantage  over  the  other  shii)pers. 

Senator  Blair.  But  that  would  have  to  be  ai)proved  first  by  the 
Commission,  and  all  these  questions  as  to  what  would  be  fair  and  right 
Vould  be  taken  into  account  in  fixing  the  taritl".  Is  it  not  enough  for 
the  law  to  provide  that  the  public  shall  be  rei)resented  in  the  original 
adjustment  of  the  tariff,  the  i)ublic  and  the  railroads  to  make  that  tariff, 
and  this  law  to  enforce  that  tariff".  Is  not  that  all  that  ought  to  be 
done? 

Mr.  Felton.  You  are  a  better  judge  of  that  than  I  am. 

Senator  Blair.  I  ask  your  opinion  from  a  railroad  stand-point  and  as 
a  citizen. 

Mr,  Felton.  I  think  the  practical  result  of  that  would  not  be  as  good 
as  a  legalized  pool,  because  you  would  really  have  fluctuations  through 
the  dilierential. 

Senator  Blair.  How  could  that  be,  when  you  have  the  same  tariff  for 
all  roads? 

Mr.  Felton.  We  uow  have  a  differential  on  the  first  class  from  Chi- 
cago to  New  York.  The  :N^ew  York  Central  can  make  the  distance  in  a 
day  quicker  than  we  can. 

Senator  Blair.  Could  they  not  do  that  under  the  law  as  it  now  is  ? 

Mr.  Felton.  Now,  that  does  not  apply  to  grain  and  flour  east- 
bound. 

Senator  Blair.  Make  the  tariff  to  suit  the  traffic  east-bound;  make 
the  differentials  where  they  ought  to  be  made,  and  let  the  tariff  be  a 
common  tariff  for  all.  Or,  in  other  words,  make  a  tariff"  for  each  road 
just  as  it  ought  to  be  and  the  public  be  a  party  to  it,  just  as  now  the 
railroad  people  do  it  among  themselves. 

Mr.  Felton.  I  can  not  help  feeling  that  it  would  make  considerable 
complaint,  and  I  think  I  can  illustrate  it  in  this :  say  there  is  a  flour 
mill  on  the  Pennsylvania  railroad  somewhere  near  Chicago,  taking  Chi- 
cago rates.  Now,  that  man  is  selling  his  flour  in  New  York.  He  finds 
that  the  Erie  road  in  Chicago  is  being  patronized  by  his  competitor,  or 
may  be  his  competitor  is  shipi)ing  by  the  Baltimore  and  Ohio  or  by  any 
line  running  out  of  Chicago  which  is  getting  a  ditt"erential,  while  he  has 
to  pay  the  full  rate  to  the  Pennsylvania  Railroad.  Whereas  if  you  give 
unitorm  rates  all  around  1  believe  you  would  get  better  results. 

Senator  Blair.  You  are  dealing  now  with  a  man  who  pays  the  tar- 
iff rate,  *    "^ 


THE    UNITED    STATES    AND    CANADA.  135 

Mr.  Felton.  The  pool  would  have  this  result,  that  the  Pennsylvania 
Railroad  taking  one  hundred  cars  a  month  from  that  man's  mill  would 
have  that  traffic.  It  is  on  their  line,  it  belongs  to  them.  Then  there 
would  be  one  hundred  cars  less  taken  out  of  Chicago  than  otherwise, 
and  in  the  aggregate  each  road  would  carry  its  share  of  the  business. 

Senator  Blair.  But  you  are  looking  at  this  from  the  stand-point  of 
the  railroad  entirely,  are  you  not  ? 

Mr.  Felton.  No,  sir ;  I  am  looking  at  it  from  the  rail  road  stand-point 
only  in  this  way,  that  to  my  mind  we  should  give  each  Jine  its  fair  pro- 
portion of  traffic  and  protect  the  weaker  line  by  legalizing  the  pool.  In 
order  to  protect  the  weaker  as  against  the  stronger  you  must  keep  the 
shipper  satisfied,  and  I  believe  the  shipper  is  better  satisfied  with  uni- 
form rates  by  all  lines.  A  i^ool  would  govern  the  rates  on  all  lines.  If 
the  Pennsylvania  have  25  per  cent,  of  the  business  they  would  say  to  the 
Western  counections,  "  do  not  engage  to  carry  more  than  the  25  per 
cent."  But  if  you  have  a  differential  you  do  an  injustice  to  this  man  who 
has  only  one  line  to  ship  by,  while  his  competitor  in  Chicago  has  three 
or  four  lines  by  which  to  ship. 

Senator  Blair.  In  other  words,  he  is  satisfied  when  he  lives  in  a  lo- 
cality that  has  a  disadvantage  in  situation,  if  he  is  to  pay  the  same  rate 
of  freight  as  the  man  who  is  better  situated. 

Mr.  Felton.  The  rates  are  made  from  districts  in  the  West.  For 
instance,  certain  points  take  Chicago  rates,  and  certain  other  points 
take  a  less  percentage  than  Chicago.  The  individual  who  has  mills  lo- 
cated exclusively  on  one  trunk  line  that  changes  the  full  rate  is  at  a 
disadvantage  compared  with  a  man  who  has  several  trunk  lines  to  do 
his  transportation  at  differential  rates. 

Senator  HiscocK.  Your  examination  has  suggested  to  me  this  objec- 
tioif  to  pooling,  that  it  would  break  down  or  destroy  or  impair  the  ri- 
valry which  now  exists  between  the  railroads  in  improving  their  methods 
of  transportation,  quickening  the  time  of  transportation  and  improving 
their  terminal  facilities.  As  it  is  now,  you  agree  on  a  freight  schedule 
all  the  way  through,  then  instantly  there  grows  up  a  sharp  competition 
between  the  railroads  for  the  freight,  growing  out  of  their  power  to  de- 
liver more  promptly — travel  on  faster  time,  improved  appliances  for  the 
delivery  of  the  freight  and  all  that  sort  of  thing,  with  a  view  to  con- 
trolling the  volume  of  freight  that  is  transported.  It  seems  to  me  that 
your  examination  has  suggested  to  me  that  objection  to  pooling. 

Mr.  Felton.  It  never  suggested  it  to  my  mind,  sir. 

Senator  Hiscock.  Does  it  not  now! 

Mr.  Felton.  I^o,  for  this  reason;  that  the  improvement  in  the  con- 
dition of  our  roads  and  in  our  train  service  are  improvements  that  we 
make  when  we  have  net  earnings.  Under  the  present  law  those  im- 
provements are  made  by  the  Pennsylvania  and  the  iSTew  York  Central; 
the  other  lines  can  uot  afford  it. 

Senator  Hiscock.  But  you  destroy  the  inducements  to  the  New 
York  Central  and  the  Pennsylvania  and  the  other  roads  to  improve 
their  tracks  and  improve  their  cars  and  quicken  their  time  of  trans- 
portation, and  improve  terminal  facilities  if  you  legalize  the  pool. 

Mr.  Felton.  I  think  as  a  railroad  problem  that  condition  always 
obtains  when  a  road  is  prosperous  enough  to  spend  the  money.  Every- 
thing tends  in  that  direction.  We  all  keep  up  with  the  procession  when 
we  can  afford  it. 

Senator  Hiscock.  Do  you  not  think  that  railroad  rivalry  has  done 
a  good  deal  to  improve  railroad  transportati"n? 

Mr.  Felton.  Yes,  sir. 


136  TRANSPOETATION  INTERESTS   OP 

Senator  HiscocK.  'Sow,  when  you  establish  a  pool  you  destroy  rail- 
road rivalry? 

Mr.  Felton.  Look  back  at  the  improvements  of  the  last  ten  years 
and  you  will  see  that  is  not  so.  The  improvements  were  made  under 
the  pooling:  system. 

Senator  HiscocK.  If  there  is  any  objection  to  pooling  in  my  mind  it 
is  whether  you  do  not,  the  moment  you  make  all  the  trnnk  lines 
into  one  great  co  partnership,  destroy  the  necessity  of  rival  routes  to 
improve  in  all  the  departments  of  railroading.  If  that  be  a  subject 
upon  which  you  have  not  given  due  thought,  1  would  be  glad  to  have 
you  consider  it  and  advise  us  of  your  opinion  with  reference  to  it. 

Mr.  Felton.  I  would  be  glad  to  consider  it,  but  I  do  not  have  any 
fear  of  the  result.  1  think  the  question  of  improvement  is  one  that  will 
take  care  of  itself,  and  I  think  that  the  matter  of  railroad  improvement 
is  one  that  will  never  stop. 

At  5  o'clock  and  20  minutes  p.  m.  the  committee  adjourned  until  to- 
morrow at  10  o'clock  a.  m. 


New  York,  May  8,  1889. 
The  committee  met  at  10  o'clock  a.  m.,  pursuant  to  adjournment. 

STATEMENT  OF  CHARLES  FRANCIS  ADAMS. 

Mr.  Charles  Francis  Adams,  president  of  the  Union  I'acific  Kail- 
way,  appeared. 

The  Chairman.  Mr.  Adams,  I  will  first  ask  you  what  your  position 
is  now,  *  , 

Mr.  Adams.  I  am  president  of  the  Union  Pacific  Railway  Company 
and  its  associated  lines. 

The  Chairman.  How  long  have  you  been  president  of  that  road  ? 

Mr.  ADAMf<.  Five  years. 

The  Chairman.  What  are  the  terminals  of  the  main  line  and  of  its 
branches? 

Mr.  Adams.  The  Union  Pacific  system — for  it  has  to  be  considered  as 
such— includes  about  G,000  miles,"  and  its  terminals  are  Omaha  and 
Kansas  City  on  the  Missouri  River,  or  the  IMissouri  River  (owns,  in^  lud 
ing  Kansas  City,  Leavenworth,  Atchison,  St.  Joseph,  Omaha,  and  Sioux 
City,  on  the  east;  Denver,  in  the  mountain  legion :  Og«l»-n  and  Sait 
Lake  City,  in  the  Salt  Lake  Valley,  and  Portlan<l.  Oregon,  wIktc  we 
have  a  fleet  of  steamers  in  connection  with  tlie  Oregon  b'ailwav  and 
Navigation  Company,  to  supplement  our  work  on  the  Coluinl)ia  liiver; 
then  we  have  Butte,  in  Montana,  on  the  north. 

The  Chairman.  Those  are  the  terminals  of  all  the  roads  and  the  sys- 
tem, are  they  not? 

Mr.  Adams.  That  is  the  system.  The  Union  Pacific  in  itself  is  merely 
a  trunk  line. 

The  Chairman.  A  trunk  line?    It  begins  and  ends  where? 

Mr.  Adams.  At  Kansas  City  and  Omaha  on  the  east,  and  the  Mis- 
souri River  towns  and  Denver  and  Ogden  at  the  west. 

Senator  Platt.  At  Ogden  it  connects  with  the  Central  ? 

Mr.  Adams.  It  does. 

The  Chairman.  Will  you  oive  us  a  description  of  each  branch  road 
which  composes  the  system  over  which  vou  have  control,  where  they 
are  located  and  the  length  ?     You  have  stated  the  termini,  but  I  would 


THE    UNITED    STATES    AND    CANADA.  137 

like  to  have  tlie  terminals  of  each  road  stated  in  connection  with  its 
name  and  length. 

Mr.  Adams.  It  would  be  difficult  to  specify  them  in  detail,  there  are 
so  many  of  them,  due  to  the  fact  that  we  have  a  very  rigid  charter. 
Our  system  ought  long  ago  to  have  been  consolidated,  and  we  have  been 
obliged  to  carry  it  along  in  a  very  cumbersome  way.  The  Union  Pacific 
charter  contained  no  provision  for  expansion.  Congress,  in  1862,  seemed 
to  regard  what  was  then  done  as  a  finality  in  development. 

The  principal  lines,  branches,  and  connections  we  have  are  theUnion 
Pacific  proper,  the  consolidated  company  covering  about  1,G00  miles  of 
road  between  Omaha  and  Ogden  and  between  Kansas  City  and  Denver 
and  Cheyenne,  making  a  sort  of  ''H."  Then  there  is  the  Oregon  Short 
Line,  which  extends  from  a  point  near  Salt  Lake  to  Runtington,  in  Ore- 
gon, there  connecting  with  the  Oregon  Railway  and  Navigation  Com- 
pany, which  extends  from  Huntington  to  Portland,  and  is  leased  by 
the  Short  Line.  A  majority  of  the  stock  of  the  Short  Line  is  owned  by 
the  Union  Pacific,  so  that  it  is  part  of  the  Union  Pacific  system  and 
should  properly  be  consolidated  with  it  for  simplicity's  sake*. 

Then  we  have  a  line  running-  from  Salt  Lake  north  to  Butte;  and  be- 
yond these  there  are  several  smaller  agricultural  branches  and  mineral 
roads  which  are  feeders  of  the  Union  Pacific,  but  not  through  lines. 

The  Chairman.  The  total  length  or  mileage  of  the  whole  system  is 
about  how  much "? 

Mr.  ADA.MS.  The  total  length  is  about  6,000  miles,  in  round  numbers. 

The  Chairman.  What  are  your  connections  East  and  West"? 

Mr.  Adams.  At  Missouri  Kiver  ])oints  we  connect  with  all  the  Chicago 
and  eastern  lines,  and  at  the  west  our  main  connection  is  the  Central 
Pacific,  we  ourselves  reaching  Portland  by  our  system  of  leased  lines. 

The  Chairman.  You  do  not  mean  aside  from  the  Central  Pacific,  do 
you  ? 

Mr.  Adams.  Yes ;  by  the  Railway  Navigation  Company. 

The  Chairman.  What  is  the  length  of  those  leased  lines  ? 

Mr.  Adams.  The  Railway  Navigation  Company  has  between  600  and 
700  miles  of  road  in  all. 

The  Chairman.  You  have  a  ninety-nine  year  lease,  have  you  not  1 

Mr.  Adams.  Yes. 

Senator  Platt.  Do  you  have  a  San  Francisco  connection  except  by 
the  Central  Pacific  ? 

Mr.  Adams.  No;  that  is,  we  can  make  a  San  Francisco  conniectiou 
by  water  by  way  of  Portland,  which  we  sometimes  have  been  forced  to 
do  to  solve  certain  complications. 

Senator  Blair.  Is  the  Railway  Navigation  Company's  line  included 
in  the  6,000  miles  you  have  mentioned? 

Mr.  Adams.  Yes. 

The  Chairman.  Can  you  state  generally  the  range  of  your  local 
traffic,  and  the  points  at  which  you  meet  the  competition  of  the  ocean 
and  of  rival  railroads'? 

Mr.  Adams.  Tliere  are  very  few  i)oints  where  we  do  not. 

The  Chairman.  Where  you  do  not  meet  with  competition,  you  niean  ? 

Mr.  Adams.  Yes ;  very  few  points,  indeed.  There  may  be  a  few 
small  towns — certain  points  between  Cheyenne  and  Ogden — where  no 
competition  is  met.  We  meet  comi)etition,  active  competition,  acute 
competition,  at  every  point  east  of  Cheyenne  and  Denver.  There  is  no 
])art  of  our  road,  I  think  you  may  say,  that  is  not  subject  practicidly  to 
competition.  Beyond  Cheyenne,  500  miles,  we  meet  no  competition  on 
the  main  line  until  we  come  to  Salt  Lake  City.    There  we  again  meet 


138  TRANSPORTATION   INTERESTS   OP 

active  competition,  and  we  meet  active  competition  in  Montana  and  in 
Oregon.  Between  Cheyenne  and  Ogden  we  meet  no  activ^e  competition, 
but  there  is  very  light  business.  It  is  a  njountain  region  and  there  is 
really  very  little  to  compete  for  except  our  local  business.  That  is  a 
very  valuable  business,  and  will  become  very  much  more  so  as  time 
goes  on. 

The  Chairman.  What  do  you  mean  by  your  coal  business  ?  Have 
you  coal  fields  in  that  region  ? 

Mr.  Adams.  Yes;  we  have  very  valuable  coal  properties  west  of 
Cheyenne  in  the  500  miles  between  Cheyenne  and  Ogden— where  the 
Union  Pacific  passes  through  large  coal  fields.  The  country  for  500 
miles  to  the  Missouri  Eiver  east  of  Cheyenne  is  a  fuellessconntry.  There 
is  nothing  there  to  burn  except  corn.  They  sometimes  have  a  SHper- 
fluity  of  that.  There  is  no  coal  and  no  timber,  and  accordingly  as  that 
country  fills  with  population,  it  is  inevitable  that  one  of  the  most,  if  not 
the  most  valuable  business  of  the  Union  Pacific  will  be  carrying  coal 
to  those  dwcjlling  between  the  Missouri  River  and  the  mountains. 

Senator  Gorman.  Both  east  and  west  of  tlie  deposits  1 

Mr.  Adams.  Yes  ;  there  is  no  coal  l)etween  us  and  the  Pacific  Ocean, 
so  that  the  Central  Pacific  depends  on  us  for  its  fuel. 

Senator  Blair.  How  extensive  is  that  coal  region  ? 

Mr.  Adams.  It  is  practically  unlimited. 

Senator  Blair.  Is  it  sufficient  for  the  probable  consumption  of  the 
future  in  that  country  which  is  dependent  upon  itf 

Mr.  Adams.  There  is  no  doubt  on  that  point. 

The  Chairman.  I  believe  you  said  it  was  bituminous  coal. 

Mr.  Adams.  We  have  no  anthracite  coal.  It  is  bituminous  and  lig- 
nite. It  is  very  good  coal.  The  only  anthracite  field  that  has  ever 
been  found  out  there  is  in  Colorado,  not  on  our  system. 

The  Chairman.  IIow  much  of  a  width  of  country  on  either  side  of 
your  road  do  you  naturally  get  business  from  ? 

Mr.  Adams.  Oh,  that  depends  on  the  business;  it  is  a  cattle  country, 
and  cattle  can  be  driven  any  distance,  so  that  I  can  not  say. 

The  Chairman.  1  had  reference  more  especially  to  parallel  lines  that 
would  interfere  with  your  trade  in  any  degree. 

Mr.  Adams.  The  control  of  the  traffic  depends  entirely  upon  the 
character  of  the  traffic.  Some  business  will  bear  transportation  a 
hundred  miles  to  a  railroad ;  other  business  will  not  bear  ten  miles. 
The  question  depends  wholly  on  what  cost  of  transportation  the  busi- 
ness will  bear. 

The  Chairman.  Can  you  tell  us  something  about  your  competition 
with  other  lines  in  the  ocean  trade— the  steam-ship  lines  ? 

Mr.  Adams.  There  you  touch  npou  a  very  large  question,  because 
it  is  affected  by  all  sorts  of  considerations.  There  is  the  Asiatic  trade 
which  we  had  a  monopoly  of  until  within  ten  years.  First  it  was  cut 
into  by  the  construction  of  the  Southern  Pacific  Road,  and  the  Atchi- 
son. Then  the  Denver  and  Rio  Grande  appeared  as  a  competitor;  so 
that  it  is  now,  as  it  were,  in  a  phase  of  transition. 

The  Chairman.  Have  these  several  railroad  lines  you  speak  of  their 
steam-ship  connections  ! 

Mr.  Adams.  Yes;  but  the  situation  is  inchoate  vet.  It  is  not  fully 
developed.  You  gentlemen  doubtless  realize  that  tlie  experience  of  the 
Pacific  coast  is  exactly  like  the  experience  of  the  Atlantic  coast.  The 
goodwdl  of  a  business,  if  you  maj  call  it  so,  is  verv  hard  to  cut  into. 
We  in  the  West  have  seen  Boston,  Portland,  Phihulelphia,  Baltimore, 
and  oSorfolk,  trying  to  wrest  from  New  York  the  supremacy  of  its  ocean 


THE  UNITED  STATES  AND  CANADA.  139 

European  trade,  but  in  spite  of  the  tremendous  burden  to  wbicli  the 
New  York  business  has  been  subjected,  they  have  never  succeeded  in 
shaking-  it.  On  the  contrary,  all  competing  points  have  had  to  retire 
more  and  more  from  the  field.  New  York  is  the  market  and  financial 
center;  it  is  the  place  where  the  buyer  and  the  seller  meet,  and  the 
commercial  exchanges  are  carried  on  here. 

It  is  exactly  the  same  on  the  Pacific  coast ;  and  my  impression  is  that 
the  result  in  the  end  will  work  out  in  the  same  way  there ;  that  is,  San 
Francisco  is  the  New  York  of  the  Pacific  coast,  and  as  this  continent 
goes  on  developing,  I  do  not  doubt  there  will  be  very  good  business  for 
Pnget  Sound  and  for  Portland,  just  as  there  is  for  Boston  and  Balti- 
more and  Philadelphia  and  Norfolk ;  but  when  it  comes  to  the  question 
of  Pacific  coast  supremacy,  1  have  little  doubt  in  my  own  mind  that  it 
will  settle  itself  on  natural  principles,  and  that  it  will  rest  with  San 
Francisco. 

Montreal,  on  the  east  here,  has  been  struggling  for  a  portion  of  the 
European  commerce,  and  not  entirely  unsuccessfully.  It  has  done  very 
well.  This  is  a  large  country ;  there  is  enough  for  all ;  but  Montreal  has 
not  shaken  the  ocean  supremacy  of  New  York  in  the  long  run.  Yet, 
of  course,  our  system  of  tariff  and  commercial  restrictions  affect  results 
to  a  certain  extent,  and  it  remains  to  be  seen  to  how  great  an  extent 
the  Canadian  Pacific  will  throw  commercial  supremacy  into  English 
hands,  and  to  what  extent  English  marine  interests  will  be  able  to  con- 
trol and  divert  from  the  natural  line,  by  way  of  San  Francisco  and  New 
York,  the  commerce  of  Asia. 

That  is  a  question  I  can  not  pretend  to  have  any  opinion  about  worth 
giving  to  this  committee.  It  is  too  large  a  question.  I  merely  mean  to 
say  that  I  do  not  believe  in  the  long  run — no  matter  what  Congress 
may  do — I  do  not  believe  in  the  long  run,  taking  fifty  years  together, 
that  the  supremacy  of  San  Francisco  can  any  more  be  shaken  than  the 
commercial  supremacy  of  New  York  has  been  shaken  in  the  last  fifty 
years. 

The  Chairman.  You  have  a  steam-ship  line  connected  with  your 
own  route,  have  you  not? 

Mr.  Adams.  We  had  two  steam-ship  lines.  One  was  the  Oriental 
and  Occidental  line,  which  ran  from  San  Francisco  to  Japan.  The 
other,  which  is  owned  in  connection  with  the  Railway  Navigation  Com- 
pany, runs  from  Portland  to  San  Francisco,  on  the  Puget  Sound,  and 
elsewhere. 

The  Chairman.  Where  does  your  first  line  run  to  ? 

Mr.  Adams.  The  Oriental  and  Occidental  was  a  line  which  we  owned 
in  common  with  the  Central  Pacific.  It  ran  from  San  Francisco  to 
Japanese  ports  and  China. 

The  Chairman.  To  China,  also  *? 

Mr.  Adams.  Yes. 

The  Chairman.  Is  that  line  still  in  existence  *? 

Mr.  Adams.  Yes;  it  is  still  in  existence,  but  its  traffic  has  been  seri- 
ously interfered  with  by  the  law  restricting  the  cooly  trade. 

Senator  Platt.  You  say  its  traffic;  has  been  seriously  interfered  with 
by  the  law  restricting  Chinese  immigration  ? 

Mr.  Adams.  I  do. 

The  Chairman.  That  interferes  with  every  other  line  in  the  same 
tvay? 

JVIr.  Adams.  It  does. 

The  Chairman.  In  the  general  commercial  trade  of  the  'country  is 
your  line  sustaining  itself  in  comparison  with  previous  years  ? 


140  TRANSPORTATION   INTERESTS   OF 

Mr.  Adams.  You  mean  as  to  foreign  business  ? 

The  Chairman.  Yes. 

Mr.  Adams.  I  have  not  followed  the  figures  recently,  but  my  impres- 
sion is  that  we  are  obtaining  what  the  railroads  call  our  share  of  the 
business. 

Senator  Platt.  Does  Chinese  restriction  interfere  with  the  com- 
mercial trade"? 

Mr.  Adams.  Yes.    You  see  these  were  largely  i)assenger  steamers. 

The  Chaieman.  They  were  not  engaged  very  much  in  commerce  ! 

Mr.  Adams.  No.    The  profit  was  in  the  passenger  traffic. 

Senator  Blair.  You  say  the  i)rofit  was  in  the  Chinamen  ? 

Mr.  Adams.  Yes. 

The  Chairman.  As  you  understand,  Mr.  Adams,  one  of  the  i)ur- 
poses  of  this  investigation  is  to  ascertain,  if  we  can,  what  effect  the  op- 
eration of  these  Canadian  routes  and  their  connections  has  upon  the 
business  of  the  country.  Has  your  business  been  interfered  with  to 
any  great  extent  by  the  Canadian  ]\u'ific  and  its  rteamship  connec- 
tions! 

Mr.  Adams.  I  would  rather  not  go  into  the  details  of  that  question 
with  the  committee,  as  1  do  not  feel  sulliciently  advised.  Our  trallic 
people  could  speak  much  more  intelligently  upon  the  subject  than  I  can. 

THE  interstate  COMIVIERCE  ACT. 

I  will  simply  say  in  regard  to  the  oi)eration  of  the  existing  system 
that  I  have  been  utterly  unable  to  make  up  my  mind  what  the  efl'ect  of 
it,  especially  of  the  interstate  commerce  act,  would  be,  for  the  reason 
that  in  my  judgment  the  interstate  commerce  act  has  never  been  en- 
forced sufficiently  to  show  what  its  logical  and  legitimate  action  would 
be  if  it  were  enforced.  That  has  been  due  to  various  causes,  with  which 
your  committee  are  familiar. 

The  effect,  therefore,  of  the  act  has  been  so  intermittent  and  dis- 
jointed that,  up  to  this  time,  1  am  obliged  to  say  1  have  not,  with  the 
best  thought  I  could  give  to  it,  been  able  to  form  my  own  ju<]gment  as 
to  what  the  effect  would  be  if  it  were  enforced  nniUuinly  and  literally, 
as  I  wish  it  could  be.  Put  the  law  into  active  operatioii,  and  let  us  see 
what  the  effect  is;  and  then  we  could  work  to  a  giv<>n  result. 

I  ought  to  add,  however,  in  order  that  I  should  not  be  misunderstood, 
that  I  see  now  a  very  rapid  approximation  to  an  enforcement  of  the  act, 
which  for  myself,  and  I  think  in  common  with  other  railroad  jiresidents, 
I  am  observing  with  gratific  ition  and  great  curiosity  to  see  what,  will 
come  about.  The  impression  lelt  on  my  mind  in  regard  to  the  act  and 
its  effect  on  business  is  thusly  somewhat  vague. 

Everything,  railroads  in  common  witli  water  and  every  other  thing 
that  moves,  follows  the  line  of  least  resistance,  and  the  line  of  least  re- 
sistance for  commerce,  since  this  country  was  settled,  has  been  perfectly 
marked  out.  In  the  East  it  has  been  the  line  of  the  ICiie  Canal,  and 
the  commerce  of  the  country  poured  to  New  Yoik.  simplv  because  that 
was  the  line  of  least  resistance.  The  (;onntrv  settled  and  grew  up  on 
that  line.  The  effe(;t  of  laws  recently  ])assed  iias  been  to  create  an  artifi- 
cial resistance  on  that  line,  and  I  find  in  the  case  of  the  Union  Pacific, 
as  in  that  of  other  lines,  that  there  is  a  tendencv  now  to  a  «liversion  of 
traffic  to  what  might  be  called  the  artificial  linV  of  h^st  resistan(;e  to 
the  (jiilf  of  Mexico  on  the  south,  wluie  traffic  strikes  water,  or  else  to 
tbe  lakes  on  the  north  where  it  strikes  water.  The  tendencv,  owing  to 
the  long  and  short  haul  clause  of  the  act  and  the  maintenance  of  rates 


THE    UNITED    STATES    AND    CANADA.  141 

wbicb  is  now  beiug  brought  about  by  the  more  perfect  enforcement  of 
the  act,  is  to  cause  the  eastern  and  western  lines  from  Chicago  and  St. 
Paul  to  the  seaboard  to  be  put  at  a  disadvantage  as  compared  with  the 
Canadian  lines  and  the  lakes  and  the  Gulf  of  Mexico,  so  that  there  is  a 
tendency  toward  finding  new  lines  of  least  resistance,  and  in  that  way 
ajiecting  the  old  lines  and  the  business  of  the  country. 

The  only  way  in  which  this  would  affect  us  would  be  on  thaf  class  of 
business  to  which  you  have  already  referred — that  is,  the  transconti- 
nental business — and  we  wait  to  see  to  how  great  an  extent  these  artifi- 
cial restrictions  which  have  been  imposed  will  cause  that  business  to  go 
through  Canada  from  the  east  instead  of  taking  its  natural  course 
through  San  Francisco.  But  I  will  add,  I  feel  perfe<-tly  certain  that  this 
diversion  can  not  last ;  that  whenever  it  develops  itself  the  law  must 
be  modified,  because  no  human  law  can  permanently  stand  in  the  way 
of  a  natural  course  of  trade. 

The  difficulty  we  find  is  that  the  laws  are  not  enforced.  There  is  a 
great  amount  of  truth  in  Gener.d  Grant's  old  aphorism  that  the  proper 
way  to  deal  with  a  bad  law  is  to  enforce  it ;  then  you  can  modify  it  ac- 
cording to  the  necessities  of  the  case.  Just  so  long  as  laws  are  put 
on  the  statute  books  and  are  treated  as  the  railroad  companies  treated 
the  interstate  commerce  law  while  the  act  was  getting  in  shape — up  to 
last  January,  we  will  say — I  do  not  think  that  any  man  is  wise  enough 
to  forecast  what  the  results  will  be ;  they  come  to  us  in  such  an  imper- 
fect shape. 

The  Chairman.  So  that  you  are  not  prepared  to  say,  even  though 
you  think  the  law  has  been  enforced,  whether  it  is  a  good  law  or  not. 

Mr.  Adams.  Ko.  In  some  respects  I  do  not  hesitate  to  say  it  is  a 
good  law.  In  other  respects  I  think  the  law  was  crude ;  that  it  was 
framed  to  meet  some  imaginary  exigency,  perhaps,  instead  of  beiug 
framed  in  the  light  of  pi  actical  experience.  I  have  always  thought  that 
was  the  case.  Meanwhile,  the  Interstate  Commission  are  rapidly  get- 
tiug  hold  of  the  situation.  It  is  a  complicated  machine.  To  have  made 
such  progress  as  they  have  within  two  years  is,  I  think,  satisfactory  ; 
for  it  will  not  do  in  these  matters  to  be  iu  too  much  of  a  hurry.  I  am 
advised  that  the  companies  are  now  obeying  the  law. 

The  Chairman.  We  seem  to  be  in  this  rather  anomalous  position  in 
this  couutry,  that  the  law  is  on  the  statute  book,  the  railroads  all  want- 
ing to  enforce  it,  yet  none  of  them  are  obeying  it.     [Laughter.] 

Mr.  Adams.  That  is  true,  and  that  is  inex'itably  the  case,  because  ap- 
parently you  do  not  realize  that  the  penalty  of  living  up  to  the  law  may 
be  the  loss  of  business  to  those  who  live  up  to  it.  No  railroad  can  do 
that  permanently.  It  is  not  possible  for  any  railroad  running  along- 
side of  a  competing  line  to  rigidly  enforce  the  interstate  commerce  act 
if  its  competitor  does  not  obey  it,  without  having  the  competitive  bus- 
iness taken  from  it. 

The  Chairman.  Taken  from  it  by  some  other  line  that  is  not  obey- 
ing the  law  ? 

Mr.  Adams.  Yes,  that  is  it  exactly.  Therefore  the  railroads — so  far 
as  I  have  been  able  to  talk  with  the  presidents  of  the  different  roads — 
have  all  said  that  "  we  would  like  nothing  better  than  to  have  that  law 
en 'breed  to  the  letter  ;  but  if  we  are  to  live  up  to  it,  we  want  it  enforced 
by  all ;  we  want  it  given  an  honest  trial.  If  we  alone  enforce  the  law, 
it  may  be  at  the  expense  of  our  stockholders  and  our  property.  It  is 
not  our  money  we  are  experimenting  with." 

The  Chairman.  Suppose  you  were  all  to  obey  the  law  j  what  would 
be  your  judgment  as  to  the  result  ? 


142  TRANSPORTATION  INTERESTS  OF 

Mr.  Adams.  That  is  eutirely  beyoud  me.  I  am  sure  of  one  tiiinj?- 
aud  tbat  is  tbe  ouly  thing  I  am  sure  of— I  am  sure  that  tlien  the  biw 
would  either  be  left  alone,  if  it  worked  well,  or  anu-nded  if  it  did  not. 
I  am  willing  to  have  the  problem  worked  out  in  that  wny. 

The  Chairman.  There  is  nobody  having  any  legislative  power  who 
is  not  anxious  to  make  such  amendments  as  the  commerce  of  the  coun- 
try requires. 

Mr.  Adams.  Then  we  could  amend  the  law  intelligently.  But  just 
so  long  as  it  is  partially  enforced,  or  spasn)odically  enforc<?d,  or  so  en- 
forced that  its  construction  is  not  understood,  you  only  get  imperfect 
results,  and  you  may  make  the  matter  worse  by  efforts  to  amend. 

COMPETITION   OF   CANADIAN   LINES. 

The  Chairman.  Going  back  to  the  proposition  on  which  we  started,  as 
to  foreign  commerce,  I  understood  you  to  say  that  so  far  as  the  trade 
that  you  had  with  governments  east  and  west  of  us  was  concerned,  it  has 
not  be<^n  interfered  with  by  the  Canadian  Pacific. 

Mr.  Adams.  I  think  it  has  been  iuierfered  with  by  all  other  lines  that 
have  come  in;  but  I  do  not  think  the  time  has  yet  come  to  divert  the 
channel  of  commerce.  lean  not  si)eak  positively  as  to  the  Canadian 
Pacific.  The  Canadian  Pacific  I  do  not  consider  as  being  fairly  at  work 
yet.  But  every  line  that  has  come  in  has  immediately  gone  to  work 
by  some  means  or  other  to  get  a  share  of  that  business,  and  that  has 
affected  us. 

The  Chairman.  The  Canadian  Pacific  has  its  steam  ship  Hue,  has  it 
notf 

Mr.  Adams.  I  do  not  know  how  far  they  have  that  dev^«doped  and 
organized.  The  Canadian  Pacific  is  a  new  road  as  yet,  and  1  do  not 
believe  they  have  got  their  machine  in  running  order. 

The  Chairman.  I  have  understood  that  there  was  a  subsidized  line 
of  steamers  running  between  the  Pacific  coast  and  China  and  Japan. 

Mr  Adams.  I  should  have  to  be  more  fully  advised  on  that  point 
than  I  am  before  1  undertook  to  inform  the  committee. 

The  Chairman.  1  will  ask  another  question.  Do  you  know  any- 
thing about,  or  can  you  inform  the  committee,  what  ditfereutials  are  al- 
lowed the  Canadian  Pacific  ? 

Mr.  Adams.  No ;  I  can  not. 

Senator  Platt.  There  is  a  bonded  line  of  steamers  running  from  San 
Francisco  to  the  terminus  of  the  Canadian  Pacific,  is  there  not  ? 

Mr.  Adams.  I  believe  there  is. 

Senator  Platt.  Is  not  that  line  carrying  business  which  you  for- 
merly carried  and  would  otherwise  carry,  and  is  not  that  business  di- 
verted by  reason  of  that  line  of  steamers  of  the  Canadian  Pacific  ? 

Mr.  Adams.  Undoubtedly,  so  far  as  that  business  goes.  That  is  old 
business;  it  is  not  new  business.  How  far  it  is  new  business  and  how 
far  It  has  affected  the  current  of  business  u})  to  this  time,  I  can  not  tell 
you.  I  have  not  been  advised;  but  my  impression  is  that  it  can  not 
have  been  very  seric  us  up  to  this  time,  otherwise  I  would  have  been 
advised. 

The  Chairman.  You  know  nothing  about  differentials  then  out  in 
the  Western  country? 

Mr  Adams.  Oh,  yes.  The  differential  svstem  is  acomplicated  svstcin 
which  we  have  either  to  ignore  or  openly  adopt,  owing  to  the  fact,  as 
explamed  to  your  committee  at  great  length,  that  a  line  worked  under 
consiUerable  disadvantage  can  not  be  expected  to  surrender  and  go  out 


1 


THE  UNITED  STATES  AND  CANADA.  143 

of  business,  and  therefore  you  have  to  submit  to  its  cutting  uutil  it 
passes  a  certain  point  and  becomes  unendurable. 

The  Chairman.  An  expedient  for  the  division  of  trafiic"? 

Mr.  Adams.  Yes,  it  is  an  expedient  for  the  division  of  traffic. 

The  Chairman.  Does  your  line  have  anything  to  do  with  the  Cen- 
tral Traffic  Association"? 

Mr.  Adams.  We  have  to  do  with  all  the  traffic  associations.  It  is 
one  man's  business  to  attend  to  them.  I  should  rather  not  undertake 
to  go  into  this  subject  with  the  committee,  because  it  is  a  very  compli- 
cated one,  and  I  would  have,  to  get  all  my  information  from  either  the 
general  manager  of  the  Union  Pacific,  Mr.  Thomas  L.  Kimball,  or  the 
traffic  manager,  Mr.  Mellen.  Mr.  Mellen's  business  is  nothing  but  to 
attend  meetings  of  traffic  associations.  Mr.  Mellen  is  occupied  his 
whole  time  in  atti^nding  meetings  of  the  associations  and  keeping  that 
portion  of  the  business  of  the  Union  Pacific  in  shape. 

The  Chairman.  Would  there  be  any  difficulty  in  securing  his  attend- 
ance at  Boston  if  we  should  go  there  hereafter  ? 

Mr.  Adams.  I  can  send  for  him  at  any  time  the  committee  wishes  to 
see  him. 

Tbe  Chairman.  You  then  do  not  seem  to  feel  very  much  concerned 
about  the  question  whether  the  Canadian  Pacific  Eailroad  is  going  to 
interfere  with  your  traffic  or  not. 

Mr.  Adams.  I  am  waiting  to  see.  I  do  not  at  all  say  1  do  not  feel 
concerned.  I  want,  however,  to  see  it  more  fully  developed.  I  am  per- 
fectly sure  of  one  thing,  that  though  a  good  deal  of  mischief  may  be 
done  before  the  thing  is  remedied,  yet  if  we  once  get  the  thing  devel- 
oped-so  as  to  see  what  it  amounts  to,  and  it  amounts  to  anything,  the 
remedy  can  be  applied.  It  has  not  worked  long  enough,  and  1  have 
not  yet  been  able  to  satisfy  myself  of  the  extent  to  which  it  will  go. 

The  Chairman.  If  you  are  given  a  fair  chance  in  the  United  States 
you  can  take  care  of  the  eastern  and  western  traffic  ? 

Mr.  Adams.  I  have  no  fear  as  to  that  if  we  are  given  a  fair  chance. 

The  Chairman.  What  is  the  difference  in  length  between  the  Cana- 
dian Pacific  line  from  its  western  terminus  to  the  East  here — to  New 
York  or  Boston  or  Portland — and  our  American  transcontinental  lines? 

Mr.  Adams.  I  can  not  tell  you  exactly.  1  do  not  consider  the  ques- 
tion of  distance  in  these  days  as  of  very  great  moment. 

The  Chairman.  Not  when  one  road  gets  a  differential  over  another? 

Mr.  Adams.  It  may  be  a  question  of  grades  or  gauge  or  various 
things.  It  may  be  a  question  of  even  the  facilities  for  doing  business, 
as  one  road  can  do  business  much  more  cheaply  than  another.  It  de- 
pends on  a  variety  of  considerations.  It  used  to  be  a  humorous  argu- 
ment with  freight  agents  to  state  to  the  shipper:  "Why,  we  pull  your 
goods  more  miles  for  the  same  money." 

The  Chairman.  And  they  ought  to  have  a  little  more  for  it  ? 

Mr.  Adams.  No  ;  that  the  shipper  ought  to  transport  by  them,  inas- 
much as  they  would  give  the  goods  a  ride. 

Senator  Platt.  Do  you  know  whether  it  is  a  fact  or  not  that  goods 
can  be  taken  from  San  Francisco  by  the  water  routes  to  the  Canadian 
Pacific  and  be  delivered  at  St.  Paul  and  Chicago  more  cheaply  than  you 
can  deliver  them  at  those  points  1 

Mr.  Adams.  I  have  seen  that  stated,  and  have  made  some  inquiry 
about  it ;  but  I  have  not  been  able  as  yet  to  satisfy  myself  that  the 
matter  had  assumed  large  proportions,  or  that  it  was  not  due  to  some 
temporary  cause. 

Senator  Platt.  Practically  it  has  not  yet  hurt  you  very  much. 


144  TEANSPOETATION  INTERESTS  OF 

Mr.  Adams.  I  have  not  been  satisfied  that  it  lias  hurt  us  to  any  very 
serious  degree  as  yet. 

Senator  Blaib.  If  it  does  not  hurt  you  it  does  not  hurt  anybody, 
does  it  I 

Mr.  Adams.  I  can  not  speak  as  to  that. 

Senator  Blair.  But  has  it  or  not  done  injury  to  the  Northern  Pacifi<'  ? 

Mr.  Adams.  The  roads  work  in  such  an  indirect  way  that  I  woukl 
have  to  be  better  prepared  than  1  am  now  to  answer  your  question. 

Senator  Blair.  You  are  situated  as  well  as  any  other  road  with  re- 
spect to  that  traffic,  being  situated  in  the  center,  or  north  of  the  south- 
ern lines  of  the  country? 

Mr.  Adams.  Ours  is  the  natural  line  across  the  country.  There  is 
no  doubt  about  that,  and  it  will  always  remain  so. 

Senator  Blair.  For  the  Asiatic  trade? 

Mr.  Adams.  For  all  trade.  It  is  the  natural  transcontinental  line. 
We  are  the  New  York  Central  as  among  the  other  lines. 

Senator  Blair.  .And  you  are  treating  the  Central  Pacific  as  part  of 
your  line  in  this. 

Mr.  Adams.  Yes. 

Senator  Blair.  Are  the  high  grades  and  obstructions  in  winteir,  going 
through  the  mountains,  etc.,  any  serious  obstruction  to  your  road  being 
a  great  through  channel  ? 

Mr.  Adams.  Yes  ;  but  not  such  as  to  put  us  at  a  disadvantage.  Our 
grades  are  better  thau  those  of  any  other  line  crossing  the  continent. 

Senator  Blair.  Better  than  the  Canadian  Pacific  f 

Mr.  Adams.  I  always  considered  that  the  Canadian  Pacific  was  out- 
side of  the  problem,  but  I  am  under  the  impression  that  our  grades  are 
better  thau  those  of  the  Canadian  Pacific. 

Senator  Blair.  1  saw  a  statement  to  the  effect  that  the  Canadian 
Pacific,  by  following  the  grades  of  the  ocean  and  touching  Puget  Sonnd, 
makes  the  distance  700  miles  shorter  to  China  than  the  route  via  San 
Francisco.     Perhaps  that  is  not  so. 

Mr.  Adams.  That  may  be;  but  I  think  you  will  find  that  it  is  here,  as 
it  has  been  with  the  trade  along  the  Atlantic  coast  touching  Portland, 
or  some  such  port,  instead  of  New  York.  I  think  San  Francisco  occu- 
pies much  the  same  position  on  the  Pacific  coast  as  New  York  does  on 
the  Atlantic  coast. 

Senator  Blair.  Is  it  or  not  700  miles  farther  to  China  via  San  Fran- 
cisco than  via  Puget  Sound  ? 

Mr.   Adams.  And    in  the   same  way  we  have  alwavs  heard  about 
Boston  being  one  day  nearer  Europe  than  New  York  ;  but  I  have  not 
noticed  that  the  one  day  ever  affected  the  commerce  of  New  York  to  • 
any  considerable  extent,  and  it  never  will. 

The  Chairman.  Going  back  to  your  own  operations.  It  has  been 
stated  to  me  since  I  have  been  here  in  New  York,  that  your  road 
charged  more  for  freight  than  the  rate  charged  by  other  railroads.  I 
think  some  gentleman  who  is  building  a  road  somewhere  up  in  the 
Northwest  is  complaining  because  it  costs  him  more  to  get  his  railroad 
iron  where  he  wanted  it— about  400  or  500  miles  this  side  of  San  Fran- 
cisco—than  It  would  cost  to  take  it  all  the  way  to  San  Francisco  and 
then  bring  it  back. 

Mr.  Adams.  I  am  surprised  to  hear  that  statement ;  but,  if  it  is  cor- 
rect. It  would  be  a  matter  which  I  should  suppose  was  dnetosome  ar- 
rangement of  the  Central  Pacific,  and  not  of  ourselves. 

Ihe  Chairman.  That  I  did  not  inquire  into. 

Mr.  ADA.MS.  I  think  you  will  find  that  such  is  the  fact.    TheCeutral 


■*■ 


THE    UNITED    STATES    AND    CANADA.  145 

Pacific  has  always  pursued  the  policy  of  charging  less  to  Sau  Fran- 
cisco than  to  points  this  side  of  San  Francisco,  with  a  view  to  making 
Sau  Francisco,  which  is  the  end  of  their  line,  the  distributing  point  of 
that  country.  If  this  allegation  is  correct,  it  is  a  part  of  the  old  sys- 
tem in  respect  to  rates  in  that  country;  but  I  know  nothing  about  it. 
It  is  doubtless  due  to  some  arrangement  of  the  Central  Paciiic. 

The  Chairman.  Take  your  own  line  proper;  do  you  do  that,  as  a 
matter  of  fact? 

Mr.  Adams.  Not  at  idl,  as  I  understand  it.  We  have  in  times  past 
done  in  these  matters  just  as  it  has  been  the  common  i)ractice  of  all  the 
railroads  of  the  country  to  do.  The  i)raclices  of  the  past  have  now 
been  broken  up  and  stopj)ed  by  the  provisious  of  the  interstate  com- 
merce act,  and  I  dp  not  understand  that  this  j)ractice  is  followed  by  us 
now.  But  I  ought  to  say  that  these  are  matters  not  coming  within  my 
jurisdiction.     Traffic  questions  do  not  naturally  reach  me. 

The  Chaikman.  These  questions  are  under  the  control  of  your  traffic 
manager,  I  suppose. 

Mr.  Adams.  Yes,  they  come  under  the  control  of  the  traffic  manager 
at  Omaha.  It  would  be  lutile — it  would  be  worse  than  futile,  it  would 
be  folly — for  me,  sitting  in  Boston,  to  endeavor  to  regulate  the  traffic  of 
the  Uu'ou  Pacific  Railroad.  It  must  be  regulated  on  the  spot,  and  those 
regulating  these  fraffic  rates  must  be  responsible  and  have  the  power 
to  act  on  the  spot.  Thus  these  questions  only  reach  me  when  there  is 
some  matter  of  general  policy  to  be  settled,  some  question  with  refer- 
ence to  the  course  to  be  pursued  under  the  law ;  then  the  question  be- 
comes one  of  general  policy. 

EFFECT   OF   THE   INTERSTATE   COMMERCE  LAW. 

The  Chairman.  Yesterday  the  general  manager  of  the  Grand  Trunk 
Eailway  Company  of  Canada  presented  to  the  committee  a  circular 
which  he  sent  to- his  employes,  the  purport  of  which  was  the  require- 
ment of  an  observance  of  the  interstate  commerce  act  in  all  business 
connected  with  the  United  States.  I  suppose  that  every  president  or 
general  manager,  or  somebody  connected  with  the  railroad,  exercised 
the  same  power  in  that  direction. 

Mr.  Adams.  I  sent  a  similar  circular  to  our  officials,  and  framed  it  in 
very  decided  language,  in  the  early  part  of  the  year;  I  again  repeat 
what  I  said  before,  that  I  am  extremely  reluctant  to  express  any  opin- 
ions on  the  subjects,  because  we  have  not  yet  had  time  to  see  what  the 
effect  of  the  act  is.  I  will  state  that  we  are  watching  it  with  additional 
interest  because  during  the  last  three  months  the  traffic  results  have 
been  most  unsatisfactory.  It  has  been  the  most  singular  casein  my  ex- 
pei  ience.  Up  to  January  last  tlu^  lines  were  extremely  busy.  The  traffic 
was  most  satisfactory  in  every  respect,  but  in  January  orders  went  out 
to  the  effect  that  there  should  be  a  literal  compliance  with  the  inter- 
state commerce  act  in  every  respect.  Now,  .whether  it  had  anything  to 
do  with  that  I  am  not  prepared  to  say,  but  business  then  disappeared 
at  once,  and  up  to  this  time  the  traffic  conditions  of  the  country  west  of 
Omaha — I  can  not  speak  of  the  country  east  of  Omaha — is  most  unsat- 
isfactory. I  am  not  prepared  to  say  that  is  not  due  to  some  temporary 
or  local  cause,  and  we  are  watching  to  see. 

The  Chairman.  Are  you  aware  of  any  other  lines  that  have  increased 
their  business? 

Mr.  Adams.  It  is  equally  unsatisfactory  v/ith  all  lines.  The  only  line 
where  the  business  is  satisfactory  is  the  Northern  Pacific,  which  is  due 
C543 10 


146  TRANSPORTATION    INTERESTS    OF 

to  local  causes  pretty  well  understood,  aud  that  make  an  exceptional 
case.  I  bave  corresponded  with  the  presidents  of  other  lines  in  order 
to  ascertain  whether  our  experience  is  exceptional,  and  they  tell  me 
that  it  is  common. 

The  Chairman.  And  if  there  is  any  business  to  do,  somebody  cer- 
tainly is  doing-  it. 

Mr.  Adams.  Undoubtedly,  and  we  are  waiting  to  see  why  this  is 
thus.  The  thing  will  develop.  It  can  not  long  continue  in  its  present 
shape  without  bringing  on  disaster. 

The  Chairman.  There  have  been  in  two  or  three  cases  expressions 
in  favor  of  returning  to  the  system  of  i)ooling,  to  the  legalizing  of  con- 
tracts between  competitive  railroads.  Ilave  you  any  definite  view  on 
that  subject? 

Mr.  Adams.  I  am  not  a  very  enthusiastic  believer  in  either  the  ex- 
pediency or  the  results  of  what  is  known  as  pooling.  Nevertheless,  I 
think  that  it  ought  to  be  recognized  and  legalized. 

The  Chairman.  Subject  to  the  supervision  of  the  Interstate  Com- 
merce Commission"? 

Mr.  Adams.  Yes ;  under  the  operation  of  the  law. 

The  Chairman.  Have  you  any  special  suggestions  to  make  as  to 
amendments  of  the  law  as  it  at  i)resent  exists  i 

Mr.  Adams.  On  the  contrary,  my  desire  is  not  to  see  the  law  amended 
but  to  see  it  enforced,  and  then  we  will  know  how  to  amend  it.  IMy 
feeling  in  regard  to  the  law  is  that  now  we  are  simply  groping  our  way 
in  the  dark.     It  has  not  as  yet  had  a  fair  trial. 

Senator  Blair.  What  is  this  mysterious  feature  of  the  law?  What 
feature  in  the  law  is  there  that  presents  such  an  occult  pi  oblem  ? 

Mr.  Adams.  This  country  was  built  up  on  the  principle  of  free  man- 
agement of  railroads.  That  is,  there  might  be  pooling  and  rebates  and 
drawbacks,  and  the  haul  for  a  longer  distance,  where  the  volume  of 
business  justified  it,  might  be  less  than  the  haul  for  a  shorter  <listance. 
Now  a  system  has  been  introduced  by  law  wiiich  wholly  iliHers  from 
the  original  system,  and  a  commerce  that  has  grown  up  under  one  sys- 
tem has  suddenly  another  system  applied  to  it. 

Senator  Blair.  Have  you  any  doubt  that  the  passage  of  this  law  in 
a  great  measure  stopped  the  cheating  that  was  going  on  ? 

Mr.  Adams.  No. 

Senator  Blair.  Well,  that  is  one  great  feature  of  the  interstate 
commerce  law.  This  deceptive  method  of  conducting  business  whereby 
one  shipper  has  an  advantage  that  another  shipper  does  not  have,  is 
remedied  by  the  law.  That  feature  w^e  keep.  Another  feature  is  the 
abolition  of  rebates.  You  would  keep  that  feature  in  the  law,  would 
you  not  ? 

Mr.  Adams.  Undoubtedly. 

Senator  Blair.  And  there  must  be  some  other  features  you  would 
keep.  I  thought  it  would  be  this  long  and  short  haul  clause.  Is  it 
that  feature  of  the  law  which  the  railroad  managers  would  eliminate, 
or  some  other  specific  feature? 

Mr.  Adams.  I  can  not  speak  for  the  other  railroad  managers  of  the 
country,  and  do  not  undertake  to  do  so,  and  1  have  not  suggested  either 
the  repeal  or  amendment  of  the  law. 

Senator  Blair.  Y"ou  suggest  its  enforcement,  and  the  difficulties  of 
the  country  have  been  such  that  after  great  tribulation  this  law  was 
enacted.  Now  we  are  charged  with  an  effort  to  get  light  which  may 
lead  to  an  improvement  of  it,  and  I  do  not  know  anybodv  who  under- 
stands the  railroad  situation  better  th-an  you  do,  and  I  thought  I  might 


THE    UNITED    STATES   AND    CANADA.  147 

be  able  to  call  your  attention  to  some  feature  of  tbe  law  which  you  de- 
sire to  have  amended. 

Mr.  Adams.  The  unexpected  is  apt  to  occur,  and  I  think  that  to-day, 
as  far  as  I  can  jud^e,  things  are  working  very  well.  I  think  the  Com- 
mission under  the  interstate  act  is  getting  hold  of  the  thing  and  getting 
to  understand  it  and  down  into  it.  I  think  pressure  is  being  brought  to 
bear  more  and  more  heavily,  and  I  am  not  myself  in  fiivor  of  either  re- 
pealing or  amending  the  law.  I  am  in  favor  of  leaving  it  as  it  stands, 
for  the  Commission  to  work  upon  ;  and  by  and  by  that  Commission  is 
sure,  through  its  investigations,  to  point  out  anything  that  would  be 
an  improvement  of  the  hiw  and  wherein  the  law  should  be  amended. 
Natural  forces  will  be  brought  to  bear  vrhich  will  demand  its  amend- 
ment and  perfection,  and  when  that  time  arrives  the  law  will  be  changed 
accordingly. 

Senator  Blair.  And  then  have  public  sentiment  behind  it. 

Mr.  Adams.  And  then  have  public  sentiment  behind  it.  My  position 
is  the  same  to-day,  though  I  am  now  a  railroad  president,  that  it  was 
when  I  was  a  railroad  commissioner  of  the  State  of  Massachusetts. 
What  I  believe  in  for  the  remedying  of  these  evils  is  publicity  and  the 
gradual  working  of  public  opinion,  which  will  produce  all  the  changes 
necessary.  But  you  must  give  them  time.  You  can  not  produce  your 
results  in  a  day  ;  and  1  thiid^  the  Interstate  Commission  through  its 
investigations  is  proceeding  as  rapidly  as  could  be  expected.  I  do  not 
see  that  there  is  much  fault  to  be  found. 

ENFORCEMENT   OF   THE  LAW. 

Senator  Platt.  In  your  opinion  should  the  long  and  short  haul  pro- 
vision be  lived  up  to,  or  should  it  not  ? 

Mr.  Adams.  I  do  not  care  about  the  short  and  long  haul  provision 
specially,  but  the  law  should  be  lived  up  to. 

Senator  Platt.  Is  it  your  understanding  that  it  has  been  lived  up  to? 

Mr.  Adams.  1  have  my  doubts  about  that ;  but  I  say  that  we  should 
wait  a  little  longer  before  changing  or  amending  the  law. 

Senator  Platt.  In  what  other  respects  has  the  law  not  been  lived  up 
to  I 

Mr.  Adams.  When  you  come  to  the  intricacies  of  cutting  of  rates, 
etc.,  it  is  a  large  field.  I  will  state  to  you  one  way  of  cutting,  in  order 
to  show  how  things  are  done,  and  which  is  well  understood  among  the 
lines.  In  certain  cities  of  the  country  there  are  large  lumber-yards  and 
points  of  lumber  shipment.  These  yards  have  their  tracks  running  up 
to  them — separate  tracks.  A  boxcar  containing  lumber  is  switched  by 
the  railroad  company  into  tiiat  yard.  The  proprietor  of  the  yard  has  a 
rate  for  the  lumber,  which  is  a  very  low  rate,  for  the  lumber  rate  is 
always  extremely  low.  The  car  is  switched  into  the  yard  and  boards 
are  i)iled  up  up  against  the  doors  of  the  car  on  each  side.  The  interior 
space  is  filled  with  groceries  and  hardware  and  articles  scheduled  at 
higher  rates,  and  the  car  with  its  mixed  contents  is  carried  to  its  desti- 
nation at  the  lumber  rate.  The  lumber  dealer  is  simply  cutting  the  rate 
on  all  these  articles  loaded  between  his  lumber,  and  the  railroad  is  con- 
niving with  him  in  doing  so.  I  mention  this  as  one  practice  well  under- 
stood among  railroad  men. 

Senator  Platt.  Do  you  believe  that  at  the  present  day  the  railroads 
of  the  country  generally,  and  I  refer  particularly  to  the  western  roads, 
are  living  up  to  the  requirements  of  the  law  pretty  fairly  ? 

Mr.  Adams.  I  think  they  are  doing  so  to-day  more  fairly  than  ever 


148  TRANSPORTATION    INTERESTS    OF 

before.  But  when  you  come  to  the  degree  to  AvLicli  they  are  living  up 
to  it,  I  shoukl  hesitate  to  speak  without  a  great  deal  more  information 
than  I  now  have.  The  ways  of  evading  the  law  by  cutting  the  rate  are 
so  many  and  ingenious  and  the  men  are  so  expert  at  it  that  1  should 
think  him  a  bold  man  who  would  hazard  a  positive  assertion  in  reply  to 
your  question. 

The  Chairman.  You  said  once  that  a  railroad  president  could  not 
stop  it. 

Mr.  Adams.  I  have  seen  no  reason  to  change  my  opinion.  lie  can 
stop  it  if  he  is  on  the  spot  and  decai)itates  every  one  he  catches  doing 
it ;  but  it  is  very  hard  to  detect  them. 

The  Chairman.  As  a  whole  is  not  the  traffic  on  the  railroads  con- 
ducted more  nearly  on  general  business  principles  that  it  used  to  be? 

Mr.  Adams.  I  should  hesitate  even  to  say  that,  except  for  the  jjcriod 
since  the  1st  of  January.  My  attention  was  called  to  it  pretty  vigor- 
ously before  the  1st  of  January  and  I  looked  into  the  matter  in  our 
traffic  department,  and  the  conclusion  which  I  reached  was  that,  j^rior 
to  that  time — prior,  I  say,  to  the  time  the  presidents  of  the  lines  met 
here  in  New  York — things  having  couie  to  such  a  state  that  the  presi- 
dents were  brought  together  in  New  Yorl<  for  the  i)urpose  of  consulta- 
tion— 1  was  led  to  the  conclusion  that  aflairs  had  never  been  worse 
than  they  had  been  a  short  time  jirior  to  that. 

The  Chairman.  The  general  impression  seems  to  be  that  the  roads 
observed  the  law  a  little  while  and  then  they  evaded  it  for  a  while,  and 
when  they  found  they  were  not  prosecuted  vigorously  for  not  ol)eying 
the  law  they  then  became  reckless  for  a  time. 

Mr.  Adams.  That  was  the  im])ression  made  upon  my  mind  as  the  re- 
sult of  my  inquiries. 

The  Chairman.  What  has  brought  about  tlie  cliange;  just  this  sim- 
ple meeting  of  tlie  railroad  i)residents  herein  New  York? 

Mr.  Adams.  When  a  thing  gets  very  bad  it  is  apt  to  remetly  itself. 
Necessity  causes  a  remedy.  That  had  mucii  to  (h)  with  it.  We  were 
all  alarmed  by  the  course  of  events.  As  one  of  tlie  most  intelligent 
and  thoughtful  western  railroad  presidents  s-iid  to  me,  in  discussing 
this  matter  last  October,  "  If  there  is  a  chasm  before  you,  and  you  are 
continually  approaching  it,  the  time  must  come  when  you  will  gi)  over." 
That  was  his  view  of  the  railroad  situation.  The  demoralization  was 
going  on.  The  margin  of  i)rorit  bet  wfcii  the  cost  of  oi)eration  and  what 
was  charged  was  growing  less  and  lcs>,  and  it  was  a  mere  question  of 
time  when  we  would  go  into  the  chasm.  There  was  a  serious  feeling  of 
alarm.  That  feeling  of  alarm  with  intelligent  men  almost  invariably 
leads  to  an  effort  at  correction. 

At  the  same  time  there  was  another  element  that  tended  to  improve 
the  course  of  events,  the  Interstate  Commerce  Commission.  I  give  great 
weight  to  these  investigations  of  the  Interstate  Conimerce  Commission. 
I  think  they  constitute  a  very  large  factor  in  the  situation,  and  when 
Judge Cooley  and  the  other  commissioners  showed  a  disposition  at  last 
to  get  hold  of  the  situation,  to  familiarize  themselves  with  the  ground, 
it  tended  to  simplify  matters.  They  had  a  dillieult  i)roblem.  You  can 
not  expect  men  to  take  hold  of  a  difficult  thing  like  that  and  get  to  the 
bottom  of  it  at  once.  But  when  they  went  into  the  i)ayment  of  com- 
missions and  the  violationsof  law,  and  dragged  them  outinto  the  light. 
It  produced  an  effect  at  once.  I  think  they  are  proceeding  wisely.  I 
do  not  wish  to  hurry  them.  So  far  as  1  am  concerned,  I  am  watching 
them  with  confidence,  but  I  think  the  greatest  service  those  commis- 
sioners can  render— and  I  suppose  what  I  say  will  be  reported— the 


THE   UNITED    STATES   AND   CANADA.  149 

greatest  service  that  the  commissioners  can  render  the  railroads  just 
now  is  to  prosecute  two  or  three  of  the  guilty  ones. 

The  CuAiKMAN.  I  think  it  would  be  a  good  thing  raj'self. 

Mr.  Adams.  It  woukl  be  like  the  assertion  of  Voltaire  about  tlie  En- 
glish Government,  that  now  and  then  they  shot  an  admiral  to  encourage 
the  others.  I  think  there  could  not  be  anything  done  to  better  the 
situation  than  to  institute  legal  proceedings  against  some  law-violating 
railroads. 

Senator  Eeagan.  Do  you  conceive  that  the  moral  lectures  delivered 
by  the  Interstate  Commerce  Commission  are  a  better  remedy  than 
prosecutions  for  the  violations  of  law? 

Mr.  Adams,  I  have  a  great  respect  for  moral  influences  on  railroad 
men  as  on  others. 

Senator  Blair.  They  are  very  susceptible  to  such  influences,  are 
they  not  ? 

Mr.  Adams.  Yes.  I  say  again,  speaking  from  my  own  experience,  in 
Massachusetts  we  accomplished  very  considerable  results,  but  we  never 
prosecuted  any  one. 

Senator  Eeagan.  I  have  no  doubt  that  is  true  ;  but  if  we  recognize 
the  fact  that  rebates  are  given  and  discriminations  are  made  between 
shippers  in  violation  of  law,  is  it  not  as  essential  that  such  violators  of 
law  should  be  punished  as  it  is  essential  that  the  violation  of  any  law 
should  be  punished  ? 

Mr.  Adams.  I  have  already  answered  that  question,  Senator.  I  have 
said  I  thought  it  would  be  the  best  thing  that  could  happen  if  some 
prosecutions  were  instituted  under  that  law. 

The  Chairman.  What  would  you  think  of  an  amendment  of  the  act 
providing  for  the  giving  of  moieties  to  informers  so  as  to  find  out  who 
were  violating  the  law. 

Mr.  Adams.  The  moiety  system  has  not  worked  very  well,  has  it, 
Senator  *?     It  has  been  applied  in  our  revenue  system. 

The  Chairman.  I  do  not  think  much  of  it  myself  as  a  general  thing. 

Mr.  Adams.  I  do  not  think  it  is  necessary. 

The  Chairman.  It  does  seem  as  if  we  would  have  to  adopt  some  ex- 
traordinary means  to  find  out  what  is  going  on  among  the  railroads  in 
order  to  bring  them  to  an  observance  of  the  law. 

Mr.  Adams.  I)o  you  not  think  that  is  now  being  done  with  satisfac- 
tory rapidity  ?  Take  the  utterances  of  Judge  Cooley  and  I  think  you 
will  find  they  have  produced  the  desired  efi'ect ;  I  think  the  i)rogress 
being  made  is  satisfactory. 

The  Chairman.  It  is  aggravating  to  me,  Mr.  Adams,*to  learn  that  a 
great  class  of  business  men,  representing  thousands  of  millions  of 
dollars,  should  almost  iniiversally  admit  that  the  recklessness  of  the 
men  engaged  in  the  railroad  businet^s  was  worse,  if  jiossible,  since  the 
interstate  commerce  act  was  passed  than  before. 

Mr.  Adams.  I  think  that  is  so. 

The  Chairman.  Then  it  would  seem  as  though  something  besides 
grass  should  be  thrown. 

Mr.  Adams.  Yes,  and  I  think  that  is  coming.  I  think  the  pressure 
of  the  act  is  showing  itself.  I  do  not  dare  to  state  it  here  as  a  fact, 
but  there  is  a  theory  I  have — and  I  give  it  i)urely  as  a  theory,  and  not 
as  a  thing  that  I  should  state  as  the  result  of  investigation  of  the  present 
condition,  or  the  prospective  condition  of  traffic,  judging  from  the  i)ast 
three  months;  it  is  this  and  I  give  it  for  what  it  is  worth,  as  explain- 
ing the  i)resent  state  of  affairs,  namely:  Since  the  first  of  January, 
owing  to  the  action  of  the  Interstate  Commerce  Commission,  owing  to 


150  TRANSfORTATIOK  INTERESTS  OF 

threats  of  prosecution,  owiug  to  the  orders  given  by  the  presidents,  rates 
have  been  maintained  more  rigidly  and  more  evenly  than  ever  before. 
There  never  has  beeu  a  time  io  the  history  of  railroading  when  the 
largest  shippers  and  manufacturers  could  not  dictate  their  own  terms 
practically,  except  within  the  last  three  months.  1  think  it  not  impos- 
sible that"^  the  two  are  looking  at  each  other  to  see  who  will  make  the 
first  breach.  The  railroad  man  does  not  want  to  be  the  first  to  cut  the 
rate,  and  the  shipper  does  not  w;int  to  ship  except  at  a  cut  rate,  and 
the  two  are  watching  each  other,  and  this  results  in  the  depression  in 
traffic  which  has  existed  for  the  last  two  months. 

The  Chairman.  They  are  practically  waiting  for  some  one  to  violate 
the  law  so  that  they  can  renew  the  practices  heretofore  followed. 

Mr.  Adams.  That  is  tlie  amount  of  it.  With  our  ranks  remaining 
unbroken,  and  rates  maintained  and  rebates  cnt  ofi",  we  shall  have 
made  a  great  step  forward.  1  have  therefore  been  watching  and  wait- 
ing; and,  as  I  have  repeatedly  said  here,  I  am  now  watching,  and  I 
am  not  prei)ared  at  this  time  to  say  whether  or  not  the  law  is  a  ])racti- 
cal  one  for  working  purposes,  or  whether  it  should  be  amended  or 
changed. 

Senator  Eeagan.  Mr.  Adams,  you  have  devoted  as  much  time  to  the 
study  of  the  railroad  i)roblem  as  any  man  in  the  country  i)robably.  Can 
you  tell  us  is  it  probable  that  there  can  be  a  fair  and  satisfactory  solu- 
tion of  the  railroad  i)roblem  in  this  country  while  the  stock-wtitering 
sj  stem  is  to  be  encountered  ? 

Mr.  Adams.  1  do  not  think  the  stock-watering  sj'stem  amounts  to 
much  one  way  or  the  other. 

Senator  Reagan.  But  the  interest  has  to  be  paid  upon  it. 

Mr.  Adams.  We  have  to  take  what  we  can  get.  We  might  have  bank- 
ruptcy or  anything  else  impending  over  us  and  we  could  not  charge  a 
cent  more.  If  there  is  one  thing  that  the  i)eople  of  this  country  ought 
to  be  entirely  satisfied  with  it  is  the  lowness  with  which  the  railroad 
traffic  is  conducted.    There  is  no  complaint  on  that  score. 

Senator  Eeagan.  I  think  you  are  right  about  that. 

Mr.  Adams.  The  difticulty  is  the  inecpiality.  If  we  could  have  equal- 
ity of  rates  this  would  be  the  cheapest  served  country  in  the  world.  In 
fact,  I  have  no  sympathy  with  attacks  on  the  railroads  on  this  score. 
The  one  thing  the  railroad  has  done  has  been  to  accomplish  in  respect 
to  cheapness  of  service  the  most  magnificent  triumi)h  the  world  ever 
saw.  Our  one  study  and  eflbrt  has  been  and  now  is  to  get  the  rates  as 
low  as  possible. 

The  Chairman.  One  of  the  chief  purposes  of  the  act  was  to  secure 
publicity  and  equality. 

Mr.  Adams.  Yes;  to  secure  equality  and  publicitv,  and  I  think  the 
progress  made  in  that  direction  is  satisfactory.  1  do  not  think  there  is 
any  just  ground  for  complaint.  I  think  the  Commission  is  doing  valua- 
ble work,  and  the  thing  I  like  best  about  their  work  of  late  has  beeu 
that  they  do  not  seem  to  be  in  a  hurry  ;  they  are  getting  hold  of  their 
business  before  they  take  any  steps  in  public!  I  do  not  think  they  have 
made  many  mistakes. 

regulation  of  the  CANADIAN  LINES. 

The  Chairman.  Now,  Mr.  Adams,  going  aside  of  the  general  subject 
of  the  interstate  commerce  law,  we  have  been  looking  into  the  question 
of  these  Canadian  roads  as  they  affect  United  States  railroad  interests 
and  commerce  generally.    You  are  aware  that  there  are  quite  a  num- 


THE  UNITED  STATES  AND  CANADA.  151 

ber  of  roads  built  into  the  United  States  from  tlie  G  rand  Trunk  and 
some  from  the  Canadian  Pacific,  making  connections  or  feeders  in  the 
United  States  to  their  main  lines.  What  is  your  general  view  of  the 
movement  in  that  direction ;  do  you  look  upon  it  as  a  thing  that  ought 
to  be  encouraged  or  discouraged? 

Mr.  Adams.  I  suppose  what  the  people  of  this  country  want  is  cheap 
transportation. 

The  Chairman.  That  is  what  the  people  are  looking  for,  but  do  you 
think  that  it  is  a  good  thing  to  encourage  these  Canadian  roads  to  run 
lines  into  the  United  States "? 

Mr.  Adams.  I  think  it  is  a  factor  in  the  direction  of  securing  cheap 
rates. 

The  Chairman.  You  do  not  look  upou  it  with  disfavor,  then  *? 

Mr.  Adams.  I  have  always  said  that  all  I  wanted  was  a  free  field  and 
no  favors.  If  the  Union  Pacific  can  not  take  care  of  itself  in  a  free 
field  with  no  favors  it  had  better  go  to  the  wall. 

The  Chairman.  I  think  the  Grand  Trunk  has  nearly  a  thousand 
miles  of  road  in  the  United  States,  which  it  operates  in  connection  with 
their  main  line.    What  do  you  know  about  that? 

Mr.  Adams.  The  subject,  as  I  said  before,  is  a  complicated  one.  I 
am  not  prepared  to  say  how  far  railroads  subject  to  the  law  may  be 
handicapped  by  it  in  competition  with  lines  that  are  not  subject  to  it, 
like  the  Grand' Trunk.  I  am  very  sure  if  the  law  could  be  enforced 
equally,  and,  if  found  imperfect,  modified  accordingly,  that  its  opera- 
tion would  be  beneficial  all  round.  It  may  be  j^aradoxical  on  my  part ; 
I  may  be  divergent  from  all  the  other  gentlemen  who  hold  similar  posi- 
tions to  mine,  but  I  am  not  disposed  to  find  fault  with  competitors,  pro- 
vided competion  is  fair  and  even. 

The  Chairman.  Suppose  the  interstate  commerce  act  shall  remain 
in  force;  is  there  any  way,  in  your  judgment,  by  which  we  can  compel 
Canadian  roads  doing  business  in  the  United  States  to  observe  it  ?  I 
do  not  mean  only  in  the  United  States,  but  on  through  lines,  for  in- 
stance, like  the  Grand  Trunk  Eailway  from  Chicago  to  Portland  and 
Boston. 

Mr.  Adams.  I  think  you  will  find  yourself  confronted  with  very  se- 
rious difficulties. 

The  Chairman.  In  making  them  subject  to  the  interstate  commerce 
law  ? 

Mr.  Adams.  Yes.  I  should  be  very  anxious  to  see  it  worked  out.  Let 
us  see  what  the  result  would  be.  I  would  let  things  alone,  as  at  present, 
and  let  these  Interstate  Commerce  Comu:issioners  pursue  their  investi- 
gation and  see  what  the  result  is. 

The  Chairman.  It  was  suggested  here  on  yesterday  that  there  would 
be  no  objection  to  the  building  of  feeder  lines  to  the  Grand  Trunk  and 
the  Canadian  Pacific  into  this  country,  and  their  doiugbusinesshere  back 
and  forth,  provided  they  were  put  under  the  absolute  control  of  the 
Interstate  Commerce  Commission,  and 'their  lines  and  their  conduct 
were  subject  to  the  inspection  of  the  Interstate  Commerce  Commission 
not  only  in  our  country  but  in  Canada. 

Mr.  Adams.  This  is  a  pretty  broad  field  of  inquiry,  Sir.  Chairman. 
I  should  hesitate  long  before  I  expressed  an  opinion  about  it. 

Senator  Blair.  I  understand  your  general  position  to  be  this :  Open 
the  whole  continent  to  freedom  of  action,  and  if  the  Canadian  Pacific 
proves  to  be  the  best  line  let  the  others  be  feeders  to  it. 

Mr.  Adams.  I  have  no  objection  to  that. 

Senator  Blair.  But  you  would  insist  that  our  roads  have  equality  in 


152  TBANSPORTATION   INTERESTS   OF 

conditions  in  Canada  with  what  the  Canadian  roads  have  in  the  United 
States  ? 

Mr.  Adams.  I  have  no  doubt  whatever  that  when  you  come  to  deal 
with  that  problem  the  law  will  conform  to  natural  conditions.  It  will 
work  itself  out. 

Senator  Blair.  If  the  natural  channels  of  trade  are  from  the  north 
to  the  south,  so  far  as  the  Canadian  border  is  concerned,  give  us  the 
natural  operation  of  industrial  condiiions  and  freedom  to  put  our  feed- 
ers in  Canada,  as  theirs  are  in  the  United  States,  and  we  will  get  the 
commerce.    Is  that  your  idea  ? 

Mr.  Adams.  I  have  no  doubt  of  it.  How  far  artificial  legal  restric- 
tions may  aflect  it  is  another  question. 

Senator  Blair.  You  would  look  upon  political  conditions  as  arti- 
ficial, I  suppose? 

Mr.  Adams.  Entirely.  What  I  mean  to  say  is  that,  in  the  long  rnu, 
the  pressure  of  natural  forces  will  remove  those  things,  but  they  may 
produce  very  great  injury,  possibly  financial  panics,  before  the  people 
awake  to  the  necessity  of  action  to  remedy  them.  1  do  not  i)retend  for 
a  moment  to  say  I  am  not  anxious  over  the  existing  situation.  I  am 
anxious  about  it,  and  am  watching  it  from  day  to  day  to  see  how  it  is 
going  to  tarn  out,  but  I  do  not  know  what  vouUl  be  done  now  to  im- 
prove it.  If  I  had  supreme  power  as  a  dictator,  1  should  be  utterly  at 
a  loss  to  know  what  to  do. 

Senator  Blair.  If  the  continuance  of  commercial  intercourse  between 
this  country  and  Canada  is  to  have  the  etlect  of  making  a  great  nation 
north  of  us  with  political  institutions  unsympathetic  with  our  own,  with 
a  rival  sovereignty,  in  alliance  with  great  powers  on  the  continent  of 
Europe,  and  to  build  there  a  basis  of  military  operations  against  the 
United  States  in  the  future,  would  you  not  look  upon  those  things  as 
conditions  of  importance  which  should  be  considered  f 

Mr.  Adams.  I  should  if  I  were  satisfied  that  they  existed. 

Senator  Blair.  Now,  would  you  not  look  upon  tiie  growth  of  political 
iustitiitions  and  those  associations  which  lead  to  sentiments  of  na- 
tionality and  patriotism  as  contined  to  a  given  locality  as  very  imi)or- 
tant  elements  to  be  considered  in  connection  with  the  industrial  develop- 
ment"? Would  you  not  look  upon  those  things  which  grow  out  of  the 
nature  of  man  as  quite  as  important  as  those  which  relate  simjjly  to  the 
surface  of  the  earth  ? 

Mr.  Adams.  I  think  those  things  are  independent  of  legislation. 

Senator  Blair.  Are  they  not  the  result  of  legislation  ? 

Mr.  Adams.  No,  I  think  not. 

Senator  Blair.  Or  is  not  legislation  the  result  of  them  ? 

Mr.  Adams.  I  think  probably  that  is  the  case. 

Senator  Blair.  If  they  are  so  forcible  that  they  control  legislation, 
may  not  these  other  questions  yield  ? 

Mr.  Adams.  Undoubtedly  they  may.  Those,  however,  are  very  large 
questions  that  extend  over 

Senator  Blair.  Are  they  to  be  ignored  because  they  are  large! 

Mr.  Adams.  No,  not  at  all ;  but  I  mean  to  say  that  1  am  not  prepared 
to  express  any  opinion  about  them  here  and  now. 

Senator  Blair.  There  comes  a  time  in  the  development  of  this  world 
when  such  large  questions  press  themselves  upon  the  country  for  con- 
sideration. 

Mr.  Adams.  I  should  liesitate  to  express  an  opinion  without  further 
consideration. 
Senator  Blair.  I  do  not  know  what  a  committee  in  pursuit  of  light  is 


THE  UNITED  STATES  AND  CANADA.  153 

to  do  when  the  lumiuaries  refuse  to  illuminate.  [Laughter.]  I  do  not 
like  to  see  so  brilliant  a  light  capped  with  modesty.     [Laughter.] 

Mr.  Adams.  Yon  are  very  kind,  but  I  should  prefer  to  let  the  cap  re- 
main. 

Senator  Gorman.  Are  you  content  to  urge  the  strict  enforcement  of 
this  law  with  the  long  and  short  haul  clause  and  the  prohibitions  of 
pooling  by  our  American  roads,  leaving  the  Canadian  roads  practically 
free  to  do  as  they  x^lease  ? 

Mr.  Adams.  No ;  I  am  not. 

Senator  Gorman.  Well,  what  would  you  suggest"? 

Mr.  Adams.  The  best  way,  if  the  law  is  defective,  is  to  let  it  produce 
its  results  and  amend  it  accordingly.  I  have  not  seen  the  law  working 
long  enough  to  have  my  own  mind  clear  as  to  what  the  necessary  amend- 
ment is. 

What  I  mean  is  that  if  you  gentlemen  were  to-day  to  authorize  me 
to  draft  an  amendment  to  the  interstate  commerce  act  covering  these 
points,  and  said  that  you  had  no  doubt  it  could  be  passed,  I  would  be 
utterly  at  a  loss  how  to  begin.  I  have  not  the  data  on  which  alone  leg- 
islation can  be  founded.  That  some  changes  may  be  necessary  and 
ought  to  be  brought  about  I  think  very  likely ;  but  I  should  say  that 
the  proper  parties' to  bring  about  such  changes  are  the  Interstate  Com- 
merce Commissioners,  who  are  investigating  this  thing  continually,  and 
who  will  in  time  have  the  data  before  tli(mi. 

Senator  Gorman.  Now,  what  i  want  to  get  at  is  this :  Here  in  this 
country  we  have  the  interstate  commerce  law  in  operation,  and  the 
railroads  are  governed  by  it.  Now,  this  system  of  roads  north  of  us  in 
a  foreign  jurisdiction,  not  governed  by  this  law,  comes  down  to  this 
country  tapping  us  at  every  point,  takingour  trade  and  coming  in  com- 
petition with  our  lines.  You  seem  to  agree  that  the  general  principles 
of  our  law  are  correct.  Now,  do  you  not  believe  that  it  is  the  height  of 
wisdom  by  international  legislation  or  negotiations  to  have  the  same 
conditions  imposed  upon  the  Canadian  roads  for  the  privilege  of  being 
permitted  to  participate  in  this  trade  as  we  impose  upon  our  own  roads? 

Mr.  Adams.  I  was  trying  to  think  how  that  would  operate  if  it  were 
reversed,  suppose  there  were  a  code  of  laws  in  Canada  which  they  as- 
serted was  founded  on  correct  j^rinciples  and  was  right  and  proper,  and 
that  that  code  of  laws  should  be  imposed  by  them  upon  the  American 
railroads  as  a  condition  of  their  doing  business  in  Canada  1  How  would 
it  work  if  that  same  rule  were  applied  among  nations,  if  one  nation 
should  in  this  way  im]  ose  its  own  system  upon  another  nation  °?  It  is 
a  broad  generalization. 

Senator  Gorman.  This  is  a  unique  case.  It  is  separate  and  distinct 
from  the  case  you  state,  and  the  conditions  are  just  the  reverse  of  those 
which  you  have  stated.  Three-fifths,  probably,  of  all  the  traffic  of  the 
Grand  Trunk  Line  originates  in  the  iJnited  States,  and  as  their  carry- 
ing trade  is  in  direct  competition  with  American  roads,  if  unrestricted, 
not  subjected  to  the  same  conditions  as  our  railroads,  would  it  not  re- 
sult in  bankruptcy  if  the  law  were  strictly  enforced  upon  our  American 
roads  and  not  upon  them  ?  Now,  do  you  not  believe  that  prudence  and 
wisdom  and  every  consideration  dictate  that  we  shall  impose  the  same 
conditions  upon  them  that  we  impose  upon  our  own  roads  or  else  repeal 
the  law  ? 

Mr.  Adams.  As  a  railroad  man,  T  should  say  yes. 

Senator  Gorman.  As  an  American  citizen,  what  would  you  say  f 

Mr.  Adams,  There  is  a  continual  tendency  in  your  questions,  which 
are  very  ingeniously  framed  to  that  end,  to  carry  the  discussion  into  a 


154  TRANSPORTATION   INTERESTS    OF 

pliilosopliical  field,  to  which  I  have  paid  some  attention  ;  but  thoy  open 
such  a  very  wide  field  that  I  am  reluctant  to  gointo  it.  It  is  this  whole  ; 
question  of  Governmental  restriction  and  interference.  My  views  on 
that  subject  are  tolerably  pronounced  ;  but  they  are  not  in  accord  witli 
the  views  generally  entertained  in  the  community  in  which  1  live;  and 
I  am  not  prepared'to  deny,  representing,  as  I  do,  a  large  company,  that 
the  considerations  of  the  day,  which  are  all  I  have  to  consider— I  am 
not  looking  after  the  next  generation— indicate  that  your  proposition 
is  founded  on  justice. 

Senator  Gorman.  Well,  I  was  only  treating  the  case  of  to-day,  and 
the  practical  case,  without  going  into  the  general  question.  Would  it 
not  be  a  fiict  that  if  it  is  impossible  under  the  present  conditions  and 
our  present  relations  with  Canada  to  enforce  the  provisions  of  our  inter- 
state commerce  act  upon  all  the  through  trade  from  Chicago  or  tlic 
northwest  to  Montreal,  Portland,  or  Halifax,  that  it  would  follow  as  a 
matter  of  course  that  we  would  be  compelled  to  relieve  our  railroads  <>f 
the  present  restrictions ! 

Mr.  Adams.  You  would  either  have  to  relieve  them  of  the  present 
restrictions  in  a  measure,  or  you  would  find  that  commerce,  as  I  said 
before,  would  follow  the  line  of  least  resistance. 

Senator  Gorman.  And  that  would  be  over  the  roads  that  were  not 
so  restricted  ? 

Mr.  Adams.  Undoubtedly.  Xow,  I  have  no  doubt  that  in  many 
respects — take  European  commerce  with  this  country, for  instance — that 
the  line  of  least  resistance  is  through  rortland,  Montreal,  Baltiniorc, 
and  other  cities.  But  that  is  more  than  compensated  for  by  the  com- 
mercial and  other  advantages  i)re(lominating  in  New  York,  gravitation 
and  everything  else.  There  may  be  other  considerations  which  would 
more  than  counterbalance,  and  which  would  enable  us  to  hold  our  own  ; 
but  whether  that  would  be  so  or  not,  we  should  still  be  working  uiuh  r 
a  disadvantage. 

Senator  Platt.  So,  if  Canada  were  to  subsidize  the  Canadian  Pa- 
cific road  sutliciently  it  might  overcome  the  tendency  to 

Senator  Gorman.  I  was  just  coming  to  that.  Now,  it  has  been 
stated,  Mr.  Adams,  and  I  think  nowhere  denied,  that  the  Canadian 
Government — the  English  Government,  i)robably — has  granted  a  sub- 
sidy of  $105,000,000  in  round  numbers  to  the  Canadian  i*a{rific,  wliicli 
is  an  amount  probably  greater  than  the  cost  of  the  road,  or  at  any  ran- 
nearly  so,  and  in  addition  to  that,  that  they  have  subsidized  a  line  of 
steamers  from  Chinaand  Japan  to  the  Sound  toan  amount  that  1  am  iint 
informed  of,  and  have  granted  a  subsidy  to  (he  extent  of  Imlf  a  million 
dollars  fora  line  from  Halifax  and  ^Montreal  to  the  otherend,  so  as  to  bring 
thetraflicof  the  Pacific  on  the  subsidized  steamers  and  receive  it  (••: 
the  Canadian  Pacific  at  this  end.  Now,  with  a  road  constructed  with 
public  money,  with  a  line  which  in  its  ocean  transportation  makes  two 
days  shorter  time  between  Japan  and  Liverpool  than  by  your  line,  can 
the  American  roads  control  anv  considerable  portion  of  that  trade, 
0])erating  under  the  conditions  that  you  are  to-day  f 

Mr.  Adams.  Taking  the  data  as  you  give  them  1  should  say  no,  that 
it  would  constitute  more  than  a  preponderating  intluence. 

Senator  Gorman.  It  would  be  sutficient,  in  vour  opinion,  to  divert 
the  commerce  through  the  channel  ot  San  Francisco  ? 

Mr.  Adams.  To  a  large  extent,  in  my  opinion. 

Senator  Gorman.  I  am  asking  ior  your  opinion. 

Mr.  Adams.  You  know  as  well  as  1  from  exi)erience  that  in  the 
matter  of  foreign  commerce  natural  intluences  are  very  hard  to  work 
against. 


THE  UNITED  STATES  AND  CANADA.  155 

Senator  Gorman.  But  would  it  not  control  your  charges  to  an  extent 
that  would  be  damaging  if  not  destructive  to  the  Paeitic  roads? 

Mr.  Adams.  Undoubtedly.  There  you  come  to  a  point  about  which 
there  can  be  no  question.  It  might  lead  to  the  worst  financial  conse- 
quences to  us,  because  we  have  to  meet  competition  by  holding  out 
some  inducement  that  would  increase  charges  and  eat  into  the  margin 
of  profits.  The  condition  of  railroading  in  this  country  is  that  it  is  con- 
tinually doing  its  business  on  a  narrower  and  a  narrower  margin,  and 
when  you  have  anything  that  eats  into  a  margin  of  profit  of  course  it  is 
hard  to  meet. 

Senator  Gorman.  Taking  your  road — it  is  one  of  the  great  transconti- 
nental lines,  in  which  the  United  States  is  very  largely  interested,  and 
your  rates  very  largely  depend  upon  the  through  trade — would  it  not 
impair  your  power  to  reimburse  this  country  if  the  conditions  that  exist 
in  reference  to  your  company  are  such  that  if  you  continue  to  operate 
under  the  law  you  do  so  at  a  disadvantage? 

Mr.  Adams.  Certainly.  There  is  no  doubt  about  that.  That  ques- 
tion answers  itself.  Whatever  it  takes  from  us  it  takes  from  our  mar- 
gin of  profit. 

LEGISLATION  SUGGESTED. 

Senator  Gorman.  Then,  as  a  fair  arrangement,  I  ask  your  opinion 
whether  it  would  not  be  the  act  of  wisdom  before  the  United  States 
permits  this  road  to  complete  its  line  through  Maine  and  then  on  to 
Halifax,  that  we  insist  on  the  Canadian  Government  agreeing  to  oper- 
ate with  us  under  the  same  conditions  that  we  impose  upon  you  ? 

Mr.  Adams.  That  would  be  a  perfectly  fair  proposition  for  us  to 
make. 

Senator  Blair.  How  would  that  remedy  the  difficulty  since  we  do 
not  impose  any  system  of  tariflts  ui)on  our  roads  ? 

Mr.  Adams.  I  say  that  to  the  Canadian  Government  it  would  be  a 
fair  proposition  to  make. 

Senator  Gorman.  If  that  were  the  case,  that  like  conditions  could  be 
imposed  by  general  legislation,  it  has  been  suggested  here  that  in  the 
interest  then  of  the  public  and  of  the  railroads  as  well,  that  the  next 
step  which  would  give  uniformity  of  rates  and  stop  conflicts,  as  between 
the  roads,  would  be  to  legalize  pooling;  that  is  to  say,  to  permit  a 
pool  to  be  made  for  the  division  of  traffic  between  the  roads,  to  be  ap- 
proved by  the  Interstate  Commerce  Commission. 

Mr.  Adams.  I  think  that  should  be  done ;  I  am  no  friend  of  pooling ; 
I  do  not  believe  in  it.  Nevertheless  I  think  it  ought  to  be  legalized,  and 
the  railroads  be  left  to  find  out  what  is  best  through  the  natural  process 
of  experience. 

Senator  Gorman.  Under  the  conditions  I  have  stated,  with  the  rates 
to  be  first  approved  by  the  Interstate  Commerce  Commission,  I  under- 
stand you  to  say  that  it  would  be  fair  to  the  railroads.  Now,  how  would 
it  affect  the  public  interest  I 

Mr.  Adams.  I  think  it  would  be  advantageous.  I  have  always  main- 
tained that  the  things  the  public  interests  recpiired  were  publicity  and 
stability,  and  it  has  always  been  a  wonder  and  mystery  to  me — and  I 
have  been  investigating  the  subject  twenty  years — how  business  inter- 
ests could  get  along  under  conflicting  railroad  interests.  The  two 
things  the  public  now  need,  far  more  than  any  simple  reduction  of 
rales,  are  publicity  and  stability,  so  that  !shipi)ers  and  business  men 
can  look  ahead  and  make  their  arrangements.    If  the  community  could 


156  TRANSPORTATION    INTERESTS    OF 


I 


get  as  the  result  of  any  legislation  those  two  points  they  could  perfectly 
well  afford  to  say  to  the  railroads  that  they  might  charge  50  j)er  cent, 
more  than  they  charge  now,  and  yet  the  public  would  be  better  ott"- 

Senator  Gorman.  And  does  it  follow  tliat  that  would  involve  an  in- 
crease of  railroad  rates  ? 

Mr.  Adams.  I  did  not  say  that.  The  two  great  things  are  a  published 
rate  and  its  regular  maintenance,  so  that  tht-  shipi)er  can  hav»'  some  se- 
curity that  when  he  ships  at  a  rate  to  day  tomorrow  will  not  find  it  cut 
one-half  and  a  secret  rate  given  tosomeoneelse  at  the  time  he  was  taking 
the  published  rate.  If  you  could,  through  an  international  arrange- 
ment with  Canada,  take  any  step  which  would  look  to  those  two  ends, 
I  think  it  would  be  a  very  great  i)Oint  gained.  Tliere  should  be  a  com- 
mon law  between  the  two  countries,  through  which  a  stable  published 
rate  would  be  maintained,  and  then  legalize  pooling,  if  necessary,  and 
say  to  the  railroads,  do  in  that  matter  what  you  see  tit,  provided  your 
rates  are  reasonable,  public,  and  stable.  Those  are  the  three  essential 
things. 

LARGE  AND   SMALL   SHIPMENTS. 

Senator  Blair.  I  recall  that  a  little  while  ago  in  your  examination 
you  spoke  of  the  fact  that  now  for  the  first  time  the  railroads  and  ship- 
pers confront  each  other,  and  that  the  large  shii)i)er  is  waiting  to  see  if 
he  really  is  to  be  deprived  of  his  cut  rate. 

Mr.  Adams.  I  did  not  say  it  as  a  fact.  I  spoke  of  it  as  a  theory  of 
my  own,  explanatory  of  the  situation. 

Senator  Blair.  Is  it  a  fact  that  the  chief  obstacle  in  the  way  of  the 
enforcement  of  this  interstate  commerce  law  consists  of  the  combination 
shippers,  or  combination  of  shipping  interests,  rather  than  the  oj)i)Osi- 
tion  of  the  railroads  ? 

Mr.  Adams.  That  is  undoubtedly  true,  inasmuch  as  the  shippers  are 
the  persons  who  tempt  and  the  railroads  are  the  parties  who  yield. 

Senator  Blair.  If  theshii)pers  yield,  the  natural  operation  of  the  law 
would  be  advantageous  to  the  railroad,  would  it  not  f 

Mr.  Adams.  Undoubtedly,  as  far  as  that  law  goes.  The  insuring  of 
publicity  and  stability  and  equality  of  rates  is  to  the  advantage  of  the 
railroads. 

Senator  Blair.  Is  there  any  interest  in  the  country  that  suffers,  ex- 
cepting the  large  shii^jjer  who  wants  his  cut  rate,  by  the  enforcement 
of  this  law  ? 

Mr.  Adams.  I  am  not  prepared  to  answer  the  question  in  that  shape 
and  in  all  its  breadth,  because  in  transportation  some  regard  should 
be  paid  to  what  it  costs  to  do  the  business.  You  can  perfecrly  well  un- 
derstand you  may  sacrifice  a  political  ])rinciple  to  commercial  justice. 
There  is  no  question  that  a  railroad  can,  under  given  conditions  of  traflic, 
haul  a  longer  distance  for  a  less  charge  than  it  would  cost  to  haul  a 
shorter  distance. 

Senator  Blair.  Going  in  the  same  direction  ? 

Mr.  Adams.  Going  in  the  same  direction.  For  instance,  take  the 
question  of  carrying  such  a  commodity  as  coal,  and  carrying  it  to  a  ship- 
ping point  where  you  are  running  your  trains  and  carrying  so  many 
car-loads  a  day,  keeping  your  wheels  in  motion,  and  where  vour  facili- 
ties for  handling  are  perfect.  Then  take  a  place  where  you  are  peddling 
out  a  few  car-loads  of  coal.  Under  those  circumstances  the  railroad 
can  not  carry  that  peddling  coal,  though  it  be  carried  a  shorter  dis- 
tance, at  as  low  cost  as  it  can  carry  the  greater  quaotity  of  coal  the 


THE  UNITED  STATES  AND  CANADA.  157 

mger  distance.  It  costs  more  to  carry  a  car  of  coal  to  these  peddling 
oiuts  than  to  carry  one  of  the  thousands  of  cars  which  are  hauled  the 
mger  distance.  There  is  no  question  about  this  whatever;  and  the 
aly  ground  that  you  can  stand  on  is  that  you  must  at  times  sacrifice  an 
jonomical  principle  to  political  justice.  It  is  so  also  in  regard  to  large 
Qd  small  shippers.  For  instance,  take  a  large  coal  merchant  who  ships 
thousand  car-loads  a  month,  and  there  is  no  question  you  can  afford  to 
0  his  business  for  less  than  you  can  do  the  business  of  a  small  dealer 
ho  peddles  out  coal  at  retail,  doing  his  business  at  a  small  station 
Barer  the  mine,  where  he  may  call  for  the  delivery  of  a  car-load  a  week. 
Senator  Blair.  Then  why  should  not  the  large  shipi^er  have  the  ad- 
antage  of  a  cheaper  rate,  if  that  principle  is  to  be  admitted? 
Mr.  Adams.  If  that  principle  is  to  be  admitted  he  should. 
Senator  Blair.  You  could  compare  that  principle  with  the  principle 
(llowed  by  the  street  railroads  ? 
Mr.  Adams.  Yes. 

Senator  Blair.  And  you  could  ride  5  miles  as  cheaply  as  you  could 
de  1  mile  ? 

Mr.  Adams.  Yes.  The  post-office  is  an  instance  of  that  principle.  It, 
the  violent  re-distribution  you  are  making  which  renders  the  enforce- 
lent  of  the  law  difficult.  You  have  now  in  this  country  one  of  the 
lost  complicated  manufacturing  and  industrial  systems  in  the  world, 
hese  enormous  interests  have  been  built  up  on  a  system  that  you  have 
isturbed  ;  and  when  you  introduce  your  new  system  it  inevitably  must 
reduce  disturbance. 

Senator  Blair.  What  classes  in  the  community  are  opposed  to  this 
i-adjustmenf? 

Mr.  Adams.  Every  large  shipper  who  had  secret  rates  is  dead  opposed 
)  the  law. 

Senator  Blair.  And  how  as  to  com])eting  points  I 
Mr.  Adams.  All  competing  points  are  opposed  to  the  disturbance  of 
le  commercial  interests, that  have  gradually  built  them  up  under  the 
id  system.  The  transcontinental  system,  for  instance,  was  built  up 
»r  years  on  the  principle  that  the  rate  to  California  was  regulated  by 
le  rate  around  the  Horn  to  San  Francisco,  and  the  railroads  met  the 
ite  around  the  Horn  to  San  Francisco,  but  put  up  the  rates  at  points 
iort  of  San  Francisco  to  any  point  they  might  see  fit ;  whether  a  rea- 
jnable  rate  or  an  unreasonable  rate,  it  made  no  difference ;  it  was  the 
an  Francisco  rate  plus  the  local  rate  back.  When  you  enforce  the 
mg  and  short  haul  clause,  San  Francisco  ceases  to  be  the  distributing 
snter  it  was  before.  It  was  built  up  on  the  other  system.  We  all 
now  accordingly  that  San  Francisco  was  nearly  ruined  for  the  time 
eing  by  the  construction  of  the  Southern  Pacific  to  Los  Angeles,  and 
f  the  Northern  Pacific  to  Portland.  Before  that  San  Francisco  was  a 
istributing  point  for  Oregon.  Now,  when  you  have  this  system  it  af- 
jcts  all  the  distributing  points  of  that  country. 
Senator  Blair.  Who  is  affected  beneficially  by  it? 
Mr.  Adams.  New  distributing  points  spring  up.  It  is  a  readjustment, 
nd  you  have  to  give  time  to  see  how  it  works. 

Senator  Blair.  It  is  a  question,  then,  whether  the  localities  along 
lie  line  of  the  road  shall  be  promoted  in  their  development  and  growth 
t  the  expense  of  competing  points,  or  whether  the  competing  points 
re  to  enslave  the  local  points. 

Mr.  Adams.  "  Enslave"  is  a  strong  word,  but  undoubtedly  what  you 
ive  to  one  you  must  take  from  the  other. 
Senator  Blair.  If  that  is  all  so,  and  it  is  found  that  these  two  sys- 


358  TRANSPORT A.TION    INTERESTS    OF 

terns  are  in  conflict,  wliy  is  it  not  well  to  decide  now  which  we  are  to 
enforce  rather  than  to  proceed  fnrther,  tor  it  seems  from  what  you  say 
we  have  sufficient  light  to  see  and  know  of  the  principles  that  are  operat- 
ing and  the  effect  that  is  being  produced  I 

Mr.  Adams.  I  thought  that  i)ractically  it  had  been  decided. 

Senator  Blair.  That  is,  by  the  euactment  of  the  law  ! 

Mr.  Adams.  Yes,  it  established  the  princii)les.  We  are  now  going 
through  the  painful  period  of  re  adjustment.     That  is  all. 

Senator  Blair.  Your  view  would  not  be  that  the  j)as8ing  through 
this  period  should  be  arrested,  but  that  the  re-adjustmont  shouhl  he 
made  and  there  wouUl  be  a  better  division  of  things  than  iu)w  jncvails. 

Mr.  Adams.  1  should  go  ahead  on  the  line  we  are  now  J)ur^uillg  un- 
less it  proves  more  prejudicial  than  has  yet  appeared.  1  do  not  con- 
sider that  results  have  yet  developed  themselves  fully,  but  I  think  they 
are  doing  it  day  by  day. 

Senator  Blair.  Do  you  think  the  tendency  is  favorable  or  unfavora- 
ble to  the  general  business  of  the  country  ? 

Mr.  Adams.  1  can  not  say,  because,  as  I  have  already  told  you,  the 
act,  in  my  opinion,  has  only  made  itself  realb'  felt  within  the  last  four 
months.  The  result  in  these  four  months  has  been  bad;  but  that  may 
only  be  temporary,  and  I  do  not  think  we  have  hail  time  to  see  whether 
it  is  or  it  is  not.  If  the  last  four  montiis  indicate  a  permanent  condition 
of  affairs  we  will  know  it  very  soon,  and  the  law  must  then  be  changed. 

Senator  Gorman.  You  do  not  tliink  this  coiulition  is  attributable  ex- 
clusively to  the  law,  do  you  ? 

Mr.  Adams.  IS'ot  exclusively,  but  I  am  waiting  to  see.  As  I  said  be- 
fore, the  large  shipjiers  and  the  railroads  are  watching  each  other  now 
to  see  whether  it  is  a  new  state  of  affairs,  or  whether  it  is  going  to  be  a 
temporary  thing  and  the  ohl  state  of  alfairs  is  to  return. 

Senator  Gorman.  But  independent  of  that,  is  there  not  a  ilepression 
in  large  industries  due  to  commercial  causes,  and  wlneli  does  not  eoiue 
from  any  enactment  whatever? 

Mr.  Adams.  That  is  my  opinion ;  and  1  should  feel  far  more  uncom- 
fortable than  I  do  now  if  I  thought  the  present  condition  of  affairs  was 
going  to  continue  for  a  long  period  of  time.     1  do  not  think  it  can. 

Senator  Gorman.  In  regard  to  the  Canadian  l'a<'ilic,  which  wasl»nilt 
by  this  enormous  subsidy,  would  not  this  consideration  be  entith'd  to 
some  attention  as  years  proceed,  namely,  that  stock  changing  iiands 
and  being  enhanced  in  value  by  the  improved  condition  of  the  road, 
that  then  the  holders  would  have  to  realize  on  their  holdings,  and  would 
not  that  help  to  relieve  the  question  of  subsidj  1 

Mr.  Adams.  Undoubtedly. 

Senator  Gorman.  But  when  this  stock  sells  it  must  be  sold  at  a 
higher  ligure  than  if  the  road  were  not  built  by  i)ubli('  money,  because 
the  road  would  have  the  business. 

Mr.  Adams.  In  conclusion  I  wish  to  say  that  so  far  from  being  i)re- 
pared  to  indicate  a  course  to  be  pursued,  I  am  afraid  my  own  mind  is 
in  an  unfixed  state.  When  I  answered  your  invitation  I  would  much 
rather  have  told  you  that  a  person  who  himself  sees  no  more  clearly 
into  the  situation  than  I  do  could  hardly  be  exi)ecte(l  to  afford  anV 
light  to  guide  others.  The  only  hopeful  sign,  not  in  regard  to  the  busi- 
ness situation,  but  in  regard  to  the  working  out  of  this  problem,  that 
I  now  see  is  the  very  good  work  that  I  think  the  Interstate  Commerce 
Commission  is  doing.  They  are  investigating  concrete  cases  ;  and  that 
IS  the  only  way  to  arrive  at  a  result,  and  I  think  thev  are  doing  it  in  a 
manner  which  is  very  encouraging.    But  to  me  the  situation  seems 


THE    UNITED    STATES    AND    CANADA.  159 

very  confused,  and  I  am  obliged  to  say  that  not  seeing  my  way  clearly 
to  do  anything  to  remedy  it,  I  do  not  see  my  way  to  do  anything  at  all 
except  to  wait  and  watch. 

The  Chairman.  Your  idea  is  to  keep  still  and  await  results? 

Mr.  Adams.  Yes. 

Senator  Platt.  Is  there  any  way  in  which  we  can  ascertain  the  ex- 
tent to  which  freight  eastward  from  San  Francisco  is  diverted  to  and 
carried  over  the  Canadian  Pacific  ? 

Mr.  Adams.  Undoubtedly.  That  is  a  mere  matter  of  statistics.  I 
do  not  have  those  statistics.  I  have  not  the  time  to  attend  to  every- 
thing connected  with  the  Union  Pacific,  so  that  I  do  not  even  have,  un- 
less I  call  for  them,  detailed  reports  now  sent  to  my  office. 

Senator  Platt.  But  your  traffic  manager  can  do  that  ? 

Mr.  Adams.  Yes,  he  can  give  you  all  the  details  with  respect  to  the 
diversion  of  traffic  and  what  it  amounts  to.  My  assumption  is  that  the 
diversion  can  not  have  been  inordinate,  otherwise  my  attention  would 
have  been  called  to  it  in  the  general  line  of  business.  While  things 
are  going  on 'in  a  normal  way,  without  any  special  development  of  sig- 
nificance, they  let  me  alone.  When  anything  unusual  occurs  they  call 
my  attention  to  it. 

The  Chairman.  Would  there  be  a  greater  diversion  of  traffic  from 
the  Northern  Pacific  by  the  Canadian  Pacific  than  from  your  road  by 
the  Canadian  Pacific  ? 

Mr.  Adams.  Y'es,  I  always  considered  that  it  was  the  function  of  the 
Northern  Pacific  to  look  after  that  portion  of  the  field.  Mr.  Mellen  at- 
tends all  the  meetings  of  th*e  traffic  associations.  He  resides  at  Omaha, 
where  our  whole  executive  force  is  located.  The  fact  is,  I  am  often  held 
responsible  for  things  I  have  nothing  to  do  with.  Practically,  in  the 
afiairs  of  the  Union  Pacific,  I  am  not  the  president,  or  chief  executive 
officer;  I  am  rather  the  chairmam  of  the  board  of  directors  at  Boston, 
while  the  executive  of  the  road  is  located  at  Omaha.  If  you  ask  me 
such  questions  as  you  might  ask  Mr.  Hughitt  or  Mr.  Cable,  or  any  of 
the  presidents  living  on  the  spot,  I  tell  you  I  do  not  perform  their 
duties.  I  am  chairman  of  the  board  of  directors  of  the  Union  Pacific, 
and  the  persons  whose  business  it  is  to  keep  advised  about  local,  traf- 
fic, and  detail  matters  are  necessarily  on  the  spot. 

Senator  Platt.  You  occupy  the  position  to  the  company  that  a  con- 
sulting engineer  does  to  the  construction  of  the  railroad? 

Mr.  Adams.  Somewhat.  While  I  have  many  duties  to  attend  to,  I 
am  held  responsible  for  things  that  really  I  know  nothing  of.  It  is  a 
responsibility  where  I  have  no  real  power  of  control,  and  I  might  even 
go  as  far  as  Mr.  Lincoln  once  did  when  he  said,  "  I  have  no  influence 
with  this  administration."  In  the  management  of  a  great  railroad  the 
ofiicials  on  the  spot  must  be  held  to  a  strict  responsibility  for  results ; 
they  can  not  be  held  responsible  for  results  unless  they  are  clothed  with 
adequate  power.  So  I  do  not  undertake  to  interfere  unnecessarily  with 
the  executive  officers  of  the  Union  Pacific  at  Omaha. 


160  TRANSPORT ATION    INTERESTS    OF 

STATEMENT  OF  THOMAS  L.  GREENE. 

Thomas  L.  Greene,  representing  merchants  of  New  York  City,  ap- 
peared. 

The  Chairman.  What  is  your  business,  Mr.  Greene  ! 

Mr.  Greene.  I  was  until  three  or  four  years  ago  engaged  in  connec- 
tion with  railroad  traffic.  For  the  last  three  or  four  years  1  Iiave  been 
consulted  by  meichants  with  respect  to  transportation  in  the  city  of 
New  York,  and  have  been  writing  for  commercial  papers  and  keeping 
the  run  of  the  commercial  side  of  this  question. 

The  Chairman.  With  that  statement  of  your  position  as  a  business 
man,  and  you  having  listened  to  the  statements  of  difterent  individuals  at 
this  hearing,  will  you,  in  your  own  way,  give  your  views  on  the  subject 
under  consideration  ? 

Mr.  Greene.  The  opinion  of  the  merchants,  as  fiir  as  I  have  been 
able  to  obtain  it  among  those  with  whom  I  am  familiar,  wi^h  regard  to 
the  competition  of  the  Grand  Trunk,  is  that  they  make  a  distinction  be- 
tween the  Grand  Trunk  and  the  Canadian  Pacific,  as  far  as  competition 
is  concerned.  Say,  for  exami)le,  as  far  as  the  traflic  between  Chicago 
and  New  York  going  through  Canada  is  concerned,  they  do  not  consider, 
because  it  goes  through  Canada,  that  the  com]>etition  is  unjust.  In  other 
words,  the  matter  of  differentials  that  has  been  under  discussion  here 
appliesalsoto  the  Chesapeake  and  'Jhio,  an  American  line  wholly,  which 
reaches  Chicago  and  the  Western  cities  through  Norfolk,  and  has  a 
differential  about  the  same  as  the  Grand  Trunk  at  some  i)oints  and 
more  than  the  Grand  Trunk  at  other  i)oints.  That  the  traffic  goes 
through  Canada  the  merchants  do  not  think  is  of  itself  unjust.  We  are 
continually,  as  merchants,  sought  to  ship  our  freight,  not  by  the  Cana- 
dian roads  themselves,  but  almost  always  by  the  fast  freight  lines  which 
run  through  Canada ;  that  is,  by  the  American  connections  of  these 
roads.  So  that  we  never  think  of  it  as  Canadian  competition  really, 
but  rather  as  the  competition  of  one  American  line  with  another  whose 
connection  may  happen  to  be  geographically  through  Canada;  but  we 
never  think  of  it  as  Canadian  competition. 

the  question  of  pooling. 

There  have  been  some  expressions  of  opinion  made  here  in  regard  to 
the  question  of  pooling,  and  I  might  perhaps  say  a  word  on  that.  There 
is  a  certain  misunderstanding  in  the  public  mind,  1  think,  about  what 
is  exactly  the  popular  feeling  against— or  was  the  i)opular  feeling 
against— pooling.  It  is  not  that  the  railroads  divide  among  themselves 
the  money  they  get.  If  50  cents  is  charged  for  a  barrel  of  flour  from 
Chicago  to  New  York,  we  do  not  care  whether  the  railroad  divides  that 
rate  with  some  other  road  or  not ;  but  back  of  that  is  the  fixing  of 
the  rate  by  the  railroads  at  60  cents.  There  is  the  question.  It  is  not 
the  question  of  dividing  the  proceeds,  but  the  question  of  fixing  the 
rate  as  to  what  it  should  be,  and  that  is  done  always  without  consulta- 
tion with  the  shippers.  That  is  where  they  think  thev  should  be  heard 
in  this  matter,  and  where  their  fear  is  in  regard  to  the  legalizing  of 
poohng.  It  is  bad  enough  now  in  some  respects.  1  do  not  sav  that 
the  railroads  are  not  doing  justice  as  far  as  they  are  able  to  do  "it,  but 
the  transportation  question  is  one  that  interests  everv  merchant,  and 
he  practically  has  nothing  to  say  about  the  fixing  of  the  rate  on  these 
articles  of  transportation.    It  is  acknowledged  that  the  railroad  men 


THE    UNITED    STATES    AND    CANADA.  161 

sboukl  number  75  or  80  per  ceut.  of  a  rate  or  classification  committee, 
but  we  think  tliat  tbe  merchants  should  have  20  or  25  per  cent,  repre- 
seutation  in  such  a  committee.  Now  the  railroads  fix  the  matter  with- 
out consulting  the  merchants.  A  man  having  $100,000  invested  in  busi- 
ness may  wake  up  some  morning  to  fiiul  that  the  railroad  has  made  a 
decree  that  the  rate  on  such  an  article  will  be  reduced  or  advanced, 
thereby,  perhaps,  seriously  injuring  the  business  he  has  spent  time  and 
money  to  build  up. 

The  Chairman.  You  refer  to  the  price  of  transportation  ? 

Mr.  Greene.  The  price  of  transportation,  and  included  in  that  phrase 
also  is  the  question  of  classification,  which  is  at  the  bottom  of  all 
tariffs. 

Senator  Platt.  There  is  no  diflBculty  about  doing  that  now  without 
pooling,  is  there  ? 

Mr.  Greene.  The  merchants  think  that  under  the  present  system 
they  have  more  rights  than  under  a  legalized  pool.  If  there  were  any 
way  by  which  there  could  be  a  modus  vlvendi  between  the  shippers  and 
railroads,  and  the  cause  of  the  merchants  could  be  heard,  they  would 
not  care  whether  their  rates  were  fixed  one  way  or  the  other.  This 
thing  of  leaving  it  to  the  Interstate  Commerce  Commission  to  fix  the 
rate  is  very  satisfactory  to  the  shippers,  but  they  ask  this  question, 
whether  it  is  understood  that  the  Interstate  Commerce  Commission  shall 
have  the  power  to  alter  a  rate  f  That  is  the  question.  The  question  is, 
what  do  these  railroad  gentlemen  mean  by  saying  that  these  tariffs  shall 
be  subject  to  the  Interstate  Commerce  Commission  I  You  know,  gen- 
tlemen, that  the  fact  is  now  that  the  powers  of  the  Commission  are  rela- 
tive. They  say  that  if  such  a  man  has  such  a  rate  another  man  must 
have  it  too,  but  the  Commission  has  no  power  to  say  what  the  vate  of  it- 
self shall  be  on  grain  or  on  anything  else.  Is  it  the  intention  of  this 
committee  that  the  Commission  shall  have  the  right  to  make  the  rate 
■per  sef  Otherwise  a  legalized  pool  for  the  fixing  of  rates  would  be 
harmful. 

THE   making   of   RATES. 

The  Chairman.  The  idea  is  that  the  Commission  shall  have  the 
power  to  modify  or  reduce  the  rates  that  the  railroads  make. 

Mr.  Greene.  Well,  that,  of  course,  would  take  away  the  great  objec- 
tion to  pooling. 

The  Chairman.  Do  they  not  have  that  power  now  under  the  law  ? 

Mr.  Greene.  Not  perse. 

The  Chairman.  The  Commission  has  the  right  to  pass  upon  a  rate 
fixed  by  a  railroad. 

Mr.  Greene.  As  I  understand  the  matter  it  is  only  relative. 

The  Chairman.  And  they  can  say  whether  or  not  it  shall  be  re- 
duced. 

Mr.  Greene.  I  do  not  understand  it  so. 

Senator  Harris.  If,  in  the  judgment  of  the  Commission,  the  rate  is 
unreasonable  and  exhorbitant  and  unjust  the  Commission  can  say  so 
and  reduce  the  rate. 

Mr.  Greene.  Can  the  Commission  say  to-day  that  the  rate  of  25 
cents  on  grain  from  Chicago  is  too  high  ? 

The  ChA-IRMAN.  If  the  25-cent  rate  is  deemed  to  be  too  high  the 
Commission  could  bring  the  railroad  to  answer  and  order  a  reduction- 
or  institue  proceedings  if  the  rate  is  not  reduced  after  they  have  or, 
dered  the  reduction. 
6543 H 


162  TRANSPORTATION    INTERESTS    OF 

Mr.  Greene.  The  shipper  does  not  so  untlerstaud  it.  They  uuder- 
staiui  that  if  cue  town  has  a  25ceat  rate  another  town  can  have  it. 

The  Chairman.  They  have  a  right  to  deeide  whether  or  not  that  rate 
of  25  cents  be  an  unreasonable  rate,  and  if  they  decide  that  it  is  an  un- 
reasonable rate  the  result  would  be  a  reduction,  or  a  prosecution,  if  the 
ruling  of  the  Commission  were  not  obeyed. 

Mr.  Greene.  The  shipper  and  public  do  not  understand  it  so.  They 
understand  the  term  "unreasonable"  to  be  a  relative  one. 

The  Chairman.  Of  course  almost  all  that  kind  of  work  is  relative. 
One  thing  is  relative  to  another  ;  but  taking  into  account  all  the  rela- 
tions that  may  exist  in  charges,  the  Commission  have  a  right  to  deter- 
mine whether  the  rate  is  unreasonable  or  not,  and  when  they  find  that 
the  rate  is  unreasonable  then  the  only  thing  left  is  the  reduction  of  the 
rate  or  a  proseiiution  for  damages  on  account  of  extortionate  rate. 

Senator  Ulair.  That  is  in  the  case  of  an  individual  who  deems  him- 
self injured ;  that  is,  that  there  would  be  a  right  of  suit  by  law,  and  the 
Commission  is  to  say  in  the  lirst  instance  wliether  the  rate  complained 
of  bean  unreasonable  rate;  but  I  understand  the  jxtint  that  you  gen- 
tlemen make  to  be  this,  that  the  commercial  cominnnity  do  not  under- 
stand that  the  Commission  can  examine  a  taritf  and  say  it  is  an  unrea- 
sonable tariff  and  therailroael  must  reduce  it.  The  remedy  that  con)e8 
out  of  a  suit  at  law  is  one  that  the  commercial  community,  as  1  under- 
stand it,  do  not  find  to  be  a  satisfactory  one. 

Mr.  Greene.  Yes,  sir;  we  ])refer  that  the  shippers  be  in  some  way 
consulted  beforehand  in  matters  in  which  they  are  so  vitally  interested. 

The  Chairman.  Your  desire  seems  to  be  that  you  ought  to  i)artici- 
pate  with  the  railroads  in  the  determination  of  what  the  rat  cn  should  bet 

Mr.  Greene.  Y'^es,  sir;  the  shippers  should  be,  at  least,  consulted. 

Senator  Gorman.  As  to  the  profits  you  can  make  in  your  business  t 

Mr.  Greene.  Ko,  sir;  but  take  for  example  the  grocers;  the  grocers 
now  have  a  case  before  the  Interstate  Commerce  Commission  in  whicli 
they  suddenly  found  their  charges  increased  50  per  cent.  The  dry-goods 
men  found  recently  that  the  railroads  made  rates  on  cotton  goods  la 
bales  rather  than  in  boxes  ;  they  were  not  consul te<l  in  that. 

Senator  Harris.  In  what  manner  woidd  you  have  shippers  repre- 
sented in  fixing  the  rates  of  transportation  i 

Mr.  Greene.  Any  oft" hand  opinion  would  be  of  little  value;  in 
Germany  they  have  representative  commercial  bodies  who  are  repre- 
sented before  the  rate-making  power;  but  that  would  hardly  ajjply  to 
this  country,  because  that  is  a  governmental  affair;  each  city  in  Ger- 
many has  its  board  of  representation. 

Senator  Harris.  The  producers  all  over  the  country  are  8bipi)er8  to 
a  greater  or  lesser  extent  as  well  as  the  merchants,  are  they  not  ? 

Mr.  Greene.  Yes,  sir. 

Senator  Harris.  Now,  how  are  you  going  to  represent  that  great 
body  of  shippers  in  fixing  rates  by  the  many  common  carriers  through- 
out this  whole  country. 

Mr.  Greene.  As  the  matter  is  now  arranged  the  common  carrier> 
of  one  section  make  rates  that  are  limited  to  the  section  to  wliich  that 
tariff  applies.  That  limits  the  number  very  materially,  and  if  tiiey 
would  give  public  notice  that  such  and  such  a  thing  was  in  mind  and 
was  open  for  discussion  and  for  hearings  it  would  help  the  merchant.* 
very  much.  I  am  in  favor  of  publicity,  because  thereby  we  could  avoi(i 
a  great  deal  of  misunderstanding  if  we  could  but  talk  with  another. 

Senator  Harris.  Do  you  not  think  it  projjer  and  just  that  the  mer 
chants  be  required  to  confer  with  the  consumers  of  "tlie  country  as  r< 
the  price  that  should  be  fixed  upon  their  goods  ? 


THE    UNITED    STATES    AND    CANADA  163 

Mr.  Greene.  I  do  uot  thiuk  tliat  tlie  railroad  should  consult  the 
merchants  iu  that  way.  .  I  do  not  mean  that  the  merchant  shall  fix  the 
price  for  the  railroad,  but  ('hat  there  shall  be  some  means  of  consulta- 
tion with  the  merchants  before  the  rate  is  fixed.  The  merchants  should 
have  some  chance  to  exphiiu  what  they  wish,  and  in  case  of  sudden 
changes  why  it  should  or  should  uot  be  made  and  what  not.  But  they 
would  be  perfectly  willing,  if  1  understand  them  correctly,  to  have  that 
matter  passed  on  by  the  Interstate  Commerce  Commission.  The  only 
objection  to  that,  however,  is  that  the  matter  of  freight  rates  would  in 
time  get  into  Congress. 

Senator  Reagan.  You  want  the  Commission  to  have  sufficient  jjower 
to  supervise  these  rates  before  they  are  finally  promulgated  ! 

Mr.  Gkeene.  Yes,  sir;  before  promulgation  or  alter  it. 

Senator  Blair.  Mr.  Fink  said  the  whole  question  was  tending  to  one 
of  Government  control.  Is  there  any  possible  way  in  which  the  com- 
munity at  large  could  be  heard  except  through  some  governmental 
body? 

Mr.  Greene.  The  merchants  have  different  associations. 

Senator  Blair.  The  pooling  arrangement  would  leave  the  community 
entirely  devoid  of  the  oi)portuuity  to  bargain,  because  there  would  be 
only  one  party  to  consult,  and  that  party  could  fix  his  own  price.  Of 
course  the  shipper  must  have  the  transportation,  and  pay  the  rate  that 
one  man  puts  upon  it.  You  now  have  competition  and  the  pool  would 
deprive  you  of  that. 

Mr.  Greene.  Yes,  sir. 

Senator  Blair.  One  gentleman  here  said  he  thought  that  if  the 
Commission  represented  the  people  at  large  we  could  legalize  pooling 
and  it  would  do  away  with  existing  evils  ;  that  is,  that  the  rates  should 
be  regulated  by  the  pool  on  the  one  side  and  the  Commission  on  the 
other.    Do  you  think  that  power  of  veto  is  all  you  need  ? 

Mr.  Greene.  Yes,  sir ;  the  power  of  veto  and  of  alteration. 

Senator  Blair.  And  you  to  be  heard  by  the  Commission? 

Mr.  Greene.  Yes,  sir ;  I  do  not  thiuk  there  would  be  any  objection 
to  that. 

Senator  Harris.  That  could  be  accomplished  as  well  without  a  pool 
as  with  it,  could  it  not? 

Mr.  Greene.  Certainly ;  but  I  would  say  that  the  merchants  are 
very  far  from  being  opposed  to  these  railroad  associations.  Their  idea 
is  that  the  rates  should  be  flexible  but  not  fluctuating.  That  is  per- 
haps a  sort  of  paradox,  but  that  is  their  idea.  They  want,  where  the 
commercial  necessity  requires  it,  that  the  rate  be  changed,  but  they  do 
not  want  unstable  rates.  A  railroad  war  in  rates  is  one  extreme,  and 
a  legalized  pool  without  thorough  supervision  would  be  the  other. 

THE  CANADIAN  LINES. 

The  Chairman.  Your  merchants  here  have  very  little  concern  or 
particular  knowledge  as  to  these  Canadian  railroads  and  their  connec- 
tious,  have  they? 

Mr.  Greene.  We  know  that  they  exist  and  we  know  that  the  Amer- 
ican roads  that  ask  for  our  trafSc  carry  it  through  Canada. 

The  Chairman.  Do  you  know  whether  or  not  they  obey  the  inter- 
state commerce  law,  or  whether  they  are  any  detriment  to  the  Amer- 
ican roads  or  not,  or  is  it  a  matter  iu  which  you  are  uot  specially 
concerned  as  merchants  ? 

Mr.  Greene.  It  is  a  matter  in  which  we  are  specially  concerned,  but 


1G4  TRANSPORTATION  INTERESTS  OF 

we  do  not  look  at  a  differential  through  Canada  as  different  from  a  dif- 
lerential  around  by  way  of  Norfolk. 

The  Chairman.  You  have  no  special  views  to  give  in  reference  to 
the  existence  of  these  Canadian  lines,  or  their  effects  upon  this  coun- 
try 1 

Mr.  Greene.  The  only  thing  is  that  we  are  accustomed  to  regard 
these  Canadian  questions  separately.  The  carriage  of  goods  between 
Detroit  and  New  York  through  Canada  is  for  example  one  thing,  while 
the  unjust  discriminations  put  upon  American  vessels  in  the  Welland 
Canal  is  another  and  separate  one.  The  value  of  transportation 
through  Canada,  to  the  dowu-east  parts  of  New  England  or  to  the 
northwest  may  be  conceded,  without  any  one  being  thereby  committed, 
to  defending  the  Canadian  discriminations  against  carrying  New  Eng- 
land fish  in  bond. 

The  Chairman.  Have  you  any  views  to  express  to  the  committee  iu 
reference  to  the  influence  of  these  Canadian  lines  with  respect  to  our 
roads ! 

Mr.  Greene.  There  is  one  suggestion  that  I  might  make.  The  Inter- 
state Commerce  Commission,  of  course,  has  the  voice  or  ])ower  to  say 
that  under  certain  circumstances  the  long  and  short  haul  clause  shall 
not  bo  observed.  They  have  in  the  course  of  their  investigation  of  that 
subject  decided  that  water  competition,  or  competition  with  carriers 
wholly  foreign,  exempts  our  roads  from  this  rule.  Now,  if  in  the  mean- 
time it  should  come  to  a  question  of  absolute  life  and  deatii,  they  might 
be  willing  to  take  upon  themselves  the  power  to  say  thaf,  because  almo 
which  went  through  Canada  was  partly  out  of  their  jurisdiction,  the 
competing  American  line  might  be  exempted  from  the  force  of  the 
long  and  short  haul  clause  to  the  extent  tliey  luiglit  determine. 

The  Chairman.  Supi)Ose  that  road  was  exempt  from  the  long  and 
short  haul  provision,  what  would  become  of  the  road  just  contiguous 
to  it?  Take  the  Northern  Pacitic,  for  instance.  Now,  do  you  say  be- 
cause of  the  Canadian  Pacific  being  exem|)t  from  the  operation  of  the 
long  and  short  haul  clause  the  Northern  Pacitic  shall  be  exempt  from 
it  also ! 

Mr,  Greene.  Yes. 

The  Chairman.  If  the  Northern  Pacific  is  exemi)t  from  the  operatioii 
of  the  law  because  it  is  doing  business  in  competition  with  the  Canadian 
Pacific,  then  the  Union  Pacitic,  which  is  doing  business  in  competition 
with  the  Northern  Pacific,  would  also  have  to  be  exempt  fiom  the 
operation  of  the  law. 

Mr.  Green>^.  Unquestionably. 

The  Chairman.  And  the  Union  Pacific  does  business  in  competition 
with  the  Atchison,  Topeka  and  Santa  F6  ! 

Mr.  Greene.  Yes,  sir. 

The  Chairman,  Then  you  must  except  the  Atchison  and  Topeka  ? 

Mr.  Greene.  Yes,  sir. 

The  Chairman.  Then  you  have  no  long  and  short  haul  clause  left, 
have  you  ? 

Mr.  Greene.  Yes,  the  same  as  now  under  water  competition  hereto- 
fore referred  to.  The  Comoiission  decided  so  where  water  competition 
existed  and  where  foreign  competinou  existed. 

The  Chairman.  They  suspended  the  operation  of  the  long  and  short 
haul  clause  for  the  time  being,  in  the  matter  of  railroads  that  they  had 
under  investigation. 

Senator  Peatt.  They  said  that  for  that  tiin.'  th.y  so  held,  but  I  did 
not  understand  that  the  decision  was  a  permanent  one. 


THE    UNITED    STATES    AND    CANADA.  165 

Mr.  Grkene.  The  New  Orleans  rate  was  55  cents  and  the  rate  to 
Athiuta  was  $1.14.  That  is  an  inequality,  and  the  Southern  States  are 
now  full  of  that  thing.  The  Commission  have  decided  that  where  a 
proper  representation  is  made  to  them,  after  investigation,  they  will 
consider  that  water  competition  is  a  factor  in  determining  the  rates  in 
violation  of  the  act,  or  that  part  of  the  act  with  reference  to  the  long 
and  short  haul  requirements. 

Senator  Blair.  Do  you  know  any  railroad  in  the  United  States  that 
is  exempt  from  the  operation  of  the  long  and  short  haul  clause  by  reason 
of  water  competition  ? 

Mr.  Greene.  All  the  roads  between  here  and  the  Mississippi  and  be- 
tween here  and  New  Orleans  are  in  the  same  condition. 

Senator  Blair.  Is  this  a  recent  decision  that  you  refer  to? 

Mr.  Greene.  There  is  no  decision.  They  have  given  it  out  that 
where  there  are  cases  or  complaints  brought  before  them  touching 
water  competition,  they  will  consider  the  matter  of  water  competition, 
as  far  as  it  goes,  a  defense.  The  Commission  have  recently  examined 
all  Southern  tariffs  where  these  violations  of  the  short  haul  are  numer- 
ous, and  have  ordered  no  changes  where  water  routes  compete. 

Senator  Platt.  They  have  not  authorized  a  road  to  act  arbitrarily 
at  all  in  this  matter.  They  are  simply  waiting  for  somebody  to  bring 
that  question  before  them,  as  I  understand. 

Mr.  Greene.  The  case  which  was  lately  before  them  and  where  they 
ordered  a  change  was  the  question  of  charging  more  just  this  side  of 
Atlanta,  but  that  is  a  case  of  land  rates.  The  rate  from  New  York  to 
Atlanta  is  now  $1.14.  and  the  carriers  think  of  raising  it  to  $1.20, 
whereas  a  few  points  between  are  charged  more. 

Senator  Platt.  There  is  no  way,  then,  in  which  the  question  of  rates 
between  the  laud  and  water  routes  can  be  determined  except  by  the 
regulating  of  the  rates  along  the  line  of  the  water  route  ? 

Mr.  Greene.  That  is  true.  The  rate  to  New  Orleans  was  55  cents, 
and  is  now  70  cents,  which  gives  New  Orleans  an  advantage  over  At- 
lanta, but  the  higher  rate  to  Atlanta  is  not  therefore  unjust. 

Senator  Platt.  The  rate  to  Atlanta  is  what? 

Mr.  Greene.  One  dollar  and  fourteen  cents.  The  Commission  re^ 
quired  them  to  arrange  their  land  rate  to  correspond  with  the  long  and 
short  haul.  The  rate  to  Spartanburgh  was  $1.24,  which  is  just  this  side 
of  Atlanta,  and  the  land  rate  there  should  not  be  more  than  to  Atlanta. 
There  was  no  complaint  of  the  rate  being  more  to  Atlanta  than  to  New 
Orleans,  i  he  tariffs  of  the  Louisville  and  Nashville  and  other  Southern 
roads  are  full  of  these  exceptions  to  the  short  haul  rule.  This  water 
competition  affects  the  whole  Southern  country. 

The  Grand  Trunk  is  not  a  subsidized  road  like  the  Canadian  Pacific, 
and  if  they  should  obey  the  law  of  course  the  merchants  would  look 
upon  it  very  much  as  upon  any  other  out-of-the-way  route  to  get  to  a 
place. 

At  1  o'clock  p.  m.  the  committee  took  a  recess  until  2  o'clock. 

At  the  expiration  of  the  recess  the  committee  resumed  its. session. 


166  TRANSPORTATION   INTERESTS    OF 


STATEMENT  OF  JAMES  J.  HILL. 

Mr.  James  J.  Hill,  president  of  the  St.  Paul,  Miuueapolis  and  Mani- 
toba Eailway  Company,  appeared. 

The  Chairman.  What  is  your  business  at  this  time,  Mr.  Hill. 

Mr.  Hill.  At  present  1  am  president  of  tbe  St.  Paul,  Minneapolis 
and  Manitoba  Railway  Company. 

The  Chairman.  Will  you  i)lease  describe  to  the  committee  tbe  vari- 
ous lines  owned,  operated,  and  controlled  by  your  com]»any,  their  sev- 
eral termini,  and  the  region  of  country  within  which  you  are  doing 
business  *? 

Mr.  Hill.  Our  line  commenced  originally  at  St.  Paul.  The  original 
road  as  chartered  was  from  St.  Paul  to  the  international  boundary  lines 
between  Minnesota  and  the  Province  of  Manitoba.  That  is  the  original 
land-grant  road.  The  road  has  been  extended  into  Dakota  and  into  the 
lied  River  Valley..    I  think  our  first  (extension  was  made  tluTe  in  1880. 

The  Chairman.  It  extends  into  ])ak(»ta  from  whercf 

Mr.  Hill.  From  Breckeiiridge  and  other  points  in  Minnesota. 

The  Chairman.  Where  is  Kreckenridge,  with  ictVrence  to  St.  Panlf 

Mr.  Hill.  It  is  on  the  boundary  line  bftwren  Minnesota  aixl  J);ikota, 
about  the  center  of  the  western  boundary  line  of  the  State  of  Minnesota. 

From  that  time  on  we  have  continued  extending  the  line  as  tlie  coun- 
try would  settle  up.  For  instance, Me  have  in  many  cases  surveyed  a  lino 
oneyear.  People  followed  the  stakes  and  settled  along  them.  The  next 
year  we  grade;  the  third  year  we  lay  the  rails  down,  and  the  fourth 
year  have  stations,  not  many,  that  will  ship  ()(H),()(M)  bushels  of  wheat. 
The  station  from  which  the  (i()(>,()00  bushels  of  wheat  were  shijjped  was 
on  the  line  that  now  ends  at  Rutte,  Mont. 

The  original  company  runs  to  Great  Falks,  and  from  (Ireat  Falls  we 
own  or  control  the  line  lying  wholly  within  Montana  and  which  extends 
190  miles,  or  in  the  neighborhood  of  li(i(>  miles  I  may  say,  from  (Jreat 
Falls,  on  the  Missouri  River,  to  Rutte 

The  Chairman.  Where  is  Rutte  i^ 

Mr.  Hill.  Rutte  is  on  the  west  side  of  the  nmin  ninge  of  the  Rocky 
Mountains,  in  Montana. 

The  Chairman.  You  cross  the  mountains. 

Mr.  Hill.  We  cross  three  ranges  of  mountains  with  the  Montana 
Central. 

The  Chairman.  How  far  is  Rutte  beyond  Helena  ? 

Mr.  Hill.  It  is  72  miles  beyond  Helena,  but  ranges  of  mountains  in- 
tervene. 

The  Chairman.  How  far  is  Rutte  from  St.  Paul  f 

Mr.  Hill.  About  1,250  miles. 

Senator  Platt.  How  many  miles  are  there  in  vour  wliole  system  ? 

The  Chairman.  You  call  these  different  roadsover  which  von  hav«' 
control,  a  system. 

Mr.  tliLL.  Tlie  ^Manitoba  road  proper  is  about  3,000  miles. 

Ihe  Chairman.  You  mean  the  road  from  St.  Paul  to  Manitoba  proper  ? 

Mr.  Hill.  No,  sir;  its  branches.     It  is  all  one  concern,  except  the 

ine  in  Montana  and  a  line  from  Hinckley,  .Minn.,  to  Lake  Superior,  a 

line  from  Watertown  to  Huron  in  Dakota,  and  a  line  fron)   Willmar  to 

Sionx  lalls.     The  Manitoba  road,  however,  owns  all  the  stock  of  each 

ot  these  roads. 

The  Chairman.  They  are  branches  of  the  main  line  running  from 
St.  Paul  to  Manitoba?  ^ 


A 


THE  UNITED  STATES  AND  CANADA.  167 

Mr.  Hill.  Yes,  sir.  Our  main  line  now  is  from  St.  Paul  to  Butte. 
The  word  "Manitoba"  is  rather  a  misnomer.  At  the  time  the  name  was 
adopted  the  principal  business  between  St.  Paul  and  the  country  north 
of  us  was  the  transportation  of  freight  and  passengers  to  and  from  Man- 
itoba. There  were  very  few  settlers  north  of  a  hundred  miles  from  St. 
Paul,  while  the  distance  from  St.  Paul  to  Manitoba  is  400  miles.  The 
word  "  Manitoba"  was  added  to  the  name  of  the  road  to  identify  it  as 
the  line  reaching  that  country. 

The  Chairman.  Where  are  the  actual  termini  of  that  road  going 
north? 

Mr.  Hill.  At  St.  Vincent,  in  Minnesota,  and  at  Neche,  in  Dakota, 
both  on  the  international  boundary. 

The  Chairman.  One  of  these  roads  runs  into  Canada,  I  believe? 

Mr.  Hill.  We  have  not  a  foot  of  road  in  Canada.  The  Canadian  Pa- 
cific connects  with  us  by  two  lines  that  have  been  built,  one  built  by  the 
Government  and  one  built  more  recently  by  the  company. 

The  Chairman.  Is  not  Winnipeg  in  the  Dominion  of  Canada  ? 

Mr.  Hill.  Yes,  sir;  it  is.    It  is  05  miles  from  the  United  States. 

The  Chairman.  Have  you  not  a  line  running  to  Winnipeg? 

Mr.  Hill.  Ko,  sir ;  we  run  through  trains  over  the  Canadian  Pacific, 
or  we  haul  their  cars. 

The  Chairman.  You  have  connection  to  Winnipeg  ? 

Mr.  Hill.  Yes,  sir. 

The  Chairman.  How  long  was  it  after  this  first  line  was  built  before 
you  had  any  competition  ?     You  have  it  now,  I  believe. 

Mr.  Hill.  Well,  just  as  soon  as  the  Canadian  Pacific  Railway  was 
completed  the  competition  commenced.  Prior  to  the  construction  of  the 
Canadian  Pacific  Railway  all  the  business  going  to  the  Canadian  north- 
west, including  the  material  to  build  the  first  thousand  or  twelve  hun- 
dred mdes  of  their  railway,  was  carried  over  our  route.  At  one  time 
the  business  north  of  St. Vincent  constituted  40  to  45  per  cent,  of  our 
entire  traffic. 

The  Chairman.  I  believe  I  understood  you  to  say  that  St.  Vincent  is 
right  on  the  boundary  line. 

Mr.  Hill.  Yes,  sir. 

Senator  Gorman.  During  what  year  was  it  that  the  business  north 
of  St.  Vincent  constituted  40  to  45  per  cent,  of  your  entire  trafiic? 

Mr.  Hill.  It  was  in  1882  and  1883.  During  those  two  years  it  ran 
from  35  to  45  per  cent,  of  our  entire  trafiic. 

Tlie  Chairman.  You  had  a  monopoly  of  the  business  from  St.  Vin- 
cent to  Minneapolis,  did  you  not  ? 

Mr.  Hill.  Yes,  sir;  we  had  a  very  comfortable  monopoly  for  three 
years. 

The  Chairman.  What  road  was  built  that  caused  a  division  of  that 
trade  ? 

Mr.  Hill.  The  Canadian  Pacific  was  completed  north  of  Lake  Su- 
perior, and  at  the  same  rates  we  could  not  get  any  business,  for  the 
rea:son  that  goods  used  in  Canada  and  Manitoba,  on  account  of  the 
duties,  were  bought  in  Canada.  They  were  shipped  from  Montreal, 
Toronto,  or  any  other  point  in  Canada  to  merchants  in  Manitoba  just  as 
goods  would  be  shipped  from  Xew  York  to  Chicago,  without  anything 
more  than  the  ordinary  shipping  receipt.  If  the  goods  were  purchased 
in  the  United  States  for  consumption  in  Manitoba  they  had  to  be  accom- 
panied with  consular  invoices.  The  goods  had  to  be  bonded;  bonding 
agents  had  to  beat  the  frontier  points;  the  bonds  had  to  follow  the 
goods  through  to  St.  Vincent,  and  there  tlicy  had  to  got  tlie  usual  land- 


168  TRANSPORTATION    INTERESTS    OP 


Jl 

iug  certificate  aud  iuspectiou  certificate.  All  this  was  more  tronbli^ 
thau  the  shippers  would  uudertake  when  there  was  no  diilerence  in  the 
rate.  We  could  not  make  any  lower  rate  than  the  Canadian  Pacific 
would  make.  Our  road  and  its  connections  undertook  to  pay  interest 
and  something  on  the  investment,  aud  the  Canadian  Pacific's  invest- 
ment was  borne,  to  an  extent,  by  the  Government  of  Canada. 

The  Chairman.  The  Canadian  Pacific  corporation  proper  did  not 
have  much  invested  in  the  road?  ij 

Mr.  Hill.  Yes,  sir;  1  was  one  of  the  original  ten  who  started  it,  and     f 
I  know  that  there  were  ten  millions  of  good  money  put  in  it  to  com- 
mence with. 

The  Chairman.   How  much  was  put  in  by  the  Government  ? 

Mr.  Hill.  1  do  not  know,  sir.  I  sold  out  my  interest  in  the 
Canadian  Pacific.  1  saw  that  a  conflict  was  coming,  and  1  said,  "  We 
will  part  friends." 

The  Chairman.  Have  you  any  approximate  knowledge  of  the 
amount? 

Mr.  Hill.  That  is  a  matter  easily  established.  I  might  say  it  was 
one  sum  or  another.  It  would  be  as  you  would  reckon  it.  I  think  it 
was  given  seven  or  eight  hundred  miles  of  road,  certain  bonds  were 
guarantied,  and  it  was  granted  a  great  deal  of  laud  and  a  cash 
subsidy. 

The  Chairman.  What  is  the  competing  line  with  your  line  now 
from  Winrjipeg? 

Mr.  Hill.  There  is  very  little  business  between  the  United  States 
and  Wiuni[)eg.  The  Northern  Pacific  competes,  but  neither  of  us  get 
enough  to  hav^e  any  trouble  about  it. 

The  Chairman.  Has  the  Northern  Pacific  llailroad  a  line  to  Winni- 
peg now  I 

Mr.  Hill.  Yes,  sir;  it  is  called  the  Manitoba  and  Northern  Pacific, 
I  think.  In  Canada  it  is  a  company  that  has  been  bonused  by  the 
province  of  Manitoba.  Either  the  stock  of  that  company  is  held  by  the 
Northern  Pacific  or  the  Northern  Pacific  operates  the  roatl. 

Senator  Platt.  Where  is  that  road  ? 

Mr.  Hill.  It  extends  from  the  boundary  to  W^innipeg,  on  the  west 
side  of  the  Ked  Kiver.  It  leaves  the  United' States  between  St.  Vincent 
and  Neche. 

Senator  Platt.  Where  does  it  connect  with  the  Northern  Pacific  ? 

Mr.  Hill.  At  a  point  14  miles  east  of  our  connection  with  the  Ca- 
nadian Pacific. 

The  Chairman.  Is  that  the  road  about  which  there  seems  to  be  some 
considerable  excitement  and  trouble  ? 

Mr.  Hill.  Yes,  sir;  about  a  crossing  of  another  line. 

The  Chairman.  My  recollection  is  that  it  was  some  time  before  the 
Canadian  Government  proper  consented  to  allow  the  road  to  be  built 
at  all.    Is  that  not  the  case  ? 

Mr.  Hill.  That  is  true.  The  province  had  a  right  to  build  the  road, 
but  they  had  no  right  to  do  so  under  the  charter  of  the  Canadian  Pa- 
cific or  under  the  contract  of  the  Canadian  Pacific  with  the  Canadian 
Government.  The  Canadian  Government  agreed  to  grant  no  charter 
to  any  railroad  within  15  miles  of  the  international  boundary  line  for 
twenty  years. 

The  Chairman.  I  have  heard  something  of  its  being  100  miles. 

Mr.  Hill.  That  is  not  correct.  The  contract  was  to  grant  no  charter 
tor  a  road  witLin  15  miles  of  the  boundary  line  for  twentv  years,  I 
think.  Ihe  Canadian  Pacific  could  take  care  of  all  the  roads 'tllat  were 
withm  the  province. 


THE    UNITED    STATES    AND    CANADA.  169 

The  Chairman.  Was  that  granted  by  an  act  of  the  Canadian  Parlia- 
ment? 

Mr.  Hill.  Yes,  sir. 

The  Chairman.  It  was  to  the  effect  that  there  should  be  no  roads 
built,  except  by  the  consent  of  the  Canadian  Pacific,  within  15  miles  of 
the  international  boundary. 

Mr.  Hill.  Yes,  sir. 

The  Chairman.  And  that  was  the  ground  of  objection  ? 

Mr.  Hill.  Well,  that  was  the  agreement.  It  may  have  been  waived 
for  a  consideration. 

The  Chairman.  It  was  waived  in  this  case,  was  it  not? 

Mr.  Hill.  Yes,  sir;  for  a  consideration. 

The  Chairman.  What  was  the  consideration  ? 

Mr.  Hill.  1  think  there  was  a  guaranty  of  $15,000,000.  It  was  a 
very  valuable  franchise  in  the  hands  of  the  Canadian  Pacific. 

The  Chairman.  What  competition  have  you  now  for  the  Winnipeg 
business  ? 

Mr.  Bill.  We  ha  ve  the  competition  of  the  Northern  Pacific  from  the 
United  States,  but  the  Canadian  Pacific  practically  controls  it;  so  that 
the  Northern  Pacific  and  the  St.  Paul,  Minueajjolis  and  Manitoba  have 
little  of  that  business. 

Senator  Platt.  The  Canadian  Pacific,  then,  really  runs  down  from 
Winnipeg  to  Ulyndon  ? 

Mr.  Hill.  It  runs  to  the  boundary  line,  sir.  We  haul  their  j)assen- 
gercars. 

Senator  Platt.  They  control  that  road  down  to  the  Northern  Pa- 
cific? 

Mr.  Hill.  If  you  will  pardon  me,  no,  sir ;  they  do  not  control  any- 
thing except  to  the  international  boundary  line. 

Senator  Platt.  And  the  Northern  Pacific  controls  the  road  to  the 
boundary  line  ? 

Mr.  Hill.  Yes,  sir ;  and  to  Winnipeg,  over  lines  bonused  by  the  Man- 
itoba Provincial  Government. 

THE   "  SOO  "  LINES. 

The  Chairman.  Has  tha  Canadian  Pacific  any  roads  in  that  section 
of  the  country  running  into  the  United  States  ? 

Mr.  Hill.  There  are  two  roads  in  Michigan  and  Wisconsin  that  are 
supposed  by  a  great  many  to  be  owned  by  the  Canadian  Pacific.  'Those 
are  the  "  Soo  Lit)e  "  and  the  line  south  of  Lake  Superior  called  the  Du- 
luth  and  Lake  Shore  Line.  How  far  those  lines  are  directly  owned  by 
the  Canadian  Pacific  road  I  do  not  know.  I  do  not  think  that  the  Can- 
adian Pacific  owns  the  roads.  I  think  that  parties  who  have  interests  in 
the  Canadian  Pacific  also  own  large  interests  in  these  other  properties. 

The  Chairman.  Do  you  know  who  actually  controls  them  ? 

Mr.  Hill.  They  are  controlled  by  the  stockholders. 

Senator  Rraoan.  Do  you  understand  that  a  majority  of  the  stock  of 
that  road  from  Sault  Ste.  Marie,  to  which  you  have  referred,  is  owned 
by  the  Canadian  Pacific? 

Mr.  Hill.  I  think  that  an  even  share  of  it  is  owned  by  the  owners  of 
some  of  the  stock  of  the  Canadian  Pacific,  but  not  by  the  Canadian 
Pacific  Kailway  proper. 

*   Senator  ReagaN.  And  that  same  observation  applies  with  reference 
to  the  road  from  Sault  Ste.  Marie  to  St.  Paul  ? 

Mr.  Hill.  Yes.  sir  ;  I  understand  it  does. 


170  TRANSPORTATION   INTERESTS    OP 

The  Chairman.  Are  those  roads  not  now  substantially  subject  to  the 
Canadian  Pacific  1 
Mr.  Hill.  No,  I  tbink  not. 
The  Chairman.  But  they  are  operated  in  connection  with  that  road, 

are  they  not  ? 

Mr.  Hill.  To  an  extent,  yes,  sir;  that  would  have  to  be  so ;  that  is, 
they  are  operated  in  connection  with  the  lakes,  and  the  Canadian  Pa- 
cific use  their  eastern  connection  because  there  is  no  other  connection 
or  railway  at  the  Sault.  They  also  run  down  to  some  point  on  the  lake 
and  cross'^over,  I  think  it  is  from  St.  Ignace,  to  the  peninsula  of  Michi- 
gan, and  there  connect  with  the  IMichigau  Central  and  Pennsylvania 
lines. 

The  Chairman.  How  many  miles  of  those  lines  are  in  Canada  ? 

Mr.  Hill.  Not  a  foot. 

The  Chairman.  Where  do  they  make  connection  with  the  Canadian 
Pacific  ? 

Mr.  Hill.  On  the  international  bridge  or  the  bridge  across  the  Sault 
Biver  which  the  different  lines  own  in  common. 

The  Chairman.  Where  is  this  Sault  bridge  ?  Is  it  directly  on  the 
border  line! 

Mr.  Hill.  The  Sault  River  divides  the  Canadian  territory  from  the 
United  States.  It  is  exactly  at  the  head  of  the  canal,  just  where  the 
Sault  Canal  opens  into  Lake  Superior. 

The  Chairman.  So  that  the  bridge  is  on  the  line  ? 

Mr.  Hill.  Yes,  sir;  it  is  on  the  line. 

Now,  that  road  from  Minneapolis  to  the  Sault  was  built  mainly  bj- 
the  eflbrts  of  Minneapolis  people.  It  was  iu>1  a  Canadian  road.  It 
was  bnilt  by  jNIinnesota  people  who  were  trying  to  get  an  eastern  outlet 
on  better  terms,  but  after  they  had  spent  a  large  amount  of  money  the 
load  became  a  heavy  one,  and  in  the  various  ways  of  raising  money  it 
turned  up  that  other  people  were  interested.  When  the  loail  became 
too  heavy  they  naturally,  I  suppose,  turned  to  those  who  would  make 
a  connection  beyond,  and  in  that  way  inti^rested  ])eople  who  would  get 
a  portion  of  their  tonuaj^e  over  eastern  lines  to  \n\t  their  money  in  with 
them  and  complete  the  road.  I  think  tliat  is  the  way,  substantially, 
in  which  the  road  was  completed. 

The  Chairman.  Is  it  not  your  opinion  that  the  managers  of  the  Ca- 
nadian Pacific  have  been  desirous  of  getting  control  of  those  roads  and 
making  then  feeders  to  their  trunk  lines  f 

Mr.  Hill.  I  should  think  that  all  the  business  which  our  roads  get 
from  there  would  be  valuable  to  the  Canadian  Pacific.  It  would  be 
very  anxious,  I  should  think,  to  secure  it. 

The  Chairman.  In  harmony  with  the  policy  that  has  been  pursued 
by  the  Grand  Trunk  farther  east. 

Mr.  Hill.  Yes,  sir. 

relations  with  the  CANADIAN  PACIFIC. 

The  Chairman.  I  see  in  a  St.  Paul  dispatch  of  the  5th  that  your 
company  has  effected  a  pretty  close  alliance  with  the  Canadian  Pacific. 
Is  that  true  or  not  I 

Mr.  Hill.  It  is  not  true;  not  anv  closer  than  there  is  between  the 
New  York  Central  and  the  St.  Paul,  Minneapolis  and  Manitoba  Kail- 
way.  There  are  a  great  many  such  rumors  as  to  dilferent  roads  in  the 
country,  but  I  think  it  is  safe  to  say  that  nine  out  of  ten  of  them  are 
groundless.     The  gentlemen  who  were  very  active  in  the  Canadian 


THE  UNITED  STATES  AND  CANADA.  171 

Pacilic  were  my  old  associates  iu  takiug  up  the  original  St.  Paul  and 
Pacific  and  reorganizing  it,  and  out  of  which  was  made  the  St.  Paul, 
Minneapolis  and  Manitoba  Eailway,  and  it  was  the  same  party  that 
to  an  extent  took  up  the  Canadian  Pacific. 

Senator  Blair.  Please  give  the  committee  the  names  of  the  gentle- 
men you  refer  to. 

Mr.  Hill.  Sir  George  Stephen  and  Sir  Donald  Smith. 

Senator  Blair.  I  thought  there  were  ten  of  them. 

Mr.  Hill.  Sir  George  Stephen  and  Sir  Donald  Smith  were  two  of  the 
original  ten. 

Senator  Blair.  But  who  were  the  others  ? 

Mr.  Hill.  1  can  not  give  you  the  names  of  the  eight  from  memory. 

Senator  Blair.  I  would  like  to  know  who  built  it.  It  might  be  con- 
sidered an  American  road. 

Mr.  Dill.  No,  I  guess  not ;  but  I  will  furnish  them  if  you  desire. 

Senator  Blair.  1  would  be  pleased  to  have  you  do  so. 

Mr.  Hill.  All  right ;  1  will. 

The  names  are  as  follows  : 

Sir  George  Stepheu,  Sir  Donald  A.  SuiitL,  R.  B.  Angus,  Duncan  Mclntyre,  of  Mon- 
treal; John  8.  Kennedy,Wil)iaui  L.  Scott,  Morton,  Bliss  &  Co.,  of  New  York;  James 
J.  Hill,  St.  Paul;  Morton,  Eose  &  Co.,  Loudon;  Colien,  Reinach  &  Co.,  Paris. 

The  Chairman.  What  are  your  connections  now  with  main  lines? 

Mr.  Hill.  Our  connection  on  the  west  is  with  the  Union  Pacific's 
Utah  Northern  line  for  Oregon  and  California.  On  the  east  we  con- 
nect with  all  the  lines  running  to  Chicago. 

The  Chairman.  Those  are  American  lines,  are  they  not  ? 

Mr.  Hill.  Yes,  sir;  there  are  no  other  lines  there. 

At  Lake  Superior  we  connect  with  our  own  steam-boats  and  with  the 
lines  of  any  other  boats  on  the  lake.  I  say  "our  own  steam  boats;" 
I  mean  steam-boats  in  which  we  an^  interested  which  run  on  Lake 
Superior,  between  the  head  of  the  lakes  and  Buft'alo.  By  that  means 
we  can  keep  our  elevators  clear  and  move  the  crops  with  reasonable 
certainty. 

The  Chairman.  I  have  seen  it  stated  that  you  either  had  been  or 
were  about  to  be  elected  a  director  iu  the  Canadian  Pacific.  I  have  no 
right  to  ask  you  whether  you  are  going  to  be  elected,  but  I  can  ask  you 
whether  you  are  now. 

Mr.  Hill,  I  have  not  had  any  interest  in  that  road  for  a  great  many 
years,  and  I  do  not  know  that  I  ever  will.  I  do  not  know  why  I  shoukl. 
I  have  enough  to  do  to  look  after  what  I  have  on  hand ;  and  I  say  that 
as  far  as  a  connection  between  the  two  roads  is  concerned  there  is 
nothing  in  that  whatever.  The  two  gentlemen  named  were  old  friends 
and  associates  iu  the  early  Manitoba  enterprise,  and  they  have  always 
held  a  very  large  amount  in  the  investment  with  me  and  have  come 
back  into  our  board. 

organization  of   the   CANADIAN  PACIFIC. 

Senator  Gorman.  It  will  aid  me  very  much  if  you  will  give  the  com- 
mittee a  description  of  your  connection  with  the  organization  of  the 
Canadian  Pacific.  Y"ou  went  into  it  with  ten  other  gentlemen,  and  I 
take  it  for  granted  that  a  part  of  them  were  Americans,  and  I  should 
like  to  have  a  little  history  of  that  organization.  What  inducement 
was  offered  and  what  did  you  get  at  that  time  from  the  Canadian  Gov- 
ernment? 


172  TRANSPORTATION   INTERESTS    OF 

Mr.  Hill.  It  is  a  matter  of  public  record  to  be  loiiiid  in  all  tlioir  re- 
ports. 1  would  have  to  speak  from  recollection  mainly.  The  Cana- 
dian Government  agreed  to  build  a  transcontinental  road  when  the 
Canadian  confederation  was  settled  between  the  provinces.  In  follow- 
ing out  that  agreement  they  put  a  large  corps  of  engineers  in  the  held, 
and  they  spent,  I  think,  between  83,000,000  and  $5,000,000  in  examining 
the  different  lines  between  the  Ottawa  lliver,  or  between  Ottawa  and 
the  Pacific  coast.  They  let  contracts  to  build  some  very  exi)ensive 
roads  from  the  mouth  of  the  Fraser  Eiver  up  to  the  interior  of  British 
Columbia  to  a  ])Iace  called  Kamloops. 

Senator  Gorman.  Whom  do  you  mean  by  they  ? 

Mr.  Hill.  The  Canadian  government.  The  government  partly 
built  a  line  from  St.  Vincent  to  connect  uitli  the  old  St.  Paul  and  Pa- 
cific, and  that  line  was  afterwards  comph'ted  to  ("onnect  with  our  re- 
organized St.  Paul  and  Pacific,  which  is  the  JManitoba.  I'licy  built  from 
Winnipeg  to  Lake  Sujx'rior  to  a  i)lace  called  Fort  William,  at  a  point 
near  the  mouth  of  Pigeon  Piver ;  the  first  a  good  harbor  on  the  coast 
of  Lake  Superior  on  the  north  shore,  in  Canadian  water.  They  built  to 
the  nearest  point  west  on  Canadian  water.  The  expense  of  building 
the  road  seemed  to  increase  to  such  an  extent  that  they  were  anxious 
to  find  a  private  corporation  to  build  it,  taking  a  bonus  of  some  kind. 
Sir  Hugh  Allan  and  his  associates,  the  steamshii)  ]>eople  of  Montreal, 
undertook  to  make  ^ome  oi)eration  or  combination  abroad  that  would 
furnish  the  means  to  builil  the  road.  1  think  nothing  eame  of  it  what- 
ever. The  Canadian  government  then  made  a  proposition  to  some  of 
my  friends  who  were  interested  in  I'omplcting  and  pushing  the  Manitoba 
road.  We  were  brought  into  more  intimate  relations  with  them  on  ac- 
count of  the  coiinection  that  we  were  making  with  their  government 
road  at  St.  Vincent,  and  it  resulted  after  various  conversations  in  their 
asking  us  to  make  a  proposition  ;  not  the  Manitoba  Company,  but  some 
of  the  original  parties  who  created  the  Manitoba  Company".  That  re- 
sulted in  Sir  George  Stephen  and  Sir  Donald  Sn)ith,  who  \yere  the 
principal  men,  both  prominent  citizens  of  Montreal,  Canada,  making  an 
agreement.  It  resulted  in  an  agreement  being  formulated  subject  to 
the  ratification  of  parliament.  '  This  agreement  was  made  with  the 
ministers  of  the  crown,  and  provided,  if  1  remember  correct  ly,  for  the 
completion  of  the  road,  the  government  paying  a  bonus  of  $1'5,"000,000  in 
cash  and  25,000,000  acres  of  land  and  the  companv's  ])roperty  sluuild  be 
free  from  taxation  for  twenty  years,  including  the  lands,  and'all  material 
to  be  used  in  the  construction  of  the  road  to  be  imi»orled  free  otdutv. 
An  the  portions  of  the  road,  about  TOO  miles  as  I  remember— nmy  1m5 
725  miles— theretofore  built  by  the  government,  or  under  contract  to  be 
completed  by  the  governnient,  was  to  be  completed  according  to  con- 
tract and  added  to  the  cash  and  land  bonus  on  the  comi)letiou  of  the 
entire  road. 

Senator  Gorman.  Turned  over  to  your  company? 

Mr.  Hill.  Yes,  sir.  The  cash  and  land  were  paid  in  lO-mile  sections, 
or  due  in  lO-mile  sections,  if  1  remember  rightlv;  mav  be  2«i-mile  sections, 
ihe  other  was  to  be  held  until  the  entire  line  was  completed,  and  so 
the  road  was  built  under  that  original  contract,  with  some  modifica- 
tions. 

The  Chairman.  And  the  government  had  something  over  700  miles 
of  It  built  ? 

Mr.  Hill.  Yes,  sir.    The  entire  road  was  com].l('tcd  under  tliat  con- 
tract, It  having  been  ratified  by  the  Canadian  parliament, 
ihe  Chairman.  Wliat  do  you  mean  bv  the  entire  road  ? 


THE    UNITED    STATES    AND    CANADA.  173 

Mr.  Hill.  Well,  the  road  from  a  point  on  the  Ottawa  Eiver  called 
Caledon  to  Port  Moody  on  the  Pacific  Ocean, 

The  Chairman.  IMaking  the  entire  extent  of  the  road  how  mnch! 

Mr.  Hill.  I  think  about  3,000  miles;  but  the  Canadian  Pacific  has, 
bj  the  authority  of  parliament,  in  various  ways,  acquired  lines  running 
from  Caledon,  north  of  Ottawa,  through  to  Montreal,  another  line  down 
the  north  shore  of  the  St.  Lawrence  to  Quebec,  and  various  other  lines 
in  C'anada  runnings  as  far  west  as  Detroit,  I  think.  I  am  only  speak- 
ing from  general  knowledge,  because  all  this  occurred  since  1  ceased  to 
be  connected  with  it.  1  only  remained  connected  with  the  Pacific  about 
a  year  after  the  formation  of  the  company. 

Senator  Blair.  Where  were  the  700  miles  of  road  which  M'ere  built 
by  the  Canadian  Government  and  given  to  the  company  located"? 

Mr.  Hill.  From  Winnipeg  to  Lake  Superior  and  from  Winnipeg  to 
Emerson  on  the  international  boundary  between  Manitoba  and  Minne- 
sota, and  from  Port  Moody,  near  the  mouth  of  theFraser  Eiver,  to  Ce^ 
tral  British  Columbia,  at  a  place  called  Kamloops. 

Senator  Gorman.  It  is  stated,  Mr.  Hill,  in  some  of  the  reports  I  have 
seen,  that  the  714  miles  of  road  that  the  government  built  and  trans- 
ferred to  this  company  cost  $35,000,000.  Ho  you  know  anything  about 
that? 

Mr.  Hill.  It  was  a  very  expensive  road  to  build.  Portions  of  it 
were  very  expensive  and  possibly  included  in  that,  $35,000,000  would 
be  the  large  sum  spent  in  surveys,  from  three  and  a  half  to  five  million 
dollars  over  the  entire  line.  I  think  that  amount  would  be  included  iu 
the  cost  of  the  so-called  government  road. 

Senator  Gorman.  I  think  that  statement  is  taken  from  the  reports 
of  the  Dominion  government. 

Mr.  Hill.  I  had  in  my  mind  about  from  forty  to  forty-five  thousand 
dollars  a  mile  for  the  cost  of  the  road,  and  that  with  this  additional 
sum  makes  substantially  the  figures  you  name. 

Senator  Gorman.  The  land  subsidy,  I  understand  you  to  say,  con- 
sisted of- 25,000,000  acres. 

Mr.  Hill.  Yes,  sir. 

Senator  Gorman.  At  $L50  an  acre  ? 

Mr.  Hill.  These  lands  were  not  granted  as  has  been  the  custom  in 
this  country.  They  were  not  alternate  sections  within  certain  limits 
near  the  railroad.  They  were  lands  granted  within  what  was  known 
as  the  settlement  belt — good  average  quality  of  agricultural  lands  and 
might  be  from  anywhere.     It  was  a  floating  grant. 

Senator  Gorman.  What  did  the  company  realize  from  that  ? 

Mr.  Hill.  I  do  not  know. 

Senator  Gorman.  I  saw  a  statement  to  the  effect  that  the  Canadian 
Government  took  back  from  the  company  nearly  7,000,000  acres  at  $1,50 
an  acre,  and  gave  the  company  $10,000,000  in  cash  for  it. 

Mr.  Hill.  All  that  occurred  after  my  connection  with  the  road. 

Senator  Gorman.  What  would  you  consider  the  fair  amount  that 
the  company  realized  on  these  25,000,000  acres  ? 

Mr.  Hill.  I  think  that  a  very  large  portion  of  those  lands  are  still 
unsold  ;  I  do  not  know,  however.  Twenty-five  millions  of  acres  make  a 
great  deal  of  land  to  sell,  and  the  lands  have  not  been  earned  more  than 
six  years,  so  they  could  not  have  sold  a  great  many  of  them. 

Senator  Gorman.  What  of  the  further  statement,  that  the  Canadian 
Government  paid  the  road  $15,000,000  for  the  violation  of  the  contract 
in  regard  to  the  extension  of  the  lines  through  Manitoba? 

Mr.  Hill.  That  question  of  disallowance  of  lines  to  the  boundary 


174  TRANSPORTATION    INTERESTS    OF 

came* up  w  ithiu  the  last  year  mainly.     I  only  know  as  to  tbat  from  bear- 
say  and  what  I  have  seen  published  in  newspapers. 

Senator  Gorman.  Then  it  appears  in  1884  the  Canadian  Government 
advanced  twenty-two  and  a  half  millions  more  to  expedite  the  road. 

Mr.  Hill.  That  was  after  my  connection  with  it,  and  any  statement 
1  would  make  would  only  be  hearsay  and  without  any  more  knowled^^e 
than  the  public  understanding.  I  have  no  particular  knowledge  as  to 
what  was  done. 

Senator  Gorman.  Have  you  ever  summed  it  up  so  that  you  could  tell 
us  the  total  amount  of  subsidy  that  they  received  from  the  Dominion 
Government  ? 

Mr,  Hill.  1  could  not,  but  1  have  seen  it  in  their  printed  reimrts,  and 
it  is  very  easy  to  ascertain  the  exact  ligures  as  to  that. 

Senator  Gorman.  Well,  is  it  about  one  hundred  and  sixty  millions? 

Mr.  Hill.  Possibly,  but  the  reports  will  show  accurately. 

Senator  Gorman.  Then  that  was  more  than  suflicient  to  build  the 
entire  line,  was  it  not? 

Mr.  Hill.  ThcA^  is  some  very  expensive  work  north  of  Lake  Supe- 
rior. To  say  what  it  cost  to  build  the  entire  line,  the  Canadian  i*aci(ic 
proper,  or  the  ])ortion  lor  which  the  company  originally  contracted  to 
build,  does  not  cover  the  Canadian  Pacilic  Hallway  of  today.  They 
have  a  inimber  of  branch  lines,  and  1  do  not  know  what  each  of  these 
branch  lines  or  consolidated  roads  represent  in  their  cajtital  or  ofli(;ial 
statement. 

Senator  Gohman.  AVith  your  general  knowledge  of  the  Canadian 
Pacilic — eliminating  the  branch  lines  that  they  own  in  the  Unite<l  States 
and  taking  the  main  system  through  from  the  St.  Lawrence  to  the 
Sound — how  much  private  capital  do  you  suppose  was  put  in  that  road 
to  construct  and  equip  it,  over  and  above  the  amount  furnished  by  the 
Canadian  Government  ? 

Mr.  Hill.  My  actual  knowledge  of  tliat  is  not  suflicient  to  enable  me 
to  make  a  statement  that  would  be  of  any  use ;  it  would  be  nothing 
more  than  a  guess,  and  1  have  not  enough  information  to  state  closely 
on  that.     However,  their  annual  reports  will  show  that. 

Senator  Gorman.  From  the  impression  you  have  irom  your  connec- 
tion with  it,  could  you  make  a  rough  estimate  of  it! 

Mr.  Hill.  1  might  nud<e  an  estimate,  but  it  would  be  like  estimating 
the  height  of  a  house  that  I  had  never  seen,  and  the  estimate  would  not 
be  of  any  value. 

Senator  Gorman.  I  understand  that  thiscom]iany  you  speak  of  built 
and  completed  the  road. 

Mr.  Hill.  The  original  Canadian  Paciflc  Comi)any,  yes. 

Senator  Gorman.  Did  they  not  build  it  with  the  money  and  subsidies 
allowed  by  the  Canadian  Government  i 

Mr.  Hill.  There  are  several  pieces  of  railroad,  several  hundreds  of 
miles  of  railroad  in  the  system,which  were  taken  in  during  the  time  this 
road  was  being  built.  Now  what  pc.rtion  of  their  capital  rei)resents 
the  lines  which  were  take^i  in  and  what  jwrtion  of  their  capital  rep- 
resents the  lines  from  Caledon  to  the  Pacitic  Ocean,  is  something  that 
1  could  not  state.  1  have  no  means  of  knowing,  and  von  see  whv  it 
would  be  necessary  to  know  that  to  answer  the  other  question.  iJut 
then'  iujnual  reports,  1  know,  show  it,  and  you  can  get  the  information 
trom  them.  1  would  be  very  glad  to  answer  the  qu«'stiou  if  1  had  the 
intormation,  but  1  do  not  know.  It  has  been  so  long  since  I  was  con- 
nected with  it,  and  a  number  of  these  lines  having  been  taken  up  since, 
that  1  could  not  siv,y. 


THE  UNITED  STATES  AND  CANADA.  175 

Senator  Gorman.  I  was  eliminating  all  the  factors  and  all  tbe  roads 
built  siuce,  and  confining  myself  to  the  contracts  entered  into  by  this 
company,  of  which  yon  were  one,  with  the  Canadian  Government  to 
coustrnct  the  liue  through  to  the  Sound. 

Mr.  Hill.  As  I  understand  the  question,  you  mean  the  bonuses  of 
one  kind  and  another  given  by  the  Canadian  Government  were  equal 
to  the  cost  of  the  original  road,  but  I  could  not  answer  that  question, 
for  1  do  not  know  what  the  original  road  cost,  and  the  cost  of  the  entire 
l)roperty  includes  a  lot  of  lines  that  were  not  included  in  the  bonused 
lines. 

Senator  Gorman.  The  point  with  reference  to  which  I  am  inquiring 
is  whether,  in  point  of  fact,  according  to  your  original  contract  with  the 
Canadian  Government,  the  government  did  not  furnish  in  cash  subsidies 
and  land  grants  enough  to  enable  you  to  build  the  main  line  without 
putting  in  any  private  capital? 

M  r.  Hill.  The  original  contract  would  not  build  the  railroad.  1  think 
the  original  contract,  assuming  that  the  land  was  worth  a  dollar  an 
acre,  would  have  left  about  $15,000  a  mile  to  be  furnished  on  the  por- 
tion from  Winnipeg  west.  1  made  figures  on  that  several  times,  and 
had  for  six  or  eight  months  a  good  deal  to  do  with  it,  and  I  think  that 
that  was  about  the  estimate,  that  the  lands  were  15,000  acres  to  the 
mile  and  $10,000  in  cash  over  the  prairie  portion,  and  that  would  be 
worth,  say,  $20,000  a  mile.  Several  streams  bad  to  be  crossed  and  heavy 
bridge  materials  of  every  kind  had  to  be  taken  from  Canada  through 
the  IJnited  States;  men  and  supj)Iies  had  to  be  hauled  800  miles,  and 
it  was  an  expensive  line  to  build.  It  was  also  built  in  a  great  hurry, 
which  added  to  the  expense.  1  think  that  if  they  could  have  sold  the 
laud  the  bonus  would  be  equal  to  $15,000  or  $20,000  a  mile,  and  1  think 
that  railroad  with  its  equipment  cost  from  $37,000  to  $40,000  a  mile  to 
a  place  called  Calgarry.  Going  over  the  mountains  the  land  bonus  was 
less  and  the  cash  larger  per  mile.  The  cash  was  worth  more  to  the 
railroad  that  the  unsold  lands. 

Senator  Gorman.  Was  the  road  bonded  at  all  1 

Mr.  Hill.  The  land  grant  was  bonded,  but  whether  the  road  was 
bonded  or  not,  I  could  not  say.  I  think  the  road  is  bonded.  I  could 
not  say  positively,  though.  . 

Senator  Gorman.  Well,  I  gathered  from  your  statement  that  practi- 
cally the  road  was  constructed  with  the  amount  of  money  furnished  by 
the  Canadian  Government;  within  tlie  amount  that  was  furnished  by 
the  Canadian  Government. 

Mr.  Hill.  There  would  be  the  proceeds  of  the  bonds,  whatever 
amount  that  would  be,  and  whatever  was  paid  for  the  stock  in  addi- 
tion. 

Senator  Gorman.  How  large  an  interest  had  our  American  peoj)le 
in  that  enterprise ! 

Mr.  Hill.  I  think  gentlemen  in  New  York  and  myself  had  about  one 
third. 

Senator  Gorman.  But  that  has  been  disposed  of.  I  understand  you 
to  say  it  has  gone  back  into  the 

Mr.  Hill.  1  think  before  the  road  was  completed  these  gentlemen 
were  all  reasonably  glad  to  sell  out  of  it. 

Senator  Gorman.  The  ownership  now  is  in  whom  practically  ? 

Mr.  Hill.  It  is  scattered  throughout  Great  Britain,  some  on  the 
Continent,  and  some  here  in  New  York.  I  see  the  stock  is  sold  here. 
I  have  never  seen  a  list  of  the  stockholders. 


176  TKANSPORTATION  INTERESTS  OF 

Senator  Gorman.  You  do  not  know  whether  the  Canadian  Govern- 
ment itself  owns  a  controilin^j?  interest  in  the  stock,  do  you  ? 

Mr.  Hill.  I  do  not  know  that  they  own  a  share  of  it,  nor  do  I  know 
that  they  do  not.  I  wouhl  say,  however,  that  I  have  no  idea  that  they 
own  a  share  of  it.  I  think  the  road  is  probably  owned— the  majority 
of  the  stock— in  England. 

The  Chairman.  What  road  are  you  now  speaking  of? 

Mr.  Hill.  The  Canadian  Pacific.  All  this  is  my  belief.  From  my 
familiarity  with  the  matter  and  my  knowledge  of  it  in  the  beginning, 
I  have  no\lonbt  that  all  these  questions  that  you  have  asked,  Senator 
Gorman,  would  be  found  accurately  in  the  reports  of  the  government 
and  of  the  company. 

Senator  Platt.  Mr.  Hijl,  there  is  a  line  of  steamers  running  from 
Port  Arthur,  that  goes  somewhere,  which  is  owned  and  controlled  by 
the  Canadian  Pacific.     Where  do  those  steamers  run  to  ? 

Mr.  Hill.  To  Owen  Sound,  I  think,  which  is  on  Georgian  Bay. 

Senator  Platt.  Do  these  steamers  bring  freight  into  the  United 
States  ? 

Mr.  Hill.  Xo,  sir ;  they  do  not.  They  are  passenger  boats.  They 
are  Clyde  built  passenger  boats,  which  were  cut  in  two,  taken  through 
the  canals,  and  then  put  together  up  there. 

Senator  Platt.  Then  those  steamers  cut  no  figure  in  the  bringing 
of  freight  into  the  United  States? 

Mr.  Hill.  No,  sir;  I  do  not  know  that  the  Canadian  Pacific  brings 
much  freight  into  the  United  States.  They  certainly  do  not  bring  much 
into  our  section.    There  are  some  goods  that  go  out  that  way. 

shipments  from  china  and  japan. 

The  Chairman.  Can  you  give  us  any  information  with  reference  to 
shipments  of  goods  coming  from  Ciiina  and  Japan,  and  then  dropping 
down  into  the  United  States  over  the  Canadian  Pacific  ? 

Mr.  Hill.  Goods  come  from  the  coast  and  from  China  for  merchants 
in  the  United  States  in  that  way. 

The  Chairman.  To  merchants  at  what  points  most  prominently! 

Mr.  Hill.  At  Chicago  for  one. 

The  Chairman.  And  at  St.  Paul  and  Minneapolis  ? 

Mr.  Hill.  Yes,  sir. 

The  Chairman.  And  at  Omaha? 

Mr.  Hill.  Yes,  sir ;  and  I  do  not  know  but  that  they  get  as  far  as 
New  York. 

The  Chairman.  And  some  of  the  shipments  reach  Kansas  City  ? 

Mr.  Hill.  1  know  of  shipments  coming  from  San  Francisco  to  Omaha 
by  way  of  Winnipeg. 

The  Chairman.  How  does  it  happen  that  they  come  around  that 
way  ?    Is  not  that  a  long  way  ? 

Mr.  Hill.  Probably  the  parties  are  not  in  a  hurry  for  their  goods- 
Five  or  six  cents  a  hundred  would  be  an  inducement  to  bring  them  that 
way. 

The  Chairman.  How  does  the  Canadian  Pacific  happen  to  make  5  or 
6  cents  reduction  in  rates  over  and  above  American  roads  which  come 
straight  through  ? 

Mr.  Hill.  The  bulk  of  their  tonnage  is  west  bound,  or  has  been,  and 
they  have  a  great  many  emi)ty  cars  coming  back  from  the  Pacific  coast. 
I  think  that  tliey  would  be  glad  to  bring  cars  back  loaded  with  freight 
which  would  pay  at  almost  any  rate  they  could  get. 


THE    UNITED    STATES    AND    CANADA.  177 

TRAFFIC    OVEE   THE   CANADIAN   PACIFIC. 

The  Chairman.  Have  they  any  connection  with  lines  running  from 
Winnipeg  south  by  which  they  could  make  an  all -rail  shipment,  billed, 
for  instance  at  the  Pacific  coast  clown  to  Omaha  ? 

Mr.  Hill.  Yes,  sir;  they  have  such  an  arrangement.  • 

The  Chairman.  Do  they  disregard  the  interstate  commerce  act  en- 
tirely 1 

Mr.  Hlll.  I  do  not  know. 

The  Chairman.  You  do  not  know  whether  they  publish  their  rates 
or  not,  do  you  ? 

Mr.  Hill.  I  do  not  know  whether  they  file  their  tariffs  with  the  In- 
terstate Commerce  Commission.  Take  our  company  and  the  Chicago, 
St.  Paul,  Minneapolis  and  Omaha  Kailroad,  that  would  make  connection 
from  the  Canadian  Pacific  line  down  to  Omaha;  they  file  their  tariffs 
with  the  Interstate  Commerce  Commission. 

The  Chairman.  Does  the  Canadian  Pacific  file  their  tariffs  from 
Winnipeg  with  the  Interstate  Commerce  Commission? 

Mr.  Hill.  They  do  not  issue  a  tariff  from  Winnipeg  over  our  lines. 
They  issue  a  tariff  over  their  own  lines  simply. 

The  Chairman.  Which  is  southerly  to  the  border  line  ? 

Mr.  Hill.  Yes,  sir. 

The  Chairman.  Do  goods  come  to  any  point  south  by  arrangement 
with  your  line  as  to  a  given  rate? 

Mr.  Hill.  1  think  the  competing  rates  are  all  settled  by  what  is  called 
the  Transcontinental  Association. 

The  Chairman.  What  is  the  Transcontinental  Association? 

Mr.  Hill,  The  transcontinental  lines  have  an  association  and  their 
through  rates  are  established  by  this  association.  I  think  the  Canadian 
Pacific  is  allowed  a  differential.  They  have  a  passenger  differential, 
anyway.  I  do  not  know  whether  they  have  a  differential  on  freight  or 
not. 

The  Chairman.     W^hat  differential  do  they  receive  on  passengers? 

Mr.  Hill.  I  think  their  differential  is  $5  on  second-class  passengers. 

The  Chairman.  Five  dollars  for  each  passenger? 

Mr.  Hill.  Yes,  sir. 

The  Chairman.  Do  they  receive  that  differential  from  Puget  Sound  ? 

Mr.  Hill.  Passengers  can  go  from  Chicago  to  San  Francisco  by  way 
of  Winnipeg  over  the  Canadian  Pacific  for  $5  less  than  they  can  by 
way  of  the  Union  Pacific  and  the  Central  Pacific. 

Senator  Blair.  What  is  the  difference  in  time  on  the  trip  from 
Chicago  to  San  Francisco  as  between  the  Canadian  Pacific  and  the 
Union  Pacific  and  the  Central  Pacific  ? 

Mr.  Hill.  There  should  be,  if  they  have  fair  weather  on  the  Pacific 
coast,  about  five  days'  difference  in  time. 

The  Chairman.  It  takes  five  days  more  to  go  around  via  Winnipeg 
by  the  Canadian  Pacific  than  to  go  straight  through  ;  is  that  the  idea? 

Mr.  Hill.  Exactly. 

Senator  Blair.  Take  a  man  whose  labor  is  worth  a  dollar  a  day, 
and  it  would  be  about  even. 

Mr.  Hill.  You  would  be  surprised  to  see  the  number  of  people  going 
that  way.  I  have  seen  a  great  many— I  do  not  know  how  many — on 
one  train. 

The  Chairman.  What  is  your  observation  as  to  business  on  the 
Pacific  coast ;  is  the  Canadian  Pacific  diverting  very  much  freight  com. 
(ing  east  from  the  American  lines  to  their  own  lines  ? 
6543 — ~12 


178  TRANSPORTATION   INTERESTS    OF 

Mr.  Hill.  You  mean  from  points  in  the  United  States? 

Tiie  Chairman.  1  mean  from  tlie  Pacific  coast.  We  have  the  Union 
Pacific  and  the  Central  Pacific  making  connection  with  San  Francisco 
and  the  Southern  Pacific  line,  and  so  on. 

Mr.  Hill.  I  do  not  recall  more  than  a  few  instances  where  they  car- 
tied  a  car  load  or  two  of  sugar  from  San  Francisco  in  that  way.  That, 
I  think,  however,  was  about  the  time  the  interstate  commerce  law  was 
put  into  effect.  Possibly  it  was  a  few  months  later.  A  few  shii)ment8 
came  around  that  way.  There  is  a  good  deal  of  foreign  trade  coming 
from  Asia  to  the  terminus  of  the  Canadian  Pacific. 

The  Chairman.  Why  is  that  ? 

Mr.  Hill.  They  have  a  line  of  steamers  running  between  China  and 
Japan. 

The  Chairman.  A  subsidized  line  ? 

Mr.  Hill.  I  do  not  remember  that  the  subsidy  applies  to  the  present 
system.  It  is  enough  to  take  some  of  the  freight  steamers  from  the 
Cunard  Line  formerly  running  between  America  and  Liverpool  from  the 
trade  between  Canada  and  Kurope.  They  are  now  running  between 
the  western  terminus  of  the  Canadian  Pacific  and  China.  1  understand, 
however,  that  some  new  and  laster  boats  are  being  built  for  that  line. 

The  Chairman.  For  the  Canadian  Pacific  Line? 

Mr.  Hill.  It  is  a  line  that  will  connect  with  the  Canadian  Pacific;  it 
is  an  English  line  connecting  China  and  Japan  with  the  Canadian  Pa- 
cific road  through  to  Halifax,  and  there  with  a  fast  line  of  steamers 
running  to  England.  It  is  intended  that  these  steamers  shall  be  so  fast 
that  they  expect,  as  the  manager  or  president  of  the  Canadian  Pacific 
told  me  within  a  few  months,  to  take  passengers  from  London  and  land 
them  in  St.  Paul  by  way  of  Halifax  and  the  Canadian  Pacific  as  early 
as  they  can  be  landed  in  New  Yoik  by  the  lines  running  to  New  York. 

The  Chairman.  The  Halifax  steamship  line  is  also  subsidized,  is  it 
not! 

Mr.  Hill.  I  understand  that  some  very  i>owerful  and  fast  boats  are 
to  be  put  into  a  line  between  England  an'd  Halifax. 

The  Chairman.  What  is  your  opinion,  Mr.  Hill,  of  this  ♦  The  Cana- 
dian Government  or  the  P.ritish  Government  has  a  subsidized  line  on 
the westconnecting  with  the  Canadian  Pacific.  It  then  practically  builds 
the  Canadian  Pacific.  Then  it  gives  a  subsidv  to  a  portion  of  this  line, 
in  amount  818«;,00()  a  year,  and  next  it  subsidizes  a  line  from  Liverpool 
to  Halifax.  VVith  that  sort  of  a  movement  it  gives  that  line,  both  water 
and  inland,  a  very  decided  advantage  over  anv  other  road  on  this  con- 
tinent, does  it  not  I 

Mr.  Hill.  I  think  that  they  would  have,  as  far  as  that  business  is 
concernetU  very  great  advantages;  and  I  think  it  is  intended  by  the 
iinperial  Government  that  they  should  have  such  great  advantages. 

ihe  Chairman.  The  original  purposes  of  the  construction  of  the 
Canadian  1  acific  was  political,  was  it  not!     Was  not  the  idea  to  binci 

M     x?^^"^  provuices  together  in  one  political  union  ? 

Mr.  Hill.  The  only  lines  of  travel  between  the  eastern  and  far  west- 
ern portions  of  the  Dominion  of  Canada  before  the  constru(;tiou  of  the 
Canadian  Pacific  Eailway  was  by  San  Francisco  and  on  American  lines. 
All  the  Lritish  Columbia  trade  to  and  from  San  Francisco  prior  to  the 
construction  of  the  Canadian  Pacific  was  over  the  American  lines. 

Ihe  Chairman.  The  eflect  of  the  subsidizing  of  this  eastern  end  of 
the  Canadian  Pacific  and  that  steam  ship  line  running  to  St.  John  or 
Jiaiitax— the  effect  of  such  a  movement  as  that  would  be  to  draw  away 
iUilit?        •"  ^^""^^^^  '^  ^'''^''  amount  oJ'  their  toreigu  tittde,  would 


THE    UNITED    STATES    AND    CANADA.  179 

Mr.  Hill.  1  tliiuk  that  the  governmeut  of  Great  Britain,  through  its 
board  of  trade  and  through  every  other  means  known  to  Intelligent 
men,  have  done  everything  in  their  power  to  keep  Loudon  the  commer- 
cial and  financial  center  of  the  commercial  world.  I  think  it  would  be 
a  mistake  to  supjmse  that  they  will  forego  any  opportunity,  such  as  lies 
apparently  within  their  power,  in  the  Canadian  Pacific,  by  the  granting 
of  a  subsidy  of  a  few  thousand  pounds  necessary  to  make  a  through 
line  that  would  run,  we  will  say,  from  JSTew  York  to  Yokohama  in  two 
weeks.  I  think  that  within  eighteen  months  from  today  you  can  go 
from  N^ew  York  to  Yokohama  in  two  weeks'  time. 

Senator  Blair.  How  long  would  it  take  to  make  that  trip  via  San 
Francisco? 

Mr.  Hill.  I  think  the  present  time  is  about  sixteen  days  from  San 
Fran<isco,  assuming  that  the  rail  time  would  be  the  same.  There 
would  be  a  difference  of  six  or  seven  days. 

The  Chairman.  Suppose  this  Canadian  Pacific  road  were  required 
to  go  upon  its  own  soil  to  reach  St.  John  or  Halifax ;  what  effect  would 
that  have  upon  the  advantage  that  you  say  they  now  have  ? 

Mr.  Hill.  We  are  a  very  intelligent  people  in  this  country.  Eail- 
roads  are  corporations ;  and  the  corporations  are  controlled  by  the 
shareholders ;  and  I  think  you  will  find  that  the  Canadian  Pacific  is 
not  on  American  territory. 

The  Chairman.  Does  no  part  of  the  Canadian  Pacific  road  run  on 
American  territory  f 

Mr.  Hill.  No,  sir. 

The  Chairman.  But  it  is  constructing  a  line  through  Maine,  is  it  not  1 

Mr.  Hill.  I  think  you  will  find  that  that  is  an  American  road.  It  is 
an  American  road  as  much  as  the  New  York  Central  or  the  Pennsyl- 
vania. 

The  Chairman.  Suppose  that  the  American  roads  did  not  do  business 
with  the  Canadian  Pacific  road  and  the  Canadian  Pacific  wanted  to 
extend  its  line  to  Halifax,  how  would  it  do  so  ? 

Mr.  Hill.  It  would  go  by  the  Intercolonial  Eailway. 

The  Chairman.  How  much  would  that  increase  the  length  of  the 
line  i? 


Mr.  Hill.  Possibly  about  100  miles ;  but  that  is  a  mere  guess.  The 
IJailway  Guide  will  give  it  to  you  exactly. 

The  Chairman.  Practically,  then,  it  would  make  no  great  difference 
to  the  Canadian  Pacific  road  whether  they  ran  on  American  soil  or  not  ? 

Mr.  Hill.  I  do  not  think  the  difference  would  be  very  material.  It 
Avould  not  be  sufficient  to  stop  the  business,  but  on  the  other  hand  it 
would  be  difficult  to  put  up  a  gate  at  the  international  boundary. 

The  Chairman.  I  am  not  suggesting  that  we  are  going  to  do  that. 

Mr.  Hill.  I  was  thinking  of  the  difScultj^  in  carrying  out  the  details 
of  any  arrangement  of  that  kind. 

Senator  Blair.  The  gate  would  have  to  swing  both  ways  would  it  not? 

Mr.  Hill.  Those  matters  along  our  veiy  long  border  will  come  up 
some  day,  and  they  will  be  very  interesting  subjects  for  international 
negotiation.  There  are  some  nice  points  in  the  question.  I  do  not  know 
why  there  should  beany  great  difticulty  in  settling  them,  but  I  think  it 
would  be  well  to  have  them  settled. 

The  Chairman.  About  as  good  a  way  as  any  to  settle  those  questions 
would  be  by  making  Canada  part  of  the  United  States. 

Mr.  iliLL.  1  was  born  in  Canada,  and  1  think  the  Canadians  make 
very  good  Americans. 

The  Chairman.  So  do  I— many  of  them, 


180  TKANSPORTATION  INTERESTS  OF 

Coming  back  to  your  line  of  road,  jNIr.  Hill— not  the  one  ruuniug  up 
to  Winnipeg,  but  the  otlier  one — is  it  your  expectation  to  reach  the 
Pacific  Ocean  tinally  with  a  new  line  of  road  ? 

Mr.  Hill.  We  are  now  within  500  miles  of  the  coast. 

The  Chairman.  I  s^houkl  think  that  you  would  naturally  go  on. 

Mr.  Hill.  We  might. 

The  Chairman.  Where  would  be  your  jioint  of  destination,  prob- 
ably, if  you  Aveut  to  the  coast  at  all  * 

Senatar  Gorman.  I'robabiy  Mv.  Hill  would  n»)t  like  the  balance  of 
the  loads  to  know  what  his  objective  point  is. 

Mr.  Hill.  1  do  not  know  at  present.  1  have  not  had  time  to  go 
W^est  and  examine  the  harbors. 

THE   LINE   THROUGH  MONTANA. 

The  Chairman.  Your  road  now  runs  through  quite  an  arid  region 
— say  in  Montana,  where  land  is  only  subject  to  cultivation  by  irriga- 
tion? 

Mr.  Hill.  The  road  in  Montana  to  the  Kocky  Mountains  runs  through 
the  valley  of  the  Missouri  and  the  valley  of  the  Milk  Uiver  for  almost 
the  entire  distance.  It  is  the  line,  substantially,  recommended  by  Gov- 
ernor Stevens  in  the  original  Pacific  reports. 

The  Chairman.  Is  that  line  going  to  pay  you  immediately  f 

Mr.  Hill.  Let  me  answer  your  first  question.  You  spoke  about  that 
soil  and  country.  I  think  that  country  v>\\\  compare  as  to  soil,  water, 
and  climate  with  the  country  along  any  lino  running  from  Chicago  to 
Omaha  or  Kansas  City. 

The  Chairman.  Your  line  would  be  a  competitor  of  the  Canadian 
Pacific  if  it  got  to  the  Pacific  Ocean  ! 

Mr.  Hill.  Please  let  me  finish.  It  was  a  matter  of  great  interest  and 
of  suri)rise  to  me  about  the  climate.  The  farmers  commenced  i)uttiiig 
in  their  spring  crops  in  and  about  Fort  Pentoii  and  Great  Falls  this 
year  on  the  10th  of  Februaiy. 

Mr.  Reagan.  When  did  they  begin  putting  in  their  crops  ? 

Mr.  Hill.  About  the  10th  of  February.  That  is  earlier,  I  think,  than 
crops  are  i)nt  in  in  Texas.  It  is  earlier,  1  believe,  than  crops  were  put 
in  in  any  other  State  of  the  Union, 

The  Chairman.  In  what  latitude  is  that? 

Mr.  Hill.  In  latitude  48.  Last  year  at  an  exhibition  at  Minneapolis, 
wheat  raised  out  in  that  northwest  country  took  the  first  premium  as 
the  best  qualtity  of  hard  fife  or  Xo.  1  hard,  which  has  heretofore  been 
considered  the  peculiar  property  of  the  lied  Pi  ver  Valley.  Cattle,  sheep, 
and  horses  run  on  the  ranges  the  year  round  there. 

Senator  Eeagan.  How  is  the  climate  along  your  line  east  of  Benton  ? 

Mr.  Hill.  1  think  the  average  would  be  about  the  same  as  northern 
Missouri,  although  in  Montana,  in  January,  they  will  have  from  two  to 
three  weeks  of  very  cold  weather. 

The  Chairman.  Will  you  tell  the  committee  whether  you  would  bo 
a  competitor  with  the  Canadian  Pacific  if  you  went  to  the  I'acific 
coast  ? 

Mr.  Hill.  I  think  if  we  go  to  the  Pacific  coast  we  would  be  rather 
active  competitors  with  all  the  lines. 

The  Chairman.  Your  line  has  no  expectation  of  becoming  a  part  of 
the  Canadian  Pacific;  some  of  these  days,  has  it? 

Mr.  Hill.  No,  sir;  none  whatever. 

Senator  Keagan.  Have  you  any  information  in  regard  to  the  tem- 
perature westward  along  the  boundary  line,  say  from  Assiuiboiu  t 


THE   UNITED    STATES   AND   CANADA.  181 

Mr.  Hill.  That  is  a  very  beautiful  country.  That  is  a  country  abund- 
antly supplied  with  water — streams,  mountain  streams.  It  is  a  fine 
grazing  country. 

Tlie  Chairman.  Is  not  this  region  which  you  talk  about  irrigated, 
and  was  not  that  fine  wheat  of  which  you  speak  raised  by  irrigation  ? 

Mr.  Hill.  Not  at  all,  sir. 

Senator  Blair.  How  about  the  climate  and  the  passes  through  the 
mountains  to  get  to  the  Pacific  on  the  north  ? 

Mr.  Hill.  There  is  a  very  easy  way  to  the  coast.  There  are  two  or 
three  passes  over  the  main  ranges  of  mountains. 

Senator  Blair.  Within  our  territory  ? 

Mr.  Hill.  Yes,  sir  ;  within  our  territory.  There  is  a  very  easy  pass 
north  of  the  boundary  line  through  which  the  Canadian  Pacific  desired 
to  build  their  road ;  but  the  government  would  not  allow  them.  It  is 
too  near  the  boundary. 

CONSTRUCTION   OF   THE  MANITOBA  ROAD. 

Senator  Gorman.  How  far  is  your  road  south  of  the  Canadian  Pacific, 
on  an  average  ? 

Mr.  Hill.  We  are  about  150  miles  south  of  the  Canadian  Pacific,  I 
should  say,  on  an  average. 

The  Chairman.  How  far  north  are  you  of  the  Northern  Pacific? 

Mr.  Hill.  We  are  from  90  to  150  miles  north  of  the  Northern  Pacific. 

Senator  Gorman.  How  much  of  a  sulDsidy  did  your  road  receive  from 
the  Government  from  St.  Paul  to  the  Canadian  line  at  St.  Vincent  ? 

Mr.  Hill.  On  that  400  miles,  the  subsidy  we  received  was  under  the 
grant  of  1857,  ten  sections  of  land  to  the  mile. 

Senator  Gorman.  You  received  no  money  at  all,  then  ? 

Mr.  Hill.  No,  sir ;  no  money. 

Senator  Gorman.  Now,  then,  the  balance  of  your  road,  leading  clear 
out  to  Butte,  is  a  line  which  has  been  built  entirely  without  subsidy,  is 
it  not? 

Mr.  Hill.  Yes,  sir ;  without  any  subsidy  at  all. 

Senator  Gorman.  And  built  by  private  enterprise  ? 

Mr.  Hill.  Entirely.  Even  the  right  of  way  we  paid  for  to  the  Gov- 
ernment. 

Senator  Gorman.  So  that  then  there  is  a  very  slight  portion  of  your 
road  which  has  been  subsidized. 

Mr.  Hill.  Yes,  sir. 

Senator  Gorman.  What  is  a  fair  estimate  on  the  aggregate  that  your 
road  would  realize  from  those  lands  ?  Taking  the  whole  of  the  grant, 
what  would  be  a  fair  estimate  ? 

Mr.  Hill.  Taking  the  whole  of  the  grant,  I  suppose  that  in  twenty 
years  there  have  been  sold  $10,000,000  worth  of  lands;  the  proceeds  of 
these  lands  has  been  used  to  retire  the  bonds  of  the  company,  so  that  it 
has  in  this  way  reduced  the  capital.  The  lands  are  pledged  in  that 
way.  That  was  the  case  with  the  old  St.  Paul  and  Pacific,  and  that  is 
the  case  with  the  present  company.  The  company  or  the  stockholders 
get  only  a  benefit  from  the  lands  in  so  much  as  the  bonds  so  redeemed 
are  taken  from  above  their  stock.    The  capital  is  reduced  that  much. 

Senator  Gorman.  So  that  you  have  i^ractically  2,400  miles  of  road 
running  parallel  to  this  Canadian  Pacific  and  the  Northern  Pacific  that 
were  built  entirely  and  exclusively  by  private  enterprise  ? 

Mr.  Hill.  We'  have  now  about  2,800  miles  of  road  built,  without 
any  bonus  or  anything  else  except  the  stock  and  bonds  invested  by 
private  parties. 


182  TRANSPORTATION   INTERESTS   OP 

Senator  Gorman.  You  built  tbat  road  under  very  peculiar  circum- 
stances and  very  rapidly,  too,  1  believe.  I  am  told  that  tlie  grading 
and  the  laying  of  tbe  rails  on  your  road  was  probably  more  expeditious 
than  on  any  other  road  in  this  country  or  in  Canada. 

Mr.  Hill.  I  think  that  for  the  length  of  the  road  we  built  it  more 
rapidly  than  any  road  was  ever  built  before. 

Senator  Gorman.  Is  it  single  track  ? 

Mr.  Hill.  Yes,  sir. 

Senator  Gorman.  What  is  the  average  cost  per  mile  of  your  road  as 
it  stands  to-day? 

Mr.  Hill.  Tlie  entire  Manitoba  system  including  its  land  grant,  in- 
cluding all  its  sleeping  cars,  all  itsecpiijiments,  all  its  shops,  all  its  ter- 
minals, which  are  very  large,  including  a  new  line  of  steel  steamers  on 
the  Lake,  and  several  other  ]Hoperties,  the  entire  capital  is  equal  to 
about  $26,500  a  mile  in  stock  and  bonds. 

Senator  Gorman.  That  is  moderate. 

Mr.  Hill.  I  think  it  is  lower  than  any  other  road  in  the  country. 
That  amount  represents  the  actual  capital  of  i)rivate  individuals  that 
has  been  put  into  the  road. 

CANADIAN  PACIFIC   COMPETITION. 

Senator  Gorman.  You  are  about  150  miles  south  of  the  Canadian 
Pacitic,  and  you  are  under  the  operation  of  the  interstate-commerce  law 
in  regard  to  the  long  and  short  haul  clause,  are  you  not? 

Mr.  Hill.  Yes,  sir. 

Senator  Gorman.  You  are  necessarily  competing  for  that  freight  in 
the  northwestern  country  that  you  ])ass  through,  and  somewhat  of  a 
competitor  with  respect  to  rates. 

Mr.  Hill.  Yes,  sir. 

Senator  Gorman.  Can  you  compete  with  these  other  roads  on  fair 
terms  to  yourself,  the  interstate-commerce  law  being  in  force  and  being 
observed  by  you  ? 

Mr.  Hill.  There  are  a  great  many  times  when  the  interstate-com- 
merce law  would  work  an  apparent  hardshi]),  and  I  might  say  a  very 
great  hardship,  upon  the  American  lines,  because  the  other  line  is  not 
compelled  to  observe  it.  I  think  if  the  conditions  were  equal,  and  that 
if  we  had  relatively  the  same  conditions  that  prevail  in  Canada,  an 
American  road  could  not  live.  We  have  sixty  live  millions  of  peojjle  in 
this  country  and  a  great  deal  more  money  than  the  people  of  Canada. 
The  various  business  enterprises  carried'  on  in  the  United  States  as 
compared  with  Canada  are  enormous  and. furnish  busine-ss  and  tratlic 
and  tonnage  and  persons  traveling,  moving  in  a  way  that  is  not  the 
case  in  the  lower  or  eastern  portions  of  the  Dominion',  and  if  they  had 
to  depend  upon  themselves  the  same  as  our  roads  do,  they  could  not 
live. 

Senator  Gorman.  But  if  this  traflic  is  to  go  on  and  this  interstate- 
commerce  law  is  to  be  enforced  rigidly  as  against  all  the  American  lines, 
can  you  compete  successfully  with  the  Canadian  lines  running  to  the 
north  of  you  and  tapping  you  at  all  the  essential  points,  when  they  nre 
not  pnt  on  the  same  footing  with  you? 

Mr.  Hill.  They  have  all  the  advantages  that  would  operate  in  their 
favor  and  against  the  American  lines.  The  railroad  is  a  business  en- 
terprise, and  the  object  of  a  business  investment  is  to  i)av  something 
back  to  the  people  who  invest  their  money.  Our  cai)itarfor  the  past 
three  years  has  been  furnished  mainly  by  our  stockholders,  each  man 


THE  UNITED  STATES  AND  CANADA.  183 

taking  his  proportion  of  any  securities  that  the  company  issued  for  the 
purpose  of  building  the  road,  and  it  was  taken  on  the  basis  of  a  low 
rate  of  interest.  If  another  road  competing  with  us  had  to  pay  less  in- 
terest or  had  any  other  means  than  its  revenue  from  the  business  di- 
rectly, they  would  have  the  advantage  of  us  and  sooner  or  later  our  en- 
terprise would  be  a  loss  to  the  people  who  invested  in  it. 

Senator  Reagan.  Kow,  from  this  point  [indicating  on  mapj  of  this 
territory  west,  what  population  have  they,  and  what  competition  can 
there  be  between  your  road  and  this  other  road  at  present,  until  the 
future  settlements  are  made  west  of  there? 

J\Ir.  Hill.  There  will  never  be  anything  but  cattle  and  wool  to  carry 
from  the  Canadian  side  between  the  international  boundary  line  on  the 
south  and  Old  Wives  Lake  on  the  north,  and  Long  Creek  on  the  east, 
and  the  Cypress  Hills  on  the  west. 

Senator  Reagan.  As  to  the  balance  of  this  country  there  is  very 
little  population  or  none  at  present. 

Mr.  Hill.  The  population  is  along  the  line  of  the  railroad. 

Senator  Reagan.  But  1  am  asking  as  to  the  population  along  here 
[indicating  on  map].  There  is  no  population  along  here  that  will  cre- 
ate any  business  for  which  to  compete,  is  there  ? 

Mr.  Hill.  There  is  a  very  nice  and  thrifty  population  along  the 
boundary  between  the  Red  River  of  the  North  and  the  w^estern  bound- 
ary of  the  province  of  Manitoba,  lying  south  of  the  Assiniboin  River. 

Senator  Reagan.  My  q-^estion  is  in  reference  to  the  territory  west  of 
the  western  boundary  of  Manitoba  along  the  international  boundary. 
What  is  there  to  compete  for  there  ? 

Mr.  Hill.  There  is  nothing  at  present  except  some  cattle  and  wool. 

REGULATION   OF   CANADIAN  LINES. 

Senator  Gorman.  With  those  conditions,  would  it  be  an  unfair  prop- 
osition to  say  to  the  Canadian  Government,  "You  must  impose  some 
conditions  by  international  arrangement  on  the  Canadian  roads  and 
their  connections,  so  far  as  the  provisions  of  the  interstate-commerce 
law  are  concerned,  so  that  the  provisions  of  that  law  shall  be  enforced  in 
Canada  as  well  as  in  the  United  States,  and  in  the  event  of  your  fiiiling 
to  grant  such  concessions  we  will  then  require  the  inspection  of  your 
cars  for  customs  duties  at  the  border  ? " 

Mr.  Hill.  The  entire  question  seems  to  be  one  that  could  be  fairly 
arranged.  1  speak  outside  of  our  own  matter,  because  while  at  one 
time  it  was  a  very  important  matter  to  us,  since  the  completion  of  the 
Canadian  Pacific  road  it  is  a  very  unimportant  one.  There  is  very 
little  business  between  the  Province  of  Manitoba  and  any  portion  of 
the  Dominion  that  does  not  come  over  the  Canadian  Pacitic  road.  I 
think  that  the  regulation  of  the  business  that  may  be  done  by  American 
lines  and  by  Canadian  lines  in  competition  with  American  lines,  and 
particularly  from  points  in  the  United  States  to  other  jjoints  in  the 
Unitod  States  crossing  Canadian  territory — ail  those  matters  could  be 
arranged  with  little  trouble,  because  there  are  only  two  Canadian  roads 
to  deal  with.  The  Canadian  Government  would  only  have  two  roads 
to  deal  with,  the  Grand  Trunk  and  the  Canadian  Pacitic. 

Senator  Gorman.  Do  you  think  it  would  be  a  fair  arrangement  to 
require  that  they  should  submit  to  the  same  conditions  exactly  as  the 
American  roads  I 

Mr.  Hill.  1  think  that  if  the  Canadian  roads  were  compelled  to  do 
their  business  throughout  the  Dominion  on   the  conditions  that  the 


184  TRANSPORTATION   INTERESTS    OF 

American  roads  are  compelled  to  do  their  business  in  America,  that  the 
Canadian  roads,  notwithstanding  the  liberal  bonus,  couUl  not  live. 

Senator  Gorman.  Why  ? 

Mr.  Hill.  1  do  not  think  they  would  get  enoujrh  revenue  from  the 
rates  to  pay  their  bills.  I  think  that  a  careful  investijiation  of  the  an- 
nual reports  of  the  Canadian  Commissioner  of  Government  lioads, 
showing-  the  amount  of  money,  bonuses,  local  aid  of  one  kind  and  an- 
other that  has  gone  into,  you  might  say,  ahnost  tlie  entire  mileage  of 
the  Canadian  roads,  would  surprise  you,  and  L  think  that  their  condi- 
tions are  snch,  excepting  certain  ])ortions  of  the  Dominion,  say  the 
province  of  Ontario,  which  is  thickly  ])opnlated  with  an  indu.strioiis 
people,  and  certain  portions  of  the  province  of  Quebec,  that  the  Do- 
minion as  a  whole  has  to  carry  her  railroads.  The  public  have  to  carry 
the  radroads  in  grants  of  one  kind  or  another. 

Senator  Gorman.  What  would  be  your  suggestion,  assuming  that 
this  interstate-commerce  law  is  to  be  enforced  rigidly  f 

Mr.  Hill.  As  to  the  Canadian  Pacilic? 

Senator  Gorman.  Yes. 

Mr.  Hill.  The  Canadian  Pacitic  would  have  some  advantage.  If 
there  were  a  Chinese  wall  built  along  the  boundary  they  would  liave 
some  advantages,  and  I  think  the  advantages  i)ossib]y  would  be  as 
great  as  the  disadvantages,  but  the  Grand  Truidi  road  in  Canada  would 
be  destroyed,  or  to  a  great  extent  damaged. 

Senator  GojiMAN.  Then  how  would  you  i^rotect  the  AnM-iican  roads, 
which  allege  that  notwithstanding  the  law  the  Canadian  roads  continue 
to  give  drawbacks  for  the  purpose  of  drawing  trade  from  the  territory 
along  our  own  roads  ? 

Mr.  Hill.  1  think  it  is  a  very  difficult  thing  for  the  officers  of  a  rail- 
road to  control  their  own  roads  at  all  times  ami  umler  all  circumstances. 
Iknowofnoother  way  that  that  will  ever  Ik*  brought  about  than  by  some 
arrangement  for  a  division  of  business  by  agreement  citlier  under  the 
law,  and  if  it  can  not  be  done  under  the  law,  outside  of  the  law,  and  if 
it  can  not  be  done  outside  of  the  law,  then  it  will  go  as  it  does  now, 
which  is  on  the  theory  of  the  survival  of  the  littest,  the  stronger  killing: 
the  weaker,  and  the  public  either  having  to  sutfei  the  roa<l  being  worn 
out  and  the  use  of  some  of  the  lines  abandoned,  or  paying  a  rate  that 
will  support  two  lines  where  one  could  do  the  business. 

THE   RESTRICTION   OP  RAILROAD   CONSTRUCTION. 

Senator  Reagan.  Would  it  not  be  a  wise  ])olicy,  if  a  railroad  has  not 
business  on  which  to  sustain  itseif,  to  let  that  road  go  down  rather  than 
to  tax  the  people  on  other  roads  to  keep  it  up  ? 

Mr.  Hill.  For  the  general  public  it  certainly  would.  There  are  two 
lines  which  this  qupstion  may  take,  one  which'  has  answered  in  some 
cases  and  in  some  of  the  States,  and  that  is  the  restricting  of  the  budd 
ing  of  the  roads.  1  think  it  is  much  the  better  way  to  say  to  us,  if  you 
and  I,  for  instance,  want  to  build  a  road  from  A  to  B  and  there  is"  no 
road  there,  that  we  do  soon  our  own  judgment  and  at  our  own  risk  as 
to  its  paying.  W^e should  be  compelled,  1  think,  to  submit  a  profile  of 
the  road  to  intelligent  commissioners.  If  a  reasonable  expenditure 
would  get  a  26-loot  grade,  or  what  we  call  a  half  of  1  per  cent.,  or  one 
of  six-tenths  of  1  per  cent,  grade  for  the  length  of  our  road  we  should 
not  be  permitted  to  build  one  with  a  grade  of  1^  or  07  feet  to  the  ndle, 
because  the  road  with  a  grade  of  20  feet  with  the  same  locomotive  will 
haul  nearly  twice  as  many  cars  as  the  road  with  the  gnule  of  07  feet. 


THE  UNITED  STATES  AND  CANADA.  185 

111  otiier  words,  wheu  a  road  is  to  be  built  tbeu  is  the  proper  time  to 
determine  its  ultimate  ca])acity  for  its  business.  TLeu  when  that  road 
is  built  either  the  inspector  or  commissioner  or  auditor,  or  whoever  he 
may  be,  ought  to  be  given  authority  to  go  through  the  books  and  see 
all  the  accounts,  making  up  the  cost  of  the  road,  and  to  prevent  extor- 
tion it  shall  not  charge  an  unreasonable  rate  under  any  circumstances, 
whether  tbey  get  a  return  on  their  capital  or  not.  They  should  be  in- 
dulged more,  however,  in  a  new  country  than  in  a  place  of  more  devel- 
opment. 

Senator  Gorman.  But  you  have  the  other  condition  now,  to  build 
anywhere. 

Mr.  Hill.  I  say  wheu  you  have  that  road,  as  the  business  grows  and 
the  tonnage  increases  and  the  country  develops,  compel  it  to  do  its 
business  at  prices  that  will  give  it  a  fair,  and  no  more  than  a  ftiir  return 
upon  its  fairly  invested  capital.  If  you  do  that  you  will  get  the  work 
that  that  road  is  capable  of  doing,  and  as  such  a  line  can  do  a  great 
deal  yon  will  get  the  work  done  at  a  much  lower  price  than  you  would  if 
you  found  that  road  running  from  here  [indicating]  without  any  restric- 
tion other  than  such  as  may  be  imposed  in  numerous  ways  varying  as 
often  as  the  State  legislatures  meet. 

Now,  as  soon  as  a  road  is  profitable  somebody  conceives  the  idea  of 
paralleling  it,  either  to  compel  the  richer  road  or  better  established 
road  to  buy  them  out  or  to  divide,  and  the  result  is  as  a  rule  that  the 
stronger  controls  the  weaker  and  the  public  have  to  support  the  two 
roads  where  one  would  do,  but  there  are  little  towns  springing  up  on 
the  second  road  and  they  can  not  aftbrd  to  do  without  their  railroad  any 
more  than  the  big  ones  can,  and  there  is  where  the  trouble  comes  up. 
I  think  the  rates  in  the  United  States  can  be  reduced  very  materially, 
and  I  think  they  will  be. 

Senator  Reagan.  Has  not  a  large  proportion  of  the  contention  be- 
tween railroads  grown  out  of  the  fact  of  several  roads  trying  to  en- 
croach on  the  territory  legitimately  belonging  to  other  roads? 

Mr.  Hill.  That  is  a  source  of  much  trouble.  You  may  say  that  the 
more  conservative  men  when  they  have  a  reasonably  good  property 
lying  in  a  certain  region  of  country  deem  it  their  duty  to  take  care  of 
it.  Somebodj^  attempts  to  build  into  it  and  they  have  either  to  drive 
them  out  or  frighten  them  oft"  or  make  reprisals.  That  leads  to  over- 
production of  roads.  In  the  first  place  it  leads  to  an  investment  of 
capital  that  is  of  no  value  to  the  country.  That  capital  might  as  well 
be  carried  to  the  cemetery  and  buried  in  the  grave  of  the  owner;  it  is 
dead. 

THE  DIVISION   OF   TKAFFIC. 

Senator  Gorman.  jSTow,  with  the  present  condition  of  things,  I  un- 
dersttuid  you  to  say  that,  in  your  judgment,  the  onl}'  remedy  is  to  per- 
mit pooling,  or  a  division  of  business. 

Mr.  Hill.  Pooling  may  be  an  offensive  name  for  it,  but  it  is  the  same 
as  a  division  of  business  by  agreement.  I  do  not  know  of  any  other 
way. 

Tbe  Chairman.  Does  that  involve  the  sending  of  a  man's  goods  over 
a  line  that  he  does  not  want  them  sent  over? 
'  Mr.  Hill.  It  ought  not  to. 

The  Chairman.  Then  you  have  got  to  divide  in  cash  instead  of  di- 
viding in  business,  have  you  nof? 

Mr.  Hill.  1  think  you  can  divide  the  business.  One  might  refrain 
from   taking  business  from  a  certain  district,  saying,  "  We  leave  you 


136  TRANSPOETATION    INTERESTS    OF     . 

that-  you  leave  us  tbis."  I  do  uot  think  they  slioiild  carry  it  as  far  as 
some  pools  have  where  the  weak  roa<ls  have  been  supported  by  a  cash 
subsidy  that  came  out  of  the  people  who  bought  the  traiisi)ortatiou  on 
the  other  roads. 

The  Chairman.  It  was  stated  here  yesterday  that  the  Erie  got  a 
million  dollars  for  business  that  it  did  not  do. 

Mr.  Hill.  The  Fa-ie  has  contributed.!  have  no  doubt,  a  great  deal 
to  the  wealth  of  this  country,  and  a  great  deal  to  the  wealth  of  the 
West.  I  am  not  aware  that  the  ])eople  who  put  their  money  into  the 
Erie  originally  ever  got  a  cent  of  it  back  u])  to  this  time  It  seems  to 
be  a  condition  of  things  that  has  prevailed  throughout  the  country  with 
respect  to  many  of  the  radroad  enter[>rise.s.  1  tliiidc  in  a  good  many 
cases  roads  have  been  overcai)italized. 

Senator  KeaCx  AN.  There  is  no  doubt  that  it  would  reme<ly  the  situation 
if  there  were  a  division  of  the  tratlic  to  sustain  the  weaker  and  com- 
peting roads,  but  the  question  comes  np  whether  it  is  a  sound  ])olicy  for 
the  Government  and  the  people  to  sustain  roads  that  are  incapable  of 
sustaining  themselves.  I  see  here  in  article  5,  section  3,  and  paragraph 
1,  of  these  articles  of  association  of  the  trunk  lines,  tin;  loUow  ing  : 

Tlie  traffic  arrangements  witli  other  railroad  or  transportation  companies  herein  re- 
ferred to  a're  nnderstood  to  be: 
1.  The  establishment  of  joint  tariffs  and  the  division  of  lhn)u;;h  rates  or  Cares  upon 
aftic  passing  from  or  coming  to  the  roads  of  the  (■niiii)aiiifs  pari  ies  tlicri'to. 


ti 


The  eighth  article  says : 


If  the  maintenance  of  uniform  tariffs  by  all  lines  rednees  the  trallie  of  .any  party 
hereto  below  a  fair  proportion  of  the  traltic  in  eomi)i'iititin,  the  tariHs  may  l)e  so 
adjusted  from  time  to  time  as  to  protect  such  line  from  an  nnjnst  depleti(Hi  of  tratlic  ; 
such  adjustment  to  be  made  under  the  rules  of  this  associatiim. 

1  see  what  the  purpose  of  these  gentlemen  is,  and  possibly  it  may 
be  the  means  of  accomplishing  the  result  in  view,  but  it  seetns  to  me 
to  be  a  strange  policy  if  we  should  make  solvent  roads  sustain  roads 
that  are  insolvent,  or  would  be  insolvent  if  the  stronger  roads  did  not 
sustain  them. 

Mr.  Hill.  The  trouble  is,  we  must  take  one  jdan  or  the  other.  If  we 
permit  the  promiscuous  building  of  railroads,  then  you  are  going  to 
have  a  lot  of  these  weak  and  poorly-built  concerns  going  down  every 
year  and  the  public  will  have  to  pay  for  them.  If  a  man's  leg  is  broken 
or  his  shoulder  dislocated  and  a  jury  brings  in  a  verdict  for  $2.j,()()0 
damages  the  public  will  have  to  pay  that.  It  is  part  of  the  expense  of 
operating  the  road,  and  if  there  are  more  miles  of  train  service  fur- 
nished than  is  necessary,  better  service  and  everything  of  tlie  kind  iti 
every  branch  of  the  railway  service  at  i)rices  lower  thiin  they  cost,  de- 
pend upon  it,  the  people  who  are  shipping  their  gr<»at  tons  over  the 
roads  have  to  pay  it.  The  compensation  has  to  come  from  some  place, 
and  a  ])ortion  of  the  business  must  pay  more  than  its  shan^  or  else  the 
road  will  go  down. 

If  you  permit  the  indiscriminate  construction  of  roads  you  will  have 
this  condition  of  things.  If  you  say  that  we  will  establish  the  inter- 
state commerce  law  and  enforce  it  rigidly  as  against  everybody — I  fa- 
vor the  interstate  commerce  law  strongly — l)ut  in  order  to  be  consistent 
you  should  also  regulate  the  construction  of  roads,  and  if  yoti  regulate 
the  construction  of  roads  you  can  simply  say,  '•  You  may  have  that  ter- 
ritory and  occupy  it  at  your  own  risk,  but  you  can  not  get  more  than  a 
given  income  per  annum.  You  must  keep  your  books  of  account  hon- 
estly, fairly ,  and  intelligently,  and  you  can  ilot  receive  more  than  a  rea- 


THE    tJMTfit)    STATES    AND    CANADA.  187 

sonable  return  on  your  capital."  Wbeu  you  do  this  it  will  be  the  best 
way  in  the  world  to  secure  lower  rates. 

The  Chairman.  You  are  aware,  1  suppose,  that  in  this  country  the 
charters  obtaiued  by  the  railroads  are  given  by  the  States,  and  the 
National  Goverument  has  nothing  to  do  with  the  uiatter. 

Mr.  Hill.  Yes,  and  that  is  oneof  the  difficulties.  The  interstate  com- 
merce law,  which  I  consider  has  been  wisely  administered  and  possibly 
administered  with  more  moderation  in  order  to  get  the  ])eople  fairly  to 
understand  it  than  was  necessary,  though  I  think  that  all  the  roads 
feel  that  it  has  been  intelligently  and  well  administered,  could  be  better 
administered  if  the  conditions  were  more  favorable.  The  trouble  is  that 
the  theory  of  the  interstate  commerce  law  is  one  that  would  work  bet- 
ter with  the  coiulition  of  things  where  the  construction  of  railways  was 
also  controlled  by  some  intelligent  law,  and  the  mere  authority  of  the 
States  to  grant  these  charters  in  some  way  controlled  Wnt  if  the  rail- 
roads are  to  go  on  and  be  milled  out  as  fast  as  people  are  found  willing 
for  a  large  commission  on  bonds  to  get  out  an  attractive  prospectus  and 
sell  bonds,  then  good  intelligently  located  roads  may  become  useless 
by  this  overcoustruction. 

The  Chairman.  I  understand  you  to  say  tliat  you  favor  the  authority 
of  the  law  to  allow  the  railroads  to  make  contracts  with  each  other  sub- 
ject to  the  supervision  of  the  Interstate  Commerce  Commission. 

Mr.  Hill.  Yes,  sir  ;  but  it  ought  to  be  under  the  law. 

The  Chairman.  AVhat  effect  would  that  have  on  the  rates  of  trans- 
portation of  freight  from  our  country?  You  live  in  Minnesota  audi 
live  in  Illinois ;  now  will  it  increase  or  lessen  the  cost  of  transporting 
our  grain  and  products  of  all  kinds  to  the  East"? 

RATES   CONTROLLED   BY   WATER   COMPETITION. 

Mr.  Hill.  I  think  that  the  rate  of  transportation  from  our  agrigultu- 
ral  country  in  the  West  to  the  East  is  controlled  by  the  carriage  of  the 
lakes. 

The  Chairman.  But  how  is  it  when  the  lakes  are  frozen  uj)? 

Mr.  Hill.  They  still  conrrol  it.  You  remember,  as  I  do,  when  Peoria 
was  a  larger  city  than  Chicago  and  when  Galena  had  move  wholesale 
business  than  Chicago,  but  at  this  time  nothing  but  the  low  rates  by 
the  deep-water  ships  coming  to  Chicago  make  the  rates.  They  abso- 
Hutely  control  the  rates  out  of  Chicago,  no  matter  whether  the  Lake 
Shore,  or  Michigan  Central,  or  Fort  Wayne  can  afford  to  do  the  business 
•over  their  entire  lines  at  the  through  rate  or  not.  If  tliey  can  not, 
their  local  patrons  would  have  to  make  good  the  difference  and  the 
people  of  Chicago  get  their  business  done  relatively  for  less  than  the 
merchants  in  Peoria  or  Galena,  and  this  has  resulted  in  establishing 
Chicago  in  a  position  that  I  think  must  be  permanent. 

Senator  Blair.  Is  this  the  idea,  that  she  has  the  same  watertonnage 
and  the  same  railroad  tonnage  ? 

Mr.  Hill.  The  water  tonnage  being  the  cheapest  controls  the  rate. 
Ten  years  of  my  experience  was  on  the  Mississippi  liiver.  I  do  not 
want  shallow  water  confounded  with  deep  water.  The  Government  ap- 
propriates vast  amounts  of  money  yearly.  I  have  boats  on  a  certain 
river,  and  I  will  sell  all  the  boats  for  the  annual  appro[»riation  for  that 
river.  Between  St.  Paul  and  Keokuk  the  annual  appropriations  are 
equal  to  the  value  of  all  the  boats  running  bctweeu  those  points,  and  I 
think  if  the  money  spent  on  improving  the  Mississippi  liiver  were  spent 
in  a  good  levee — 

Senator  Blair.  You  refer  now  to  the  Upper  Mississippi,  do  you  not  I 


188  TRANSPORTATION   INTERESTS    OF 

Mr.  Hill.  Take  the  Lower  Mississippi  too.  As  I  was  sayiug,  if  tbey 
built  a  good  levee  aud  put  a  double  track  upon  it  from  opposite  Cairo 
to  New  Orleans,  on  that  very  low-water  level  grade  tliey  could  haul 
freio-ht  for  less  than  they  can  tloat  it  down  and  tow  the  boat  back. 

The  Chairman.  Put  it  on  the  Cairo  side  of  the  river  and  it  will  be  in 
my  State.    [Laughter.] 

Mr.  Hill.  With  respect  to  the  question  of  rates  in  our  westerti  coun- 
try. I  think  they  are  established  by  the  Lakes.  1  know  that  at  present 
we  are  carrying^on  our  boats  wheat  from  Duluth  to  IJullalo  lor  L*^  cents 
a  bushel,  and  Nebraska  corn  for  2i  cents  a  bushel,  and  tlie  distance  is 
about  1,100  miles. 

The  Chairman.  On  what  route  is  this  f 

Mr.  Hill.  From  the  head  of  Lake  Sui)erior  down  to  liutTalo.  Wo 
carry  it  on  a  freight  line  of  steamers.     • 

The  Chairman.  You  are  discouraging  the  Mississippi  IJiver,  but  ap- 
preciating very  highly  the  lake. 

Mr.  Hill.  Our  Mississippi  boats,  that  cost  $200  a  day  to  run  them, 
carry  say  300  tons: 

The  Chairman.  Do  you  not  think  the  river  is  an  ijn|)ortant  factor  as 
well  as  the  Lakes  in  fixing  the  railroad  rates? 

Mr.  Hill.  1  think  the  actual  ligures  will  show  that  wherever  a  rail- 
way runs  along  the  shore  of  the  Mississipi)i  Kiver  the  railway  carries  a 
majority  of  the  freight,  and  at  lower  rates  than  it  can  be  carried  oil  the 
river. 

The  Chairman.  Still,if  you  were  to  take  the  river  away,  the  railroad 
would  very  quickly  put  up  the  freight  rare. 

Mr.  Hill.  I  think  you  would  find  in  most  cases  that  the  railroails  on 
the  other  side  of  the  river  would  keep  them  down. 

Senator  Blair.  What  does  it  cost  to  run  such  a  freight  ship  as  you 
speak  of! 

Mr.  Hill.  A  ship  that  will  carry  3,000  tons  will  cost  $150  a  day,  aud 
will  make  12  miles  an  hour,  while  the  other,  carrying  300  tons,  would 
make  8  or  9  miles  an  hour  and  cost  $200  a  day. 

Senator  Blair.  That  is  the  comparison  between  shallow  water  navi- 
gation and  deep  water  navigation,  and  the  Mississippi  River  navigation 
you  class  as  shallow  water  navigation  '. 

Mr.  Hill.  Yes,  sir.  For  the  purposes  of  carrying  logs  and  things  of 
that  kind  which  can  be  tumbled  into  the  river  and  be  floated  down  by 
the  current  it  is  very  useful,  but  for  the  general  uses  of  commerce  I 
think  not. 

Senator  Blair.  Well,  take  it  from  New  Orleans  to  the  gulf? 

Mr.  Hill.  The  water  is  much  deei)er  there. 

Senator  Blair.  How  does  the  cost  of  navigation  from  New  Orleans 
to  the  Gulf  compare  with  the  cost  of  transi>ortation  by  railway? 

Mr.  Hill.  I  would  like  to  see  a  railroad  on  the  bank  of  the  river  from 
Cairo  to  the  Gulf,  with  a  maximum  oC  15  feet  grade  to  the  mile.  A  mo- 
gul locomotive  would  haul  1,200  tons  of  paying  freight  and  that  would 
be  handled  by  a  single  locomotive  and  fiv("'  men.  It  would  be  a  large 
ship-load.  It  is  true  that  the  right  of  way  would  not  cost  anything  on 
the  river,  or  the  maintenance  of  harbors,  docks,  and  so  on  ;  the  (Govern- 
ment does  that  for  marine  transportation;  but  the  railwav.  1  think,  as 
far  as  the  expense  is  concerned,  could  move  it  from  Cairo  toNew  Orleans 
for  less  than  the  river  transi)ortation,  but  there  is  the  interest  on  the 
investment  in  the  one  case,  while  there  is  no  great  interest  as  to  the  river 
transportation.  The  Government  invests  monev  in  the  river  in  the 
shape  of  appropriations,  and  charges  no  interest  account  against  the 
public. 


I 


THE    UNITED    STATES    AND    CANADA.  189 

Senator  Blair.  That  comes  out  of  the  country  however. 

Mr.  Hill.  Yes,  sir. 

Senator  Keagan.  I  kne  v  a  gentleman  who  advocated  the  establish- 
ment of  a  freight  road  between  Chicago  and  ^ew  York,  double  tracked, 
to  be  run  at  the  rate  of  12  miles  an  hour,  and  he  made  a  calculation 
that  showed  that  they  could  carry  freight  nearly  as  low  as  by  water ; 
but  he  did  not  go  as  tar  as  you  have  gone  to  day  and  say  that  they 
could  carry  as  low  as  by  water  transportation. 

Mv.  niLL.  I  think  where  you  have  a  current  to  contend  with  you  can 
do  so.  It  is  like  going  up  hill  on  a  railroad.  Where  you  have  a  cur- 
rent it  makes  it  cost  a  good  deal  to  overcome  it,  and  the  high  pressure 
engines  that  are  used  on  the  Mississippi  River  steam-boats  and  found 
to  be  the  best  are  a  very  expensive  form  of  power.  The  low  pressure 
engine,  or  using  the  steam  three  times,  starting  with  high  pressure  and 
ending  with  low  pressure  on  the  lakes  is  a  very  economical  way  of  using 
power. 

Senator  Blair.  Recurring  to  the  suggestion  that  it  would  be  better  to 
let  the  roads  die  which  do  not  pay,  I  wish  to  ask  you  this:  Take  the  Erie 
road  for  instance.  How  will  this  thing  work  in  actual  experience  ? 
The  Erie  road,  which  is  supported  only  by  these  differential  rates,  comes 
within  the  suggestion  made  by  Senator  Reagan.  Now,  I  suppose  there 
are  a  million  people  living  along  the  line  of  that  road,  and 

Senator  Reagan.  I  would  not  suggest  the  Erie,  because  there  is 
plenty  of  way-business  along  that  road  to  keep  it  alive. 

Senator  Blair.  The  officers  of  that  road  said  that  they  would  be 
ruined  unless  they  had  this  differential  rate.  They  said  that  this  differ- 
ential rate  is  the  only  thing  that  enables  them  to  do  the  through  business, 
and  therefore  they  look  upon  the  through  bufsiness  as  an  advantage. 
The  suggestion  now  is  that  they  be  confined  wholly  to  their  local  busi- 
ness, because  if  they  would  be  ruined  with  their  through  business  unless 
they  had  this  differential  they  would,  of  course,  be  ruined  without  the 
through  business.  I  ask,  is  it  for  the  public  good  to  extinguish  the 
Erie  road  from  the  commerce  and  caj^ital  of  the  United  States! 

Mr.  Hill.  Far  from  it;  and  I  think  if  it  costs  o  cents  a  ton  a  mile  to 
the  local  i)atrons  of  the  Erie  road  in  order  to  pay  the  bills,  it  is  better 
for  them  to  reduce  the  rates  that  the  local  people  pay  by  doing  the 
through  business  at  any  rate  that  will  ])ay  some  protit  and  let  that 
})rofit  go  to  reduce  the  local  rate.  I  think  it  demonstrates  that  it  is 
better  for  the  Erie  road  to  be  allowed  to  move  business  at  y^jv  cent  a 
ton  a  mile  if  it  will  pay  a  profit  of  .15  cent  out  of  that  .75,  and  the 
local  people  will  get  the  advantage  of  the  .15  cent. 

And  then  again  take  the  enormous  tonnage  coming  irom  the  west  to 
the  Erie  road  and  to  all  these  trunk  lines.  They  could  not  give  any- 
thing like  the  service,  or  quality  of  the  service,  or  the  amount  of  service 
they  now  give  if  they  depended  on  their  local  trafQc.  This  large  accu- 
mulation of  tonnage  is  brought  in  like  little  streams  forming  the  larger 
ones  and  making  the  great  river.  They  furnish  the  business,  and  it  is 
done  at  the  lowest  rate,  and  I  think  it  ought  to  be  done  at  the  lowest 
rate,  and  1  think  it  is  for  the  good  of  the  local  patrons  of  that  railroad, 
bearing  in  mind  the  fact  that  a  certain  amount  of  money  is  to  be  con- 
tributed in  order  to  pay  the  bills  of  that  railroad,  in  order  to  keep  that 
road  running  during  the  year.  The  trafdc  men  have  the  question  to 
meet,  "  how  shall  we  adjust  our  tariff  to  raise  so  nu\ny  doUars?"  exactly 
as  you  would  in  assessing  a  township.  They  know  how  much  they 
have  to  raise.  They  know  what  proportion  of  their  gross  earnings  has 
to  go  for  expenses,  and  what  balance  will  be  net,  and  they  know  about 
where  to  place  their  rates, 


190  TRANSPORTATION    INTERESTS    OF 

Now  the  burden  has  to  be  distributed  on  all  the  different  shoulders. 
I  think  it  is  easily  demonstrated  that  the  burden  lies  on  the  shoulders 
of  the  local  man/  But  if  you  can  bring  all  the  tons  from  the  west  and 
only  put  upon  it  what  it  can  bear,  or  jnst  enough  to  enable  it  to  go  by 
rail  over  the  Erie  road,  rather  than  to  have  it  take  the  slower  canal 
route,  it  makes  the  local  burden  less,  to  the  extent  of  the  profit  the 
Erie  gets  from  the  heavy  tonnage  that  comes  from  the  ^^est. 

STATEMENT  OF  ERASTUS  WIMAN. 

Mr.  Erastus  Wiman  appeared. 

The  Chairman.  You  know,  Mr.  Wiman,  enough  about  our  mission 
here  and  the  work  that  is  before  this  committee,  to  say  what  you  have 
to  state  without  any  examination  on  our  part. 

Mr.  Wiman.  I  suppose  I  might  be  permitted,  Mr.  Chairman,  to  ans- 
wer the  question,  what  the  effect  upon  the  whole  country  has  been  of 
the  construction  of  the  Canadian  railways?  ]\Iay  I  be  permitted  to 
answer  that! 

Tlie  Chairman.  Yes.    What  do  you  mean  by  the  "  wliole  country?" 

"WHAT   THE   CANADIAN   ROADS   HAVE   DONE. 

Mr.  Wiman.  I  mean  the  whole  continent — the  United  States  as  well 
as  Canada.  This  is  what  I  would  say,  that  there  has  been  no  contribu- 
tion to  the  Western  States  quite  so  advantageous  as  the  construction  of 
the  Canadian  railways.  Next  to  the  constinotion  of  the  American  rail- 
ways and  the  provisions  of  nature  in  the  water-ways  which  Mr.  Hill  has 
spoken  of  just  now,  these  Canadian  railroads  have  proved  the  most  ben- 
eficial. I  think  the  Canadian  railways  have  coiilribnred  more  to  the 
facilities  for  the  handling  of  products  going  east  and  the  merchandise 
going  west,  at  rates  lower  than  ever  betbre  dreamed  of,  than  any  other 
enterprises  that  have  been  inangnrate  I  in  this  country.  First,  there  is 
the  directness  of  route,  and  second  the  bnsiness  has  been  done  at  rates  so 
low  that  they  never  paid  anything  on  thecaiiital  inv«'sted. 

The  Chairman.  You  speak  of  both  lines  ? 

Mr.  Wiman.  There  is  no  road  in  Canada  that  has  jiaid  anything  on 
the  stock  invested  except  the  Canadian  Pacific  paying  from  money  pro- 
vided lor  dividends. 

The  Chairman.  The  Canadian  Pacific  has  never  i>aid  innch  on  the 
original  construction,  has  it  1 

Mr.  Wiman.  No. 

The  Chairman.  If  you  are  acquainted  with  the  facts  will  you  give 
us  exactly  what  the  Dominion  of  Canada  has  done  towaids  "the  con- 
struction and  maintenance  of  that  road  f 

Mr.  Wiman.  1  think  the  Dominion  ijave  to  the  Canadian  I'acific 
about  $100,000,000. 

The  Chairman.  Has  it  not  given  more  than  that  bv  one  means  and 
another"? 

Mr.  Wiman.  I  do  not  think  so.  I  think  thev  gave  them  25,0^^00 
acres  of  land,  $25,000,000  of  monev,  a  railroad  from  Port  Arthur  to  Win- 
nipeg and  from  St.  Vincent  to  Winnii)eg,  and  another  road  from  Van- 
couver  to  the  Kocls,v  ^Mountains  ;  altogether,  abont  ijilOO.OOd.OOO. 

The  Chairman.  My  information  is,  and  it  is  reliable,  that  by  cash 
subsuly,  land  grants,  and  guarantee  of  credit,  the  Caufidiau  Pacific  has 
received  about  $220,000,000. 


THE    UNITED    STATES    AND    CANADA.  191 

Mr.  WiMAN.  You  iuciiule  iu  this  the  guarantee  of  credit  on  which  they 
borrowed  money,  and  on  which  they  have  to  pay  interest. 

The  Chairman.  What  does  that  amount  to  ? 

Mr.  WiMAN.  It  begets  them  use  of  money  at  a  very  low  rate  of  inter- 
est. 

The  Chairman.  How  much  of  a  guarantee  of  credit  has  been  given  by 
the  government  ? 

Mr.  WiMAN.  I  am  not  accurately  informed  on  that  i^oint. 

The  Chairman.  Does  this  one  hundred  million  embrace  any  of  that  ? 

Mr.  WiMAN.  No,  sir;  this  one  hundred  million  is  an  out  and  out  gift, 
and  a  gift  that  was  absolutely  essential  to  the  construction  of  the  road. 
No  person  would  have  undertaken  to  construct  that  railroad  as  th(iy 
have  done  along  the  rocky  shore  of  Lake  Superior,  where  it  cost  at  the 
rate  of  one  hundred  thousand  dollars  a  mile,  or  through  the  sterile  coun- 
try between  Port  Arthur  and  Winnipeg,  where  therecould  not  possibly 
be  any  traffic,  without  this  governmental  aid.  They  also  had  to  build  aii 
expensive  line  through  the  Eocky  Mountains,  and  they  never  could  have 
done  all  this  unless  they  got  some  compensation. 

The  Chairman.  Now  go  on  with  your  general  statement. 

THE  bonding  privilege. 

Mr.  WiMAN.  You  might  want  to  know  what  my  opinion  was  as  to  the 
consequences  that  would  have  occurred  had  there  not  been  a  bonding 
privilege.  I  do  not  think  these  roads  would  have  been  constructed  at  all. 

The  Chairman.  Neither  one  of  them  ? 

Mr.  WiMAN.  Neither  one  of  them. 

The  Chairman.  The  Grand  Trunk  has  not  been  assisted  very  much 
by  the  Government,  has  it  ? 

Mr.  WiMAN.  No,  sir;  it  has  not  had  any  assistance  of  late  years  that 
I  know  of.  The  Grand  Trunk  spent  large  sums  of  English  capital  for 
which  it  has  brought  meager  return. 

The  Chairman.  That  was  individual  capital  ? 

Mr.  Wiman.  Yes,  sir,  individual  capital.  Of  course,  if  the  bonding 
privilege  were  repealed  now  it  would  be  fatal  for  the  roads,  although  1 
think  the  Canadian  Pacific  would  build  a  line  and  get  around  Maine  to 
St.  John.  I  believe  they  are  building  in  that  direction  now,  and  when 
that  link  is  completed  they  will  have  a  Canadian  through  line  from 
ocean  to  ocean  and  be  somewhat  independent.  As  far  as  the  Grand 
Trunk  is  concerned,  if  it  should  be  shut  up  by  the  repeal  of  the  bonding 
l^rivilege  one  of  the  best  avenues  afibrded  to  the  West  for  the  outlet  of 
its  products  will  be  closed.  And  so  with  regard  to  the  Canadian  Pacific. 
If  the  new  lines  that  are  constructed  from  Sault  Ste.  Marie  to  Duluth 
and  also  to  Minneapolis  were  to  be  rendered  valueless  by  the  abolition 
of  the  bonding  system,  not  only  the  system  of  the  Canadian  Pacific  but 
the  whole  northwestern  railway  system  that  has  an  outlet  in  the  direc- 
tion of  Duluth  and  hence  to  Boston  and  the  New  England  States  would 
be  paralyzed,  to  the  great  injury  of  the  West  and  tlie  East  also. 

You  might  ask  me  what  portion  of  Canadian  capital  is  invested  in 
Canadian  railways.  I  do  not  think  that  10  per  cent,  of  the  capital  in- 
vested in  Canadian  railways  ig  Canadian  capital.  Fully  90  per  cent,  of 
it  is  English  money. 

The  Chairman.  I  uuderstantj.  you  to  say  that  neither  of  these  roads 
has  paid  a  cent  of  dividend  since  they  were  built  ? 

Mr.  Wiman.  They  have  not  ea-riied  it,    The  Canadian  Pacific  paid 


192  TEANSPORTATION    INTERESTS    OP 

something  out  of  some  money  put  up  with  the  Goverumeut  as  a  guar- 
antee, but  that  is  nearly  exhausted  now. 

WHY  THE  CANADIAN  ROADS  WERE  BUILT. 

The  Chairman.  Is  it  their  programme  to  run  on  inde6nitely  without 
paying  dividends  by  actual  earnings  ? 

Mr.  WiMAN.  I  think  they  were  projected  to  make  money  on  the.  cap- 
ital invested  out  of  their  land  grants,  its  development,  and  also  adding 
Asiatic  traffic.  Of  course  it  is  a  dream  of  English  public  men  to  have 
an  alternate  route  to  their  vast  possessions  in  the  East  in  order  that 
they  will  not  be  compelled  to  go  through  foreign  countries  in  case  of 
trouble.  In  case  of  war  there  would  be  a  serious  interruption  of  their 
commerce,  and  it  is  a  subject  of  selfcongratulation  to  the  IJritish 
statesmen  to  feel  that  possibly  they  will  have  communication  entirely 
through  British  territory  with  their  eastern  possessions  without  being 
exposed  to  the  danagers  of  Asiatic  or  European  complications,  and 
hence  the  English  Government  has  encouraged  very  much  the  building 
and  completion  of  this  route. 

The  Chairman.  This  Canadian  route,  so  far  as  its  construction  was 
concerned,  was  largely  political,  was  it  not  ? 

Mr.  WiMAN.  In  a  broad  sense  it  was  good  policy. 

The  Chairman.  Was  it  not  built  for  the  purpose  of  binding  the  dif- 
lerent  provinces  together  as  a  political  union  T 

Mr.  WiMAN.  Yes,  sir;  it  was  in  jnirsuance  of  a  national  policy  to 
build  up  a  great  nation  on  the  nortli  of  this  country.  The  IIudi«ion's 
Bay  territory  alone  contained  two  millions  of  square  miles  of  teiritory, 
inaccessible  so  far  as  England  and  Canada  were  concerned,  and  this 
large  area  would  have  remained  inaccessible  had  it  not  been  for  the 
construction  of  this  road.  Here  was  a  fertile  country  that  could  only 
be  opened  up  by  the  construction  of  such  a  road.  As  1  said  before  tliese 
Canadian  roads  are  very  valuable  to  your  western  country  as  well  as  to 
Canada,  particularly  to  the  great  Northwest,  of  Minnesota,  Montana, 
etc.  Equally  so  was  it  essential  to  Manitoba  and  the  vast  Canadian 
northwest  teiritory.  Any  injury  to  these  Canadian  roads  would  be  au 
injury  inflicted  on  the  rapid  development  of  the  whole  western  portion 
of  this  continent. 

The  Chairman.  You  think,  therefore,  that  there  should  be  nothing 
done  by  the  United  States  to  interfere  with  those  Canadian  roads  ? 

Mr.  WiMAN.  I  think  that  an  arrangement  should  be  reached  between 
the  two  governments.     It  is  a  very  hard  case  that  the  American  roa«i 
should  be  exposed  to  the  competition  of  the  Canadian  roads  while  ti^ 
American  roads  have  restricted  regulations  to  which  the  Canadian  roads 
are  not  subject. 

The  Chairman.  Have  you  or  have  you  not  thought  about  the  ques- 
tion whether  we  ought  not  to  require  the  Canadian  Government  to  put 
their  roads  under  the  same  sort  of  regulation  as  our  roads  ? 

JNIr.  WiMAN.  If  the  two  governments  are  willing  to  make  an  arrange- 
ment by  which  all  such  questions  could  be  adjusted,  I  have  not  the 
slightest  doubt  it  would  be  the  very  best  policy  to  i)uraue.  For  instance, 
if  the  plan  which  I  have  urged  upon  some  Senators  for  an  arrangement 
by  which  the  custom-houses  between  the  two  countries  could  be  entirely 
removed,  I  think  it  would  be  very  advantageous,  and  could  include  ail 
such  questions  as  this,  of  the  regulation  of  transportation. 


THE    UNITED    STATES    AND    CANADA.  193 

COMMERCIAL   UNION. 

The  Chairman.  You  are  in  favor  of  commercial  union,  are  you  not 
Mr.  Wiman  ? 

Mr.  Wiman.  Yes,  sir.  One  of  the  conditions  of  commercial  union, 
of  course,  would  be  to  agree  that  precisely  the  same  regulations  should 
l^revail  in  Canada  regarding-  railroads  as  prevail  under  the  interstate 
commerce  law  in  this  country,  and  that  any  violation  of  it  in  the  slight- 
est degree  would  result  in  the  imposition  of  duties  on  the  articles  car- 
ried. 

You  might  ask  me,  if  you  choose,  what  would  be  the  political  eflfect  in 
Canada  of  the  repeal  of  the  bonded  privilege  ? 

The  Chairman.  You  may  answer  that. 

Mr.  Wiman.  I  think  the  political  elfect  in  Canada  of  the  repeal  of  the 
bonding  privilege  would  be  to  lessen  the  desire  of  the  Canadian  people 
to  have  business  relations  with  this  country.  It  would  be  looked  upon 
as  a  retaliatory  process,  and  as  they  have  never  yielded  to  that  kind  of 
treatment  heretofore  it  is  not  likely  that  they  would  submit  on  this  oc- 
casion. 

If  you  recollect,  the  reciprocity  treaty  ran  from  1854  to  1865,  and 
there  was  an  idea  in  the  United  JStates  that  if  it  was  repealed  Canada 
would  come  into  the  Union  ;  but'  such  was  not  the  ellect.  The  effect 
was  precisely  the  opposite.  A  condition  of  stubbornness  and  ultra-loy- 
alty developed  which  resulted  in  the  creation  of  the  national  policy  and 
in  the  building  of  the  Canadian  Pacitic  road.  The  Canadians  were\seek- 
ing  an  outlet  and  develoi)meut  of  their  own,  and  they  conceived  the 
construction  of  this  railroad  among  other  things.  The  Canadians  are  a 
very  loyal  and  a  very  peculiar  jieople  in  regard  to  such  matters.  The 
tendency  or  the  disposition  toward  an  annexation  movement  was  much 
stronger  in  1849  than  it  has  ever  been  since  that  time.  There  is  to  day 
some  growth  of  annexation  sentiment  in  Canada,  more,  or  less  pro- 
nounced, and  possibly  it  may  continue  to  grow,  but  it  is  a  secret  growth, 
and  no  man  who  understands  the  people  there  but  realizes  that  it  nouid 
take  twenty-five  years  to  elect  a  Parliament  favorable  to  annexation  or 
to  give  force  and  effect  to  any  such  movement. 

The  Chairman.  Do  you  mean  that  it  would  require  twenty-five  years 
hence  to  accomplish  such  a  result  ? 

Mr.  Wiman.  Yes,  twenty-five  years.  It  would  take  five  Parliaments 
of  five  years  apart  to  give  force  and  effect  to  such  a  movement  for 
union.  It  has  got  to  be  done  by  Parliament,  as  the  only  constitutional 
means,  and  such  an  event  is  at  best  remote,  if  not  impossible,  wliile  the 
people  are  so  wide  apart. 

The  Chairman.  I  think  you  will  find  many  instances  iu  the  world's 
history  of  public  sentiment  changing  suddenly. 

Mr.  Wiman.  If  the  custom-houses  were  entirel.y  abolished  llictc 
would  be  freer  intercourse.  If  auniform  tariff,  regulated  at  Wasliiiiuif;!!, 
extended  around  the  continent  instead  of  athwart  it,  and  if  the  ukuiii- 
facturers  of  the  United  States  could  have  free  access  to  that  vast  region 
to  the  north  much  would  be  done  toward  changing  the  sentiment.  If 
the  emigration  that  is  pouring  in  here  and  beginning  to  trouble  you  so 
much  should  go  in  the  direction  of  these  new  regions  and  become  your 
customer,  and  the  United  States  be  enriched  by  the  productive  force  of 
that  region,  the  people  would  be  brought  into  closer  contact  with 
each  other,  and  the  result  which  you  speak  of  as  to  a  change  of  senti- 
ment might  be  attained.  Of  course  it  is  presumable  thiit  the  English 
Government  is  watching  this  question  with  great  interest,  and  the  dav 
6543 13 


194  TRANSPORTATION    INTERESTS    OF 

may  come  when  that  Goverumeut  may  have  to  decide  the  question 
whether  you  will  regulate  at  Washington  the  rate  of  duties  on  goods 
from  one  part  of  the  British  empire  imported  into  another  part  of  the 
British  Empire.  Suppose  you  were  to  make  an  offer  to  Canada  of  com- 
mercial union,  and  sujipose  at  the  general  election  two  years  hence  a  Par- 
liament were  returned  favorable  to  the  offer,  as  it  will  be  if  you  make  the 
offer,  and  a  law  would  be  passed  to  abolish  thecustom-houses  between  the 
two  countries,  it  would  make  the  United  States  tariff"  continental  in  ex- 
tent of  application.  It  would  make  trade  with  you  as  freely  as  Illinois 
trades  with  Indiana  or  between  any  two  or  any  dozen  States  in  the 
Union.  The  English  Government  is  asked  to  assent  to  discrimination 
against  English  goods  in  favor  of  American  goods.  If  the  English  Gov- 
ernment refused  it  would  be  a  serious  nuitter  with  respect  to  the  tie  that 
binds  the  Dominion  to  Great  riritain.  It  is  a  matter  that  concerns  but 
500,000  manufacturers  in  England  on  the  one  hand  and  5,000,000  people 
in  Canada  on  the  other. 

Senator  Blair.  Suppose  this  large  fertile  area  that  has  been  referred 
to  were  opened  up  to  settlement  and  it  had  access  to  the  markets  of  the 
world,  what  then  ? 

Mr.  WiMAN.  It  would  be  a  second  Oklahonja.  There  is  a  great  deal 
of  rich  country  up  there.  They  have  American  ideas  and  are  a  thrifty 
people,  and  if  the  country  were  setth  d  up  they  would  not  be  content  to 
remain  in  the  condition  they  are  now,  but  might  l)e(;ome  a  republic  in 
twenty-live  years.  Even  Quebec  alone  is  richer  than  Texas,if  the  Sen- 
ators only  knew  the  facts. 

Senator  Keacian.  That  is  saying  a  good  deal  for  it. 

Mr.  WiMAN.  In  fifty  years  under  commercial  union  and  enlarged  de- 
velopment there  might  be  a  great  republic,  and  with  the  sanu;  relative 
progress  it  might  become  as  great  as  this.  That  would  solve  the  prob- 
lems that  now  press  for  solution,  and  form  a  union  between  the  English- 
speaking  races  on  this  continent.  That  would  be  worth  talking  abKit. 
There  is  no  question  of  the  extent  and  value  of  the  country  to  the  north, 
and  when  it  has  markets  for  its  products  it  will  grow  jnst  as  rapidly  as 
the  country  to  the  south  has  grown,  but  that  can  never  be  in  the  pres- 
ent condition  of  things. 

REGULATION  OF  THE  CANADIAN  ROADS. 

The  Chairman.  We  look  at  the  matter  as  it  now  is,  and  we  find  these 
Canadian  roads  tapping  the  business  of  the  roads  of  the  United  States 
all  along  the  line,  and  thereby  weakening  more  or  less  the  American 
railroads  ;  ought  we  to  allow  that  to  go  on  just  as  it  is  ? 

Mr.  WiMAN.  Doubtless  there  ought  to  be  some  regulation  between 
them.  I  have  no  doubt  that  either  this  (the  ])resent  Canadian)  govern- 
ment or  the  one  to  succeed  it  in  two  years,  or  perhaps  the  railroads 
themselves,  will  soon  take  steps  in  the  direction  of  arriving  at  some 
mutual  arrangement  by  whieh  American  roads  nuiy  not  be  at  a  disad- 
vantage as  to  regulations. 

The  Chairman.  Is  there  anything  wrong  in  the  Government  of  the 
United  States  demanding  that  if  these  Canadian  roads  do  business  in 
the  United  States  they  shall  do  it  on  a  basis  that  would  not  be  to  the 
disadvantage  of  the  American  roads;  that  they  shall  do  this  bnsiness 
under  the  same  laws  and  regulation  as  our  own  railroads  do  ? 

Mr.  WiMAN.  You  can  obtain  all  the  concessions  needed  in  the  shape 
of  regulation  by  threatening  to  abolish  the  bonding  system.  The  Cana- 
dian (rovermnent  has  set  you  an  example.  Thev'have  refused  yon 
privileges  for  bonding  fish  from  Halifax.    There  is' no  reason  why  they 


I 


THE    UNITED    STATES    AND    CANADA.  195 

should  not  be  treated  in  the  same  manner  if  the  regulations  you  seek 
are  not  adhered  to.  They  took  off  the  head  of  the  collector  at  Halifax 
the  other  day  for  having  permitted  one  catch  of  fish  to  be  sent  in  this 
direction.  Of  course  it  is  an  inestimable  privilege  to  Canada  to  have  a 
bonding  privilege  through  this  country.  It  seems  to  me  that  in  common 
equity  there  should  be  reciprocity  by  Canada  as  between  all  nations,  and 
that  transportation  should  be  put  on  the  same  footing.  I  think  the 
railroads  themselves  will  be  disposed  to  do  all  that  can  be  done.  The 
Grand  Trunk,  so  far  as  I  know,  are  anxious  to  conform  in  every  way  to 
this  interstate  arrangement. 

The  Chairman.  Why  is  it  that  these  roads — take  the  Grand  Trunk 
for  instance — are  failing  to  pay  the  dividends,  when  they  seem  to  be 
getting  more  than  their  full  share  of  the  through  business  between  the 
East  and  the  West  in  comparison  with  the  other  trunk-lines  ? 

Mr.  Wiman.  I  think  one  cause  is  the  excessive  cost  of  construction 
in  localities  that  do  not  afford  sufficient  business.  They  run  lines  in 
various  sections  that  do  not  pay  them  for  so  doing.  Perhaps  their  rates 
are  too  low.  The  competition  between  the  Canadian  Pacific  and  the 
Grand  Trunk  at  some  points  for  local  business  is  excessive.  There  is 
only  a  certain  amount  of  business  to  be  done,  and  it  has  to  be  divided 
between  the  two,  and  neither  can  make  money. 

The  Chairman.  The  general  manager  of  the  Grand  Trunk  testified 
before  us  that  his  road  observed  the  interstate-commerce  act  thoroughly 
in  all  business  in  any  way  connected  with  the  United  States. 

Mr.  Wiman.  Weli,  I  have  no  doubt  they  try  to.  Mr.  Hickson  is  a 
man  of  great  policy  and  probity,  and  will  do  as  he  says  for  fear  of  the 
consequences,  even  if  he  does  not  follow  the  plan  from  principle. 

The  Chairman.  This  Canadian  Pacific  has,  as  we  understand  it,  been 
built  largely  by  the  government.  It  has  a  subsidized  line  of  steam- 
ships on  the  Pacific  coast,  and  the  government  is  now  establishing  a 
line  of  subsidized  steamers  from  St.  John  to  Halifax  to  connect  wdth 
the  Canadian  Pacific  at  that  end.  The  result  of  that  will  be,  will  it  not, 
to  take  away  from  Portland,  and  Boston,  and  possibly  New  York,  very 
much  of  the  foreign  trade. 

Mr.  Wiman.  1  think  it  will  create  a  great  trade  peculiar  to  itself. 
It  may  divert  some  from  the  western  routes,  but  it  will  develop  and 
create  more  ])erhaps  than  it  will  take  away  from  these  other  places.  Of 
course  the  subsidized  line  on  the  Pacific  coast  is  a  necessity.  It  is  im- 
possible to  run  ships  there  without  a  subsidy.  The  lines  from  San 
Praucisco  to  Sidney  are  subsidized  and  it  is  impossible  to  have  them 
run  such  distances  without  the  subsidy. 

The  Chairman.  Do  you  mean  the  Canadian  lines"? 

Mr.  Wiman.  No,  sir ;  they  are  Australian  lines.  The  American 
Government  and  the  Austraban  Government  pay  them  a  certain  rate 
for  the  carriage  of  the  mails.  There  are  four  ships  running  between 
San  Francisco  and  Sidney. 

The  Chairman.  What  is  the  subsidy  given  the  line  running  ni  con- 
nection with  the  Canadian  Pacific  on  the  Pacific  coast! 

Mr.  Wiman.  I  think  it  is  $1,500,000  a  year. 

The  Chairman.  Do  you  know  what  the  subsidy  is  on  the  Eastern 
line? 

Mr.  Wiman.  I  do  not  know. 

The  Chairman.  The  substance  of  your  view  is,  then,  as  the  situation 
is  at  present,  it  is  not  favorable  to  the  United  States  aiid  ought  not  to 
be  allowed  to  continue. 

Mr.  Wiman.  If  to-morrow  the  Canadian  roads  were  to  be  stopped 


196  TRANSPORTATION    INTERESTS    OF 

from  carrying  products  it  would  be  the  most  serious  blow  for  the  west- 
ern States.  If,  however,  you  want  to  enforce  the  regulations  of  the  in- 
terstate-commerce act  and  give  fair  play  to  the  American  roads,  there 
ought  to  be  some  arrangement  made  between  the  two  Governments. 

The  Chairman.  You  think  that  if  we  stop  the  Canadian  roads  it 
would  be  a  serious  thing  for  the  commerce  of  the  West. 

Mr.  WiMAN.  There  could  not  be  anything  more  serious. 

The  Chairman.  I  mean,  to  put  them  under  the  same  regulations  as 
the  American  roads  are  required  to  comply  with. 

Mr.  WiMAN.  I  think  it  would  be  a  good  thing. 

Senator  Gorman.  Why  would  it  not  be  better  if  we  closed  them  up 
entirely  ? 

Mr.  WiMAN.  Because  the  facilities  afforded  by  the  Canadian  roads 
have  done  more,  as  I  have  said,  to  develoj)  the  West  than  anything  else. 
These  roads  have  paid  nothing  to  the  investors,  while  at  the  same  time 
they  have  afforded  enormous  advantages  to  the  West.  The  Vanderbilt 
line,  known  as  the  Canada  Southern,  the  old  Great  Western  line,  and 
the  Grand  Trunk  are  three  great  avenues  running  as  straight  as  a  crow 
flies  across  the  Canadian  peninsula  from  New  York  to  j\Iichigan.  The 
Canada  Southern  is  the  best  line  toward  the  West.  It  is  perfectly 
straight,  and  can  carry  more  stuff"  to  the  train  than  any  other  line.  It 
has  low  grades  and  comparatively  no  curves  at  all.  Then  there  is  the 
Grand  Trunk  running  down  from  Sarnia  to  Toronto,  Montreal,  and 
Boston.  Then  there  is  a  northern  route  that  formerly  carried  enormous 
amounts  of  grain  from  Georgian  Bay  to  Toronto  and  then  reshipi)ed  it 
across  the  lake  into  the  canals.  Then  there  was  a  route  from  Georgian 
Bay,  by  Port  Hope,  to  Rochester;  then  the  Grand  Trunk  line  from 
Port  Huron  to  Ogdensburgh,  taking  the  river  from  there  and  crossing 
and  joining  the  Vermont  Central  system  and  other  roads  to  New  Eng- 
land. Besides  this  the  Canada  Pacific  will  soon  be  at  Detroit,  and  add 
still  another  link  to  the  "Great  Soo"  route  as  an  outlet  for  American 
l)roduce.  So  that  it  would  be,  impossible  to  have  a  more  complete  sys- 
tem or  means  of  communication  between  the  extreme  East  and  West 
than  these  two  great  roads  afford.  The  develoi)ment  of  tliis  Soo  route 
has  cost  millions  of  dollars  of  American  capital,  which  would  be  com- 
pletely lost  if  you  adopted  extreme  measures. 

Senator  Gorman.  Who  controls  that  route  now  ? 

Mr.  W^iMAN.  I  believe  the  Canadian  Pacific  partly  controls  it.  Origi- 
nally Mr.  Washburn  and  other  gentlemen  put  up  the  money  and  found 
it  doubtless  a  heavy  load  until  they  were  joined  by  the  Canadian  Pa- 
cific party.  You  might  say  the  English  peopl*?  control  the  Illinois  Cen- 
tral ;  they  do.  If  the  farmer  of  the  West  wants  cheap  freight  rates  he 
avails  himself  of  this  Soo  route. 

Senator  Blair.  Would  conformity  to  the  interstate-commerce  act  in 
Canada  afford  rny  relief  to  x\merican  railroads  ?  Would  not  the  con- 
ditions of  competition  between  them,  even  if  the  interstate  commerce 
act  were  observed  in  both  countries,  be  such  that  the  Canadian  routes 
must  have  the  advantage? 

Mr.  WiMAN.  That  is  the  result  of  geographical  conditions  that  can 
not  be  changed. 

Senator  Blair.  I  do  not  see  that  this  relief  that  is  suggested,  namely, 
full  compliance  with  the  interstate-commerce  act  on  the  part  of  the  Ca- 
nadian roads,  is  going  to  help  us  in  America. 

Mr.  WiMAN.  You  must  take  the  consequences  of  the  geographical 
situation.  If  you  want  to  make  the  products  and  the  merchandise  of 
the  West  take  the  longest  routes,  and  make  the  consumers  pay  for  the 


THE  UNITED  STATES  AND  CANADA.  19? 

louger  haul  East,  and  tlie  louger  baul  West,  theu  the  Canadian  routes 
should  be  obliterated.  If,  on  the  other  hand,  you  want  to  give  the  best 
means  of  communication  between  the  East  and  the  West  it  would  be 
well  for  you  to  avail  yourselves  of  the  shortest  route  provided  by  En- 
glish capital  for  the  benefit  of  the  West  and  the  East,  while  the  capital 
has  paid  nothing  so  far  to  the  investor. 

Senator  Blair.  It  seems  to  me  it  is  to  the  commercial  advantage  of 
the  people  of  the  United  States  to  have  these  Canadian  railroads  de- 
veloped, because  they  do  our  business  cheaper  than  our  own  roads. 

Mr.  WiMAN.  Yes,  sir. 

Senator  Blair.  Do  you  think  that  if  the  interstate  commerce  act 
were  observed  in  Canada  the  Canadian  roads  would  continue  to  do  the 
business  cheaper  than  we  can  ? 

Mr.  WiMAN.  Yes;  most  certainly. 

Senator  Blair.  Then  the  question  is,  is  it  for  the  interest  of  the 
American  people  to  pursue  such  a  j)olicy  as  will  build  up  an  independ- 
ent nation  north  of  us  ? 

Mr.  WiMAN.  Yes,  sir. 

Senator  Blair.  I  would  like  to  hear  you  on  that  question. 

AN  independent  NATION  NORTH  OF  UNITED  STATES. 

Mr.  WiMAN.  I  think  there  is  no  outside  asset  which  this  country  can 
possess  that  has  the  value  that  this  northern  Dominion  and  its  trade 
and  products  can  give  to  it.  There  is  not  the  slightest  difference  in  the 
wants  of  the  two  countries;  we  make  what  they  want;  we  consume 
what  they  produce.  It  does  not  malvc  any  difference  on  the  score  of  a 
political  division,  so  far  as  politics  are  concerned,  whether  you  have  a 
great  nation  built  up  on  your  northern  border  or  not,  if  you  have  the 
trade  and  trausi)ortation  that  grows  out  of  its  development  that  is  all 
business  men  and  railways  require. 

Senator  Blair.  Do  you  not  lose  sight  of  the  other  side  of  the  ques- 
tion ?  There  is  a  question  that  arises  out  of  the  matter  of  traflUc,  as  the 
perpetuity  of  our  nation  arose  out  of  the  question  of  slavery.  The 
question  then  was  whether  the  Union  should  be  preserved,  and  we  had 
to  fight  it  out.  Now  the  question  is  would  it  be  good  policy  on  our  part 
to  develop  a  great  nation  north  of  us,  with  at  least  alien  connections  ? 
I  do  not  care  a  snap  for  this  matter  of  dollars  and  events. 

Mr.  WiMAN.  My  theory  is  that  the  continent  is  an  economic  whole. 
The  two  countries  are  united  geographically  together  just  as  New  York 
and  Pennsylvania  are,  so  far  as  the  possibilities  of  commerce  are  con- 
cerned. I  know  perfectly  well  that  the  future  enormous  trafSc  of  the 
Saskatchewan  Valley,  capable  of  sustaining  30,000,000  of  people,  can 
be  made  to  come  via  the  Lakes  under  a  commercial  union,  be  handled 
by  American  lines  of  railway  and  shipping  and  to  American  profit.  I 
know  the  maritime  provinces  possess  iron,  coal,  and  chemically  pure 
limestone  side  by  side,  and  New  England  wants  cheap  coal  and  iron 
more  than  any  other  thing,  because  New  England  cannot  compete  with 
the  West  supplied  with  cheap  iron  from  Alabama.  On  the  other  side 
of  the  continent  coal  is  sold  in  San  Francisco  to-day  at  $12  and  $14  a 
ton,  paying  75  cents  a  ton  difference  on  the  supplies  brought  in  from 
British  Columbia,  the  natural  base  of  supply.  Then  you  have  lumber 
and  fish  in  unlimited  supplies  that  could  be  brought  into  San  Francisco 
cheaply  from  the  northern  part  of  the  Pacific  coast,  3,000  miles  in  length, 
all  in  Canadian  territory.  This  country  could  be  enormously  benefited 
by  the  products  coming  in  irom  these  regions  on  one  hand  and  on 
the  other  hand  the  manufacturers  and  merchants  and  shippers  of  this 
country  enlarging  their  markets  just  to  the  extent  of  the  development 
they  afforded  to  Canada.    There  is  no  denying  that  the  breaking  down 


198  TRANSPORTATION    INTERESTS    OF 

of  the  barriers  between  the  two  countries  will  be  equally  advantageous 
to  both.  As  to  building  up  a  great  nation  on  the  north  of  the  United 
States  you  must  take  the  chances.  Canada  is  much  more  likely  to  be- 
come a  great  nation  if  independent  of  English  rule  than  under  existing 
colonial  conditions.  In  my  opinion  the  people  there  do  not  care  to  join 
this  Eepublic  ;  if  independent  they  would  prefer  to  become  an  independ- 
ent republic.  The  tie  that  binds  Canada  to  England  is  strong,  but  it 
is  not  a  natural  tie;  it  is  a  tie  of  sentiment.  England  does  not  contrib- 
ute a  dollar  to  the  support  of  Canada,  nor  does  Canada  contribute  a 
dollar  to  the  imperial  revenue. 

Senator  Blaik.  You  are  an  Englishman,  I  believe? 

Mr.  WiMAN.  I  am  a  Canadian  and  a  British  subject.  Canada  has  tlie 
same  tariff  against  English  goods  as  she  has  against  goods  from  tlie 
United  States.  If  you  will  say  tlie  word  in  the  Senate  she  will  within 
five  years  so  regulate  her  tarili*  that  your  goods  can  come  in  free  from 
the  United  States  and  she  will  exact  a  duty  against  English  goods.  1 
do  not  think  you  could  ask  her  to  take  a  step  more  marked  than  this. 
Yet  if  the  repeal  of  this  bonding  privilege  should  be  enforced  the  people 
of  Canada  would  feel  that  it  would  be  the  pressure  of  retaliation  that 
would  not  win  her  trade  and  a  closer  relation  as  readily  as  a  mutuality 
of  interest  created  by  the  obliteration  of  the  customs  barrier  between 
them  and  you. 

Senator  Blair.  Is  Canada  of  any  special  importance  to  Great 
Britain,  except  that  she  affords  a  transcontinental  route  between  the 
East  and  England  f 

Mr.  WiMAN.  The  State  of  New  York  to  day  in  a  certain  sense  is  of 
greater  importance  to  England  than  Canada.  New  York  is  aftVtrding 
customers  and  means  of  communication  and  i)laco  of  resort  for  English 
and  Irish  people  far  greater  than  Canada. 

DEFENSES   ON  PACIFIC   COAST. 

Senator  Blair.  What  about  the  defenses  erected  on  the  Pacific 
coast  by  Great  Britain  I 

Mr.  WiMAN.  These  defenses  at  Vancouver  are  erected  with  the  idea 
of  checking  llussia.  They  think  that  a  war  with  Russia  might  induce 
them  to  attack  in  the  direction  of  British  Columbia.  I  do  not  think 
that  England  is  afraid  of  attack  in  that  (luarter  from  America.  This 
preparation  as  against  Eussia  is  a  policy  they  have  always  pursued 
against  their  European  enemies,  and  in  the  expenditure  now  "being  made 
by  British  army  authorities  they  are  guarding  against  their  European 
enemies  rather  than  against  American  enemies. 

Senator  Blair.  We  have  a  line  in  the  direction  of  Alaska  which  is 
to  be  intercepted  it  seems  by  a  very  formi<lable  fortification  right  in  the 
center  of  it.  It  will  be  very  easy  to  strike  there  at  American  commerce 
pursuing  its  way  east.  It  seems  now  that  wo  will  all  make  more  money 
in  the  end,  and  Canada  is  as  interested  to  get  rich  as  we  are,  and  as  we 
live  on  the  same  continent,  would  it  not  be  just  as  well  to  think  of  ac- 
commodating ourselves  to  each  other  as  to  other  parts  of  the  world  ? 

Mr.  WiMAN.  If  it  can  possibly  be  done  by  a  union  of  interests  com- 
mercially. 

Senator  Blair.  Y^ou  think  that  must  precede  any  change  of  political 
relations?       ,  i  j  &         i 

Mr.  WiMAN.  I  think  it  must.  I  think  a  retaliatory  policy  would  post- 
pone it  indefinitely. 

Senator  Blair.  I  would  not  suggest  that. 

Mr.  WiMAN.  I  refer  to  this  repeal  of  the  bonding  piivilege. 

Senator  Blair.  I  would  not  favor  that. 

Mr.  WiMAN.  There  is  a  great  agitation  just  now  as  to  the  progress 


THE    UNITED    STATES    AND    CANADA.  199 

of  the  Jesuits  in  Canada  which  may  have  an  important  effect  on  polities, 
and  especially  at  the  next  election.  There  is  one  man  upon  whose  ex- 
istence depends  the  proper  outcome  of  the  policy  as  to  relations  with 
this  country,  and  that  is  Sir  John  MacDonald.  His  views  as  to  con- 
tinued discrimination  on  the  canals,  the  harsh  interpretation  of  the  fish- 
ery question,  and  the  denial  of  the  bonding  privilege  on  fish,  all  indi- 
cate his  belief  in  a  vigorous  policy  against  closer  relations  with  the 
United  States. 

Senator  Blair.  Well,  let  them  keep  their  fish. 

Mr.  WiMAN.  I  think  they  are  doing  themselves  a  great  injustice. 

Senator  Blair.  We  can  get  our  ships  down  by  way  of  the  Atlantic 
Ocean,  and  it  seems  to  me  that  there  is  not  much  to  settle  on  that  score. 

Mr.  WiMAN.  In  the  mean  time  it  is  plain  that  there  must  be  an  ad- 
justment of  these  pending  and  threatening  difficulties.  I  might  say  in 
behalf  of  parties  who  have  taken  up  in  candor  the  advocacy  of  unre- 
stricted reciprocity,  that  if  an  agreement  could  be  reached  upon  the  main 
question  as  to  the  tariff  between  the  two  countries  there  would  be  no 
dififlculty  in  having  such  an  enforcement  of  the  interstate  commerce 
regulations  in  Canada  as  will  satisfy  you. 

Senator  Blair.  Will  they  give  us  some  guarantee  that  this  power 
north  of  us  will  be  our  ally  as  against  any  foreign  power  ? 

Mr.  WiMAN.  I  can  not  say  as  to  that. 

The  Chairman.  It  would  seem  from  the  movements  of  the  Canadian 
people  that  their  purpose  is  to  put  that  country,  by  their  railroad  facil- 
ities, into  such  a  condition  as  to  trade  with  each  other  and  depend  upou 
themselves  entirely  in  contradistinction  to  depending  upon  the  United 
States  in  any  way. 

Mr.  WiMAN.  I  think  they  have  tried  to  do  that,  but  the  physical  and 
climatic  difficulties  are  so'  great  that  only  partial  success  has  been 
achieved.  You  can  not  haul  produce  and  merchandise  from  Montreal  to 
Winnipeg,  and  vice  versa,  to  any  advantage,  because  the  haul  is  too 
great  and  the  expense  is  too  great.  They  could  not  sell  agricultural  im- 
plements in  the  Northwest  as  cheaply  as  they  can  be  sent  up  from  Minne- 
sota. JNor  can  they  haul  coal  as  cheaply  from  Nova  Scotia  as  they  will 
get  it  from  Pennsylvania  by  way  of  the  Lakes.  • 

The  Chairman.  So  you  think  they  could  not  get  along  as  prosper- 
ously as  they  do  without  the  advantages  they  secure  by  trading  with 
the  United  States? 

Mr.  WiMAN.  They  have  five  million  of  people,  and  they  absorb  about 
$50,000,000  worth  of  United  States  goods.  The  southern  republics 
have  sixty  million  of  people  and  only  buy  $60,000,000  worth  of  goods. 
So  that  every  Canadian  is  worth  to  the -United  States  ten  times  as  much 
as  any  inhabitant  of  South  America. 

The  Chairman.  What  do  we  buy  of  Canada*? 

Mr.  WiMAN.  About  the  same,  and  we  levy  $5,500,000  of  tax  on  the 
produce  which  they  send  us,  and  they  pay  the  duty;  that  is,  they  pay 
the  tax  into  the  United  States  Treasury  for  the  privilege  of  trading 
with  us.  They  bring  in  a  horse  and  have  to  pay  $20  to  $50  for  bring- 
ing him  in,  and  get  no  more  for  it  than  the  American,  who  is  just  so 
much  better  off. 

The  Chairman.  What  is  the  character  of  the  goods  purchased  by 
the  people  of  the  United  States  from  Canada? 

Mr.  WiMAN.  Almost  altogether  natural  products  of  the  forest,  and 
the  farm,  and  the  sea  in  the  shape  of  fish  food,  and  the  products  of 
mines. 

The  Chairman.  And  what  is  their  trade  with  us  ? 


200  TRANSPORTATION    INTERESTS    OP 

Mr.  WiMAN.  Very  largely  mannfactures.  They  are  very  heavy  cus- 
tomers in  many  lines  of  manufactures,  and  they  would  buy  four  times 
as  much  it  the  countrv  were  developed  and  the  duty  obliterated. 

The  Chairman.  Whatever  they  gained  in  people  we  would  lose, 

would  we  not !  -r^     ,    ,        . 

Mr.  WiMAN.  Not  necessarily.  There  would  be  a  large  English  emi- 
gration into  Canada  if  it  could  be  more  fully  developed  and  a  greater 
prospect  opened  up  for  it.  I  think  it  would  stimulate  emigration  from 
all  parts  of  Europe  to  a  greater  extent,  and  thus  create  an  enlarged  uuir- 
ket  for  American  manufactures  if  the  obstacles  set  up  by  the  customs 
line  were  removed.  You  would  get  all  of  those  as  customers.  You  are 
making  boots  and  shoes  for  100,000,000  of  i)eopk-  and  you  have  a  popu- 
lation of  only  00,000,000.  Everything  else  is  over-i)roduced.  •  There  are 
C,0(]0  makers  of  thread  in  Newark ;  of  these  2,000  are  idle.  (Canada 
would  be  an  open  and  growing  market  for  over-production  here. 

JESUIT  AGITATION. 

Senator  Blair.  Yon  s])oke  of  an  agitation  in  regard  to  the  Jesuits. 
Did  you  speak  of  it  with  any  reference  to  the  relations  between  this 
country  and  Canada  I 

Mr.  WiMAN.  Yes. 

Senator  Blair.  Please  explain  it. 

Mr.  WiMAN.  The  sup])Osed  encroachments  of  the  Jesuits  take  tbe 
form  of  an  act,  passed  in  the  Quebec  legishiture,  and  in  a  certain  sense 
confirmed  by  the  Dominion  Parliament,  or  rather  the  disinclination  of 
parliament  to  interfere  with  it  has  been  shown.  The  subject  is  being 
agitated,  and  we  fear  that  French  domination  is  threatened.  1  spoke 
of  this  Jesuit  agitation  as  an  inlluence  that  might  ujtset  the  existing 
control  by  the  ])arty  in  power,  and  so  clianL-^e  matters  that  (me  more 
favorable  to  commercial  union  should  come  into  jxisscssion  of  the  gov- 
ernmetit.  The  French  Koman  Catholics  fear  annexation,  as  they  think 
it  would  k^ssen  the  power  of  the  church  and  interfere  with  education. 
But  the  Jesuit  question  is  equally  balanced  in  its  intluence  on  the  re- 
lations between  the  two  countries.  In  a  certain  sense  it  is  hurtful  to  a 
growth  of  annexation  sentiment,  and  ]»romotes  the  desire  for  commer- 
cial union,  and  on  the  other  hand  it  promotes  the  growth  of  annex- 
ation sentiment  in  a  way  that  is  not  hurttul  to  a  commercial  relation. 

Senator  Blair.  Do  you  not  think  it  better  for  the  Catholic  Church 
for  all  to  be  under  one  political  sovereignty  in  this  countiyf 

Mr.  WiMAN.  The  Catholics  there  do  not  think  so. 

Senator  Blair.  Some  do. 

Mr.  WiMAN.  The  priests  and  ecelesiastical  authorities  of  Lower  Can- 
ada would  look  forward  with  apiuvhension  to  ])(»litical  im'um. 

Senator  Blair.  A  great  many  of  the  Catholics  in  this  country  desire 
it.     A  great  many  Catholics  here  of  Canadian  birtii  lavor  it. 

Mr.  WiMAN.  There  are  a  million  of  Canadians  in  the  United  States. 
They  have  had  the  utmost  liberality  of  treatment,  and  naturally  grow 
broad  in  their  views  when  they  come  here,  but  those  at  home  remain  op- 
posed to  annexation.  There  is  another  element  that  is  likely  to  grow 
m  Canada  in  consequence  of  this  Catholic  agitation,  and  tliat  is  the 
Orangemen.  It  is  a  secret  order  formed  for  the  i)urpose  of  resisting 
the  encroachment  of  the  Catholic  Church.  The  Orangemen,  however, 
wdl  unite  with  the  Catholic  Church  in  one  regard,  anil  that  is'to  pre- 
vent annexation.  The  principal  oath  they  take  is  to  supimrt  British  su- 
premacy,  and  there  area  great  many  of  them  who  would  join  tlie  (\ath- 
olics  in  ti  movement  in  opposition  to  annexation.  Tiie  trade  between 
the  two  countries  in  natural  i)roducts,  after  the  repeal  of  the  reciprocity 


THE   UNITED    STATES    AND    CANADA.  201 

treaty,  dropped  to  one-half  what  it  formerly  was.  There  was  not  a 
farmer  in  Canada  who  was  not  helped  by  the  reciprocity  treaty,  yet  at 
its  repeal  there  was  not  a  whimper  of  disloyalty.  The  farmer  would 
be  an  immense  gainer  by  annexation,  and  yet  it  I  should  go  there  to- 
day and  propose  an  annexation  meeting  I  would  be  stoned  out  of  almost 
any  town,  as  well  as  1  am  known,  and  as  respected  as  1  am  by  a  large 
majority  of  the  people.  If  a  commercial  union  could  be  accomplished 
it  is  the  better  way  of  solving  the  problem.  The  farmers,  miners,  and 
lumbermen  would  be  onormously  benefited,  as  well  as  the  fishermen. 
The  farmers,  miners,  lumbermen,  and  fishermen  are  three  to  one  of  any 
other  class.  They  want  commercial  union,  because  they  would  get 
cheaper  goods  from  the  United  States,  and  at  the  same  time  have  a 
market  for  their  product.  Sugar  in  Canada,  for  instance,  is  dearer  than 
anywhere  else  in  the  world,  and  the  breaking  down  of  the  barrier  will 
make  that  and  many  other  things  cheaper.  Commercial  union  is  re- 
garded by  some  as  a  short  cut  to  annexation;  to  others  it  indefinitely 
postpones  it.  If  you  have  faith  in  the  strength  of  the  attractiveness  of 
the  institutions  of  this  country  you  will  establish  commercial  union 
with  Canada  and  immediately  get  the  benefits  that  flow  therefrom, 
trusting  to  the  future  for  a  political  union.  If,  on  the  contrary,  this 
proves  to  be  a  government  of  the  boss,  and  by  the  boss,  and  for  the 
boss,  you  might  not  attract  the  Canadian  ten  years  hence.  The  future 
you  perhaps  can  afford  to  let  take  care  of  itself  if  you  establish  com- 
mercial union. 

Senator  Gorman.  I  understood  you  to  say  that  the  repeal  of  the  act 
of  186G,  which  permitted  cars  to  pass  to  and  from  this  country  freely, 
with  the  goods  sealed,  would  obstruct  all  this  movement  in  the  direc- 
tion of  opening  and  improving  our  trade  between  the  two  countries. 

Mr.  WiMAN.  I  say  that  the  repeal  of  the  bonding  system  would  be  a 
very  serious  matter,  not  only  for  Canada,  but  for  the  United  States. 
Its  repeal  would  indefinitely  postpone  closer  relations. 

Senator  Gorman.  Is  it,  in  your  judgment,  an  unfair  proposition  to 
say  to  the  Canadian  people  and  i  he  Canadian  Government  that  "  as  we, 
the  American  Government,  permit  you  to  come  to  Chicago  or  any  other 
port  on  the  Lakes  and  take  our  grain  and  carry  it  over  to  your  Canadian 
roads  and  then  carry  it  through  Canada,  and  back  through  Maine  in  this 
country,  and  out  through  Halifax  or  St.  John,  in  consideration  of  that 
great  privilege  what  we  want  of  you  is  that  you  subject  your  roads  to 
the  same  conditions  and  restrictions  precisely  as  we  impose  on  ours, 
and,  in  addition,  that  you  will  permit  our  American  vessels  to  touch  at 
Halifax  without  charge  and  take  on  products  for  delivery  in  the  United 
States  ?  "    Now,  would  that  be  an  unreasonable  proposition  ? 

Mr.  WiMAN.  It  is  a  very  reasonable  proposition,  in  my  view.  I  think 
there  is  no  justification  for  the  Canadian  position  in  regard  to  fish. 
Looking  at  your  proposition  as  a  business  man,  I  say  it  is  an  entirely 
reasonable  proposition  and  one  that  ought  to  be  accepted  by  Canada 
without  hesitation. 

Senator  Gorman.  I  thought  you  said  that  the  mere  repeal  of  the  law 
would  do  much  to  decrease  this  good  feeling  between  the  two  coun- 
tries. 
Mr.  Wiman.  It  would. 

Senator  Gorman.  Would  it  have  that  tendency  if  we  stated  the 

broad  proposition  that  we  would  give  them  these  privileges  if  they 

granted  like  privileges  to  us  f     How  would  that  operate  to  decrease 

this  good  feeling  ? 

Mr.  Wiman.  1  do  not  think  it  would.     The  railroads  would  be  the 


202  TRANSPORTATION    INTERESTS    OF 

first  to  respond.  It  is  reasouable  to  do  so.  They  are  not  i)iiates.  xVTr. 
Hicksou  is  not  a  pirate,  and  be  is  not  one  wlio  would  do  anything  that 
is  not  right.    Policy,  if  not  equity,  would  impel  theui  to  meet  you. 

The  Chairman.  All  that  could  be  brought  about  by  the  two  Govern- 
ments ■? 

Mr.  WiMAN.  Yes,  sir.  I  think  if  Sir  Charles  Tupi)er,  who  is  a  fair- 
minded  man  and  who  is  in  this  country  to-day,  were  brouLdit  in  and 
asked  to  arbitrate  with  reference  to  this  matter  he  would  help  toward 
such  an  adjustment. 

Senator  Gorman.  What  proportion  of  the  capital  invested  in  the 
Canadian  Pacific  and  the  Grand  Trunk  is  English  capital,  as  dis- 
tinguished from  the  Canadian  investuient  ? 

Mr.  WiMAN.  Ninety  per  cent,  or  ninety-five  per  cent,  is  English  caj)- 
ital.  There  is  no  Canadian  money  in  Canadian  roads  worth  naming. 
It  is  all  English  money. 

Senator  Gorman.  Were  these  subsidies  paid  by  the  English  Govern- 
ment? 

Mr.  WiMAN.  No,  they  were  borrowed  from  England.  The  whole  imb- 
lic  debt  of  Canada  is  in  England.  There  are  about  six  hundred  and 
fifty  millions  of  English  money  in  Canada. 

Senator  Gorman.  So  that,  as  a  fact,  we  are  dealing  with  an  English 
enterprise  ? 

Mr.  WiMAN.  That  is  so. 

At  5  o'clock  and  20  minutes  p.  m.  the  committee  adjourned  until  to- 
morrow at  10  o'clock  a.  m. 


I 


New  York,  May  9,  1889. 
The  committee  met  at  10  o'clock  a.  m.  i)ursuant  to  adjournment. 
Senator  Barbour  appeared  and  took  his  seat. 

STATEMENT  OF  GEORGE  B.  ROBERTS. 

Mr.  George  B.  Roberts,  president  of  the  Pennsylvania  Railroad, 
appeared. 

The  Chairman.  Mr.  Roberts,  will  you  please  state  the  business  in 
which  you  are  now  engaged  ? 

Mr.  Roberts.  I  have  been  engaged  as  manager  of  railroads  for  the 
last  thirty-eight  years,  and  at  present  am  president  of  the  Pennsylvania 
Railroad. 

The  Chairman.  Will  you  give  the  termini  of  your  trunk  line  and  its 
branches  and  connections  ? 

Mr.  Roberts.  It  commences  in  New  York  and  extends  to  Chicago  in 
the  northwest,  and  to  Cincinnati,  Louisville,  and  St.  Louis. 

The  Chairman.  What  do  you  call  the  trunk  line! 

Mr.  Roberts.  The  trunk  line  is  from  New  York  to  Pittsburgh. 

The  Chairman.  And  then  you  have  connections  to  these  several 
places  mentioned  ? 

Mr.  Roberts.  Yes,  sir;  what  is  known  in  our  railway  reports  as  the 
1  ennsylvania  railroad  system  is  built  up  around  the  Pennsvlv^inia  Rail- 
road charter,  which  was  for  a  line  from  Philadelphia,  or  rather  Irora 
Harrisburg  to  Pittsburgh.  The  other  lines  co]n])rising  the  system  are 
either  leased,  or  the  parent  company  owns  a  large  interest  in  tlie  capital. 


THE    UNITED   STATES   AND   CANADA.  203 

The  Chairman.  So  that  the  Peunsylvauia  Railroad  absolutely  controls 
all  these  other  roads  which  you  have  nientioued*? 

Mr.  koBEETS.  The  Penusyh  ania  Railroad  to  a  certain  exteut  indi- 
cates their  policy.  We  hardly  admit  that  the  Pennsylvania  Railroad 
controls  them  in  a  legal  view,  as  there  are  quite  a  number  of  lines  in 
the  Pennsylvania  system  which  have  absolute  and  independent  organ- 
izations, and  their  officers,  though  officers  in  many  instances  of  the 
Pennsylvania  Railroad  Company,  are  absolutely  independent,  so  far  as 
exercising  their  judgment  as  to  what  is  best  for  the  welfare  of  all  the 
shareholders  in  the  respective  corporations  is  concerned.  The  Penn- 
sylvania system  is  very  careful  to  avoid  any  question  of  imposition 
upon  the  minority  shareholding  interest. 

The  Chairman.  But  they  all  operate  together  ? 

Mr.  Roberts.  Yes,  sir. 

The  Chairman.  The  Pennsylvania  line  practically  dictates  the  policy 
of  the  whole  system,  does  it  uof? 

Mr.  Roberts.  Yes,  sir. 

The  Chairman.  Have  yon  any  business  relations  with  the  Grand 
Trunk  road  of  Canada  ? 

Mr.  Roberts.  No,  sir;  we  have  no  business  relations,  I  believe,  with 
the  Grand  Trunk.  We  have  no  railway  connections  with  any  of  the 
lines  in  Canada.  Our  system  reaches  Lake  Ontario  at  Sodus  Point,  in 
New  York. 

The  Chairman.  Is  that  on  Lake  Ontario  ? 

Mr.  Roberts.  Yes,  sir. 

The  Chairman.  In  the  United  States  ! 

Mr.  Roberts.  Yes,  sir. 

The  Chairman.  So  that  practically  you  have  no  business  relations 
with  any  Canadian  roads'? 

Mr.  Roberts.  No,  sir ;  we  have  not. 

the   situation  as   to   the   CANADIAN  ROADS. 

The  Chairman.  You  have  seen  the  resolution  under  which  this  com- 
mittee is  operating  and  carrying  on  this  investigation,  and  know  the 
character  and  scope  of  it.  What  have  you  to  say  with  reference  to 
the  situation  existing  as  between  the  American  roads  and  the  Canadian 
roads  ? 

Mr.  Roberts.  Since  the  National  Government  has  undertaken  to 
regulate  by  special  enactments  the  methods  of  transportation  upon  the 
American  lines  of  railway,  I  can  not  but  feel  that  they  have  placed  the 
American  corporations  at  a  disadvantage  with  the  Canadian  lines,  which 
are  not  under  such  laws.  These  laws,  in  many  instances,  are  quite  re- 
strictive, and  do  not  i)ermit  the  same  freedom  that  has  existed  heretofore 
in  the  management  of  railroad  properties. 

The  Chairman.  Do  you  see  that  your  road  has  in  any  degree  suffered 
from  the  fact  that  the  Grand  Trunk  operates  in  Chicago  and  from  Chi- 
cago east  ? 

Mr.  Roberts.  Not  directly  so,  but  we  have  felt  with  the  other  roads 
the  effect  of  the  Grand  Trunk  Railway  being  independent  in  its  action 
of  the  rules  or  laws  governing  the  railways  of  the  United  States.  It  is 
not  necessary  for  me  to  state  to  you  that  the  rates  that  are  charged  upon 
the  various  lines  which  are  known  generally  as  the  trunk  line  system 
of  the  country  must  be  nearly  uniform.  The  rates  are  higher  on  some 
roads  than  they  arc  on  others,  but  any  severe  depression  of  rates  on  any 
one  of  the  lines  affects  indirectly  the  revenues  or  rates  of  the  others. 


204  TRANSPORTATION    INTERESTS    OF 

It  must  be  quite  appareut  to  you  that  the  Grand  Trunk,  for  instan* 
or  the  Canadian  Pacific  Railway,  wbicli  draws  its  traffic  largely  froi 
the  States,  does  not  come  under  any  control  of  the  laws  of  this  countryl 
The  rates  on  that  traffic,  or  its  system  of  carriage,  are  not  under  sucP 
control,  and  while  those  corporations  may  observe  the  law,  so  far  sn 
their  connecting  lines  in  the  States  are  concerned,  the  moment  thai 
the  traffic  leaves  the  States  and  passes  into  the  foreign  country  it  is 
without  such  restriction  and  they  may  treat  it  in  any  manner  they  see 
fit  and  proper.  I  do  not  claim  that  they  are  now  operating  their  lines  i 
in  Canada  so  as  to  seriously  interfere  with  our  rateis,  but  they  have 
done  so  in  the  past,  and  caused  very  serious  complications  with  the 
roads  in  the  United  States. 

The  Chairman.  When  you  say  "  in  the  past,"  how  far  in  the  past  do 
you  mean  ?  i 

Mr.  Roberts.  I  mean  two  or  three  years  past.  | 

The  Chairman.  You  say  that  so  far  as  you  know  they  observe  the   ' 
interstate  commerce  act  in  all  their  transactions  which  take  place  iu   i 
the  United  States  or  in  any  way  connected  with  the  United  States 
roads  ! 

Mr.  Roberts.  You  misunderstood  me.  They  may  observe  the  inter- 
state commerce  act;  I  do  not  know  whether  they  do  or  not. 

The  Chairman.  It  has  been  testified  here  l)y  Mr.  Hickson,  for  in- 
stance, that  his  road  has  scrupulously  observed  the  interstate  commerce 
act  for  the  last  two  or  three  months,  the  i)ublication  of  rates,  and  ad- 
hering to  them,  in  all  business  going  out  of  or  coming  into  the  United 
States.  M 

Mr.  Roberts.  I  understand  he  did.  ' 

The  Chairman.  So  far,  then,  you  do  not  realize  that  the  Canadian 
roads  are  doing  any  particular  damage  to  the  roads  in  this  country  f 

Mr.  Roberts.  Ko,  sir ;  I  do  not  know  that  they  are  now  doing  any 
serious  injury  to  the  railway  interests  of  this  country  or  to  the  country, 
but  I  submit  that  it  is  entirely  within  their  power  to  do  so.  They 
have  a  very  great  advantage  over  the  railways  in  the  United  States  in 
their  independence  of  our  legal  restrictions. 

The  Chairman.  What  is  the  length  of  your  trunk  line  between  New 
York  and  Chicago! 

Mr.  Roberts.  I  think  it  is  about  1>1()  miles  to  Chicago. 

The  Chairman.  What  is  the  length  of  the  Grand  Trunk  road  from 
Boston  or  Portland  to  Chicago  ;  do  you  know  ?  They  have  no  road  to 
New  York. 

Mr.  Roberts.  No,  sir;  I  do  not.  They  connect  with  the  roads  in 
the  States  so  far  as  to  form  a  new  New  YoVk  and  Chicago  line. 

The  Chairman.  What  is  the  length  of  the  road  so  formed  ! 

Mr.  Roberts.  I  can  not  state  exactlv.  I  think  it  is  about  100  miles 
longer  than  our  line.  I  think  our  line  is  about  80  miles  shorter  than 
the  New  York  Central,  and  the  New  York  Central  is  materially  shorter 
than  the  Grand  Trunk. 

The  Chairman.  Yours  is  the  shortest  line  between  New  York  and 
Chicago,  is  it  not? 

Mr.  Roberts.  1  think  it  is.  Mv  impression  is  that  our  line  is  about 
80  miles  shorter  than  the  New  York  Central  road,  and  I  should  judge 
that  the  Grand  Trunk  line  via  Buffalo  is  materially  longer  than  the 
New  York  Central  road. 

Senator  Gorman.  You  mean  to  Portland  t 


Mr.  Roberts.  No,  from  New  York  to  Chicago,  via  Buflfalo. 
The  Chairman.  Is  there  any  reason  iu  the  economies  of  thin 


gs  why 


THE    UNITED    STATi-.S    AND    CANADA.  205 

you  can  not  compete  with  any  other  line  in  existence  through  Canada  or 
in  the  United  States  in  your  business  between  Chicago  and  New  York 
and  New  York  and  Chicago  ? 

Mr.  Roberts.  No,  sir;' so  far  as  the  economy  of  moving  trafSc  is 
concerned  we  feel  that  we  ought  to  be  able  to  compete  with  any  route 
as  between  Chicago  and  New  York,  or  Chicago  and  eastern  points  ;  but 
we  would  naturally  feel  that  in  the  case  of  the  Canadian  roads,  the 
roads  in  the  States  are  working  at  a  disadvantage,  as  some  of  the 
Canadian  roads  have  been  largely  subsidized  by  the  Canadian  govern- 
ment. 

ADVANTAGES  POSSESSED  BY   THE   CANADIAN  LINES. 

The  Chairman.  State  all  the  advantages,  if  there  are  any,  that  the 
Canadian  lines  have  over  the  American  lines. 

Mr.  Roberts.  I  think  they  have  been  subsidized  by  the  Canadian 
government  to  a  very  large  extent.  They  are  built  purely,  as  I  under- 
stand it,  for  the  development  of  the  country  through  which  they  run, 
and  to  advance  the  interests  of  a  foreign  nation,  and  the  capital  invested 
in  our  State  roads  thus  finds  itself  competing  with  the  credit  of  the  Do- 
minion of  Canada.  The  Canadian  roads  may  run  their  lines  without 
any  returns.  I  understood  that  it  was  stated  yesterday  that  the  Cana- 
dian roads  had  not  paid  anything  on  their  investment.  I  presume  that 
capital  invested  in  railroad  properties  is  entitled  to  some  return  as  well 
as  capital  invested  in  any  other  business;  and  that  money  invested 
in  our  roads  should  be  placed  in  direct  competition  with  roads  running 
through  a  foreign  country  which  are  subsidized  by  a  foreign  government 
is  harsh  if  not  absolutely  unjust. 

The  Chairman.  Do  you  know  of  any  direct  subsidy  that  the  Grand 
Trunk  has  received  ? 

Mr.  Roberts.  No,  sir.  The  Canadian  Pacific,  which  is  now  becom- 
ing a  parallel  line  to  the  Grand  Trunk,  has  been  largely  subsidized  by 
the  Canadian  government,  I  believe. 

The  Chairman.  Is  there  any  other  advantage  that  the  Canadian 
Pacific  and  the  Grand  Trunk  road,  or  either  of  them,  have  over  Ameri- 
can lines  outside  of  the  question  of  aid  received  from  the  Dominion 
government  ? 

Mr.  Roberts.  I  believe  they  have  an  incidental  advantage  in  obtain- 
ing their  supplies  largely  from  the  mother  country  free  of  duty.  They 
have  also  a  further  advantage,  which  is  that  the  capital  that  they  draw 
from  in  England  is  generally  obtained  at  a  lower  rate  of  interest  than 
capital  obtained  for  railway  purposes  in  this  country;  so  that  we  find 
in  the  management  of  our  railroads,  in  their  improvements,  betterments 
etc.,  we  are  placed  at  a  serious  disadvantage. 

The  Chairman.  Is  there  any  difference  in  the  cost  of  running  a  road 
in  the  United  States  and  one  in  Canada  on  the  score  of  labor  or  other- 
wise? 

Mr.  Roberts.  I  am  not  prepared  to  answer  with  certainty'.  1  do  not 
know  whether  the  wages  on  the  Canadian  roads  are  higher  than  they 
are  on  the  United  States  roads.  They  have  some  disadvantages  on 
account  of  the  severe  climate ;  but  at  the  same  time  there  is  quite  a 
diversity  of  opinion  among  engineers  as  to  whether  it  is  more  difficult 
to  maintain  a  road  in  a  cold  climate  than  in  a  milder  one. 

The  Chairman.  It  has  been  said  here  that  latterly  the  Grand  Trunk 
has  been  gaining  largely  in  its  proportion  of  traffic  in  comparison  with 
the  other  trunk  lines. 


206  TRANSPORTATION  INTERESTS  OF 

Senator  Gorman.  That  the  Grand  Tmuk  has  been  ^ainiuj?  hujjt'ly  in 
its  proportion  of  dead  freight  in  comparison  with  the  other  trunk  lines. 

The  Chairman.  Yes,  of  dead  freight.  Is  that  so,  Mr.  Roberts ;  and, 
if  so,  what  is  the  explanation  of  it  ? 

Mr.  Roberts.  I  was  not  aware  that  it  was  so ;  but,  as  I  stated  before, 
the  Canadian  roads  have  every  opportunity  to  do  so.  They  are  only 
regulated  in  their  rates  now  from  the  fact  of  their  being  members  of  the 
Tmuk  Line  Association,  which  is  an  nssociatiou  founded  entirely  upon 
the  good  faith  of  the  parties  to  it,  and  it  is  held  together  only  upon 
such  faith,  and  what  the  i)arties  conceive  to  be  their  direct  interest. 
The  railroads  are  not  bound  in  any  way  by  a  money  lorteit  to  keep  their 
traffic  agreements,  as  they  were  in  the  case  of  pool  obligations. 

THE   TRUNK   LINE   ASSOCIATION. 

The  Chairman.  The  Grand  Trunk  is  in  this  sort  of  combination 
which  exists  between  the  trunk  lines,  as  one  of  the  members  of  the  as- 
sociation, is  it  not  ? 

Mr.  Roberts.  As  I  am  president  of  that  association,  I  would  rather 
not  call  it  a  "  combination."  It  is  an  association  for  the  purpose  of 
managing  rates.     I  believe  its  minutes  are  printed. 

The  Chairman.  Is  it  not  a  sort  of  substitute  tor  pooling  intended  to 
be  within  the  purview  of  the  interstate  commerce  act  ? 

Mr.  Roberts.  It  is  an  association  which  takes  the  place  of  the  old 
pooling  association,  which  was  rend^^red  illegal  by  the  interstate  com- 
merce act. 

The  Chairman.  This  Grand  Trunk  road  is  in  that  association,  is  it 
not? 

Mr.  Roberts.  Yes,  sir. 

The  Chairman.  Is  the  Canadian  Pacific  also  a  member  of  that  asso- 
(5iation  ? 

Mr.  Roberts.  The  Canadian  Pacific  would  not  necessarily  bo  a 
member  of  that  association,  as  Pacific  lines  are  not.  The  association 
covers  local  territory. 

The  Chairman.  There  has  been  a  good  deal  of  talk  here  about  diftVr- 
entials  between  different  roads  in  that  association.  What  is  the  fact 
with  reference  to  the  Grand  Trunk  ? 

Mr.  Roberts.  The  Grand  Trunk  line  has  geuendly  (•laim«'d  that  they 
must  charge  a  lower  rate  for  transportation  than  what  is  charged  ui>()U 
the  lines  within  the  States,  or  at  least  some  of  the  lines  within  t!io 
States,  or  they  would  not  be  able  to  secure  the  carrying  of  any  traffic 
from  points  in  the  States. 

The  Chairman.  What  reasons  are  assigned  for  granting  dififerentials 
to  the  Grand  Trnnk  I 

Mr.  Roberts.  Some  of  the  reasons  are  these :  There  is  the  great 
length  of  the  road.  The  route  is  not  as  good  geographically  as  some 
of  the  others.  The  facilities  ailbrded  are  not  equal  to  the  facilities 
afforded  by  the  New  York  Central,  the  Pennsylvauia,  or  the  Erie  Rail- 
road. 

The  Chairman.  Have  you  personally  been  over  the  Grand  Trunk 
line '? 

Mr.  Roberts.  No,  sir. 

The  Chairman.  You  do  not  know  what  its  comlition  is  so  far  as  set- 
tlement along  its  line  is  concerned,  do  you  ! 

Mr.  Roberts.  No,  sir. 


THE    UNITED    STATES   AND    CANADA.  207 

The  Chairman.  I  suppose  as  a  matter  of  fact  that  their  local  traffic 
is  not  as  great  as  that  of  your  road,  for  instance? 

Mr.  Roberts.  No,  sir;  I  am  sure  it  is  not. 

The  Chairman.  What  differential  do  you  pay  the  Grand  Trunk,  or 
rather  what  differential  do  you  allow  them,  for  their  adherence  to  the 
])ublished  rates  ? 

Mr.  Roberts.  I  can  not  say  what  their  differential  is  now ;  it  varies 
from  time  to  time.  The  general  understanding  about  the  rates  of  the 
roads  in  the  Trunk  Line  Association  is  that  they  shall  be  made  by  each 
company  upon  consultation  with  the  other  members,  and  at  about  such 
rates  as  will  give  each  company  a  reasonable  share  of  the  business. 
Any  serious  depression  of  rates  upon  the  part  of  one  line  or  advance 
upon  the  part  of  another  tends,  of  course,  to  increase  or  diminish  the 
volume  of  traffic  on  such  line. 

The  Chairman.  Do  you  deem  it  necessary  that  that  sort  of  associa- 
tion shall  be  continued  ?  • 

Mr.  Roberts.  Do  you  refer  to  the  Trunk  Line  Association  ? 

The  Chairman.  Yes,  sir. 

Mr.  Roberts.  I  think  it  is  to  the  advantage  of  the  public  and  the 
railroads  that  such  an  association  should  exist. 

The  Chairman.  What  are  the  advantages  to  the  public  that  you 
speak  of? 

Mr.  Roberts.  It  insures  a  greater  uniformity  of  rates  to  the  ship- 
pers, and  greater  publicity  of  rates.  Whatever  is  to  the  advantage  of  the 
public  is  directly  to  the  advantage  of  the  railways. 

The  Chair]MAN.  What  is  your  judgment  about  the  rates  nowj  are 
tliey  about  right,  or  too  low  or  too  high? 

Mr.  Roberts.  The  rates  now  in  many  instances,  I  think,  are  rather 
below  what  is  a  fair  remuneration  for  the  railroads.  I  think  they  are 
lower  than  what  is  to  the  advantage  of  the  i^ublic  they  should  be. 

The  Chairman.  Why  so  ? 

Mr.  Roberts.  My  reason  for  saying  so  is  that  when  the  rates  are  ex- 
tremely low,  the  revenues  of  the  railroads  fall,  and  their  ability  to  im- 
prove their  properties,  with  better  stations,  better  service,  better  rolling 
stock  and  to  offer  advantages  in  many  ways  to  the  shipper,  is  curtailed. 
Economies  have  to  be  made  in  all  departments,  and  such  economies  are 
generally  to  the  disadvantage  of  the  public,  in  the  form  I  have  stated. 

The  Chairman.  Suppose  this  Trunk  Line  Association  did  not  exist; 
do  you  think  that  rate  wars  would  ensue? 

Mr.  Roberts.  I  think  that  the  tendency  to  such  wars  would  be  very 
much  increased.  As  I  before  stated,  the  object  of  the  association  is  to 
maintain  uniform  and  steady  rates.  Competition  between  the  numer- 
ous lines  is  quite  sufficient  to  keep  rates  down  to  the  lowest  possible 
figure,  and  rather  below  what  is  proper. 

the  interstate  commerce  law. 

The  Chairman.  What  is  your  judgment  as  to  the  situation  ?  With 
this  association  that  you  are  president  of  permissible  under  the  law, 
and  the  interstate  commerce  act  in  force,  is  or  is  not  the  condition  of 
affairs  improved  above  what  it  was  before  the  law  was  passed  and  un- 
der your  pooling  system  ? 

Mr.  Roberts.  I  think  it  is.  I  think  an  improvement  has  resulted  from 
the  passage  of  the  interstate  commerce  law,  in  the  honesty  of  the  manage- 
ment of  the  railways,  if  I  may  use  so  strong  a  term.  I  do  not  wish  to  say 
that  people  engaged  in  the  administration  of  railways  are  any  iiioredis- 


208  TRANSPORTATION  INTERESTS  OF 

houest  tbau  auy  other  class  of  officers.  I  believe  those  eugaged  in  the 
admiuistratiou  of  railway  affairs  throughout  the  country  are  certainly 
above  the  average  in  intelligence,  honesty,  and  ca|)acity.  They  must 
be.  They  are  engaged  in  such  enterprises  as  would  naturally  develop 
such  ability. 

The  Chairman.  Judging  from  the  statements  of  their  shrewdness  in 
violations  of  the  interstate  cooimerce  act,  theyc  ertainly  have  greater 
capacity  than  other  peo])le.     [Laughter.] 

Mr.  KOBERTS.  While  the  interstate  commerce  act  is  not  strictly  ob- 
served by  all  the  railroads,  there  is  an  effort  on  the  part  of  many  of 
them  to  bring  themselves  into  line  with  the  law  and  to  operate  under 
it.  I  do  not  think  that  the  railroads  are  to  be  blamed  for  the  condi- 
tion of  affairs  that  obtained  at  the  time  that  law  was  passed  or  the 
condition  of  affairs  that  obtains  at  the  present  time.  The  railroads 
were  allowed  to  grow  up  without  any  regulations.  Disjointed  lines 
were  constructed  throughout  the  entire  country,  and  were  left  without 
any  proper  system  of  laws  to  govern  them.  The  National  Government, 
alter  permitting  this  system  to  grow  up,  injects  into  it  a  law  which  is 
intended  to  upset  all  the  rules  which  were  formulated  by  the  managers 
of  the  various  railroad  comi)anies. 

It  seems  to  me  tbat  it  was  the  duty  of  the  National  Government  and 
the  people  who  are  fond  of  criti(!ising  the  management  of  railroads  to 
have  enacted  some  proper  law  years  ago,  and  in  such  way  as  not  to 
have  required  the  sudden  and  entire  translbrniation  that  has  been 
caused  by  this  law. 

The  Chairman.  Do  you  not  think  it  is  better  late  than  never  ? 

Mr.  Roberts.  I  have  no  hesitation  in  saying  that  the  time  had  fully 
arrived  for  the  national  Government  to  j)ass  some  law  to  govern  the 
transportation  interests  of  the  country  and  the  public  in  their  relations 
to  each  other. 

The  Chairman.  By  the  recent  amendments  to  the  interstate  com- 
merce act  we  have  undertaken  to  regulate  somewhat  the  public  who  do 
business  with  the  railroads. 

Mr.  Roberts.  I  am  very  glad  to  say  that  I  have  recently  heard  of 
one  or  two  instances  in  which  the  amendment  has  had  a  most  salutary 
effect  upon  the  shippers  as  well  as  upon  the  railroads. 

REGULATION   OF  CANADIAN   ROADS. 

The  Chairman.  Going  back  to  the  direct  and  imimrtant  question  as 
between  American  interests  and  Canadian  interests,  what  remedy  have 
you  to  suggest,  if  any,  or  what  amendment  to  the  interstate  commerce 
act  or  any  other  governmental  action  that  wouUl  place  the  American 
roads  and  the  Canadian  roads  upon  an  exact  equalitv  ? 

Mr.  Roberts.  1  tliink  it  is  due  to  the  American  roads  that  any  for- 
eign corporation  i)ermitted  to  carry  traffic  out  of  this  country  into  a 
loreign  country  and  back  into  this  country,  should  come  under  the 
same  laws  that  govern  our  own  domestic  lines. 

The  Chairman.  Not  only  in  that  particular  business,  but  in  all  its 
business,  whatever  it  is,  in  its  own  territory.  » 

Mr.  Roberts.  No,  sir;  of  course  we  can  not  make  laws  here,  I  take 
It,  to  govern  the  action  of  a  foreign  corporation  within  its  own  territory  ; 
but  it  the  Canadian  roads  are  permitted  to  carrv  traffic  out  of  the  United 
btates  through  their  own  territory  and  back  iiito  the  United  States  in 
competition  with  roads  that  are  wholly  within  the  United  States,  I  am 
very  clear  in  my  own  mind  that  they  should  be  brought  uuder  precisely 


THE    UNITED    STATES    AND    CANADA.  209 

the  same  provisions  of  law  as  tbe  roads  in  the  United  States,  or  else 
they  should  not  be  permitted  to  do  such  business.  I  am  not  clear  in  my 
own  mind  that  it  is  right  and  proper  that  they  should  be  permitted  to 
do  such  business  at  all. 

Senator  Harris.  I  want  to  ask  you  this  question  in  that  connection: 
If  that  commerce  which  begins  in  the  United  States  and  passes  through 
Canada  to  another  point  in  the  United  States ;  the  commerce  which  be- 
gins in  the  United  States  and  ends  in  Canada;  tbe  commerce  which  be- 
gins in  Canada  and  ends  in  the  United  States;  the  commerce  which 
begins  in  the  United  States  and  passes  through  Canada  to  a  foreign 
mjirket;  the  commerce  which  begins  in  Canada  and  passes  through  the 
United  States  to  a  foreign  market ;  now,  if  these  classes  of  commerce 
were  all  subjected  to  the  interst  te  commerce  act,  would  there  be  any 
just  cause  of  complaint  upon  the  part  of  the  American  roads  of  an  un- 
equal or  an  unfair  competition  with  Canadian  roads  ? 

Mr.  KoBERTS.  As  a  citizen  of  the  United  States  I  should  say  no.  At 
the  same  time  1  can  not  quite  understand  why  a  foreign  railroad  should 
be  permitted  to  engage  in  the  transportation  of  trafiic  that  you  have 
just  indicated  (with  the  exception  of  traffic  from  a  point  in  the  United 
States  to  a  point  in  Canada),  and  foreign  vessels  not  be  permitted  to 
engage  in  carrying  coastwise  traffic. 

If  we  get  on  a  foreign  steam  boat  on  Lake  Ontario,  which  stops  at  an 
American  port,  it  dare  not  stop  at  another  American  port  until  it  has 
stopped  at  a  Canadian  port.  Now,  why  make  any  difference  between 
a  foreign  boat  and  the  Grand  Trunk  Railroad.  I  do  not  speak  of  the 
wisdom  of  a  law  which  prevents  foreign  vessels  engaging  in  coastwise 
traffic ;  but  it  does  seem  to  me  that  if  it  is  a  good  law  it  should  be  made 
applicable  to  the  railroads. 

The  Chairman.  On  both  sides  of  the  country  ? 

Mr.  Egberts.  Yes,  sir. 

Senator  Harris.  Do  you  not  think  that  there  are  advantages  to  both 
countries  in  the  present  system  of  interchange  of  commerce  from  this 
country  to  Canada  and  through  Canada,  and  from  Canada  into  this 
country  and  through  this  country  ? 

Mr.  Roberts.  Yes,  sir;  great  advantages.  I  would  have  no  hesita- 
tion in  saying  that  reciprocity  between  this  country  and  Canada  would 
advance  largely  the  interests  of  this  country.  No  person  can  cross  into 
Canada  out  of  the  activity  of  New  York  State  and  see  the  condition  of 
that  country  without  at  once  reaching  the  conclusion  that  if  the  barrier 
were  taken  away  and  there  were  a  free  interchange  of  traffic  between 
the  two  countries  it  would  be  largely  to  the  advantage  of  both,  but  more 
so  to  our  own  country  than  to  Canada. 

The  Chairman.  Why  so  ? 

Mr.  Roberts.  Probably  a  little  incident  which  occurred  to  me  re- 
cently would  show  you  why. 

I  went  over  to  a  little  town — I  think  it  was  Rockville — in  Canada  on 
a  Saturday  afternoon  from  the  New  York  side.  The  wagons  and  plows 
that  I  saw  there  I  think  were  brought  over  at  the  time  the  French  first 
came  info  Canada.  There  was  hardly  a  Yankee  implement  to  be  seen, 
while  on  the  New  York  side  the  agricultural  imi)leinents  were  all  new; 
they  were  Yankee  implements. 

The  Chairman.  Breaking  down  the  line,  then,  would  help  Canada 
more  than  us,  would  it  not"? 

Mr.  Roberts.  I  take  it  the  Yankee  is  quite  able  to  get  the  value  of 
his  article  when  he  trades  with  the  Canadian.    I  am  warmly  in  favor  of 
6543 14 


210  TRANSPORTATION    INTERESTS    OF 

reciprocity  as  between  the  two  countries,  and  that  little  incident  strongly 
impressed  me. 

The  Chairman.  So  far  as  this  immediate  question  is  concerned,  you 
say,  I  believe,  that  if  the  Canadian  roads  were  placed  upon  an  exact 
equality  with'the  roads  in  the  United  States  under  the  law,  you  could 
successfully  compete  with  them  ? 

Mr.  Roberts.  So  far  as  representing  the  Pennsylvania  Railroad  I 
may  say,  yes.  So  far  as  a  citizen  of  the  United  States  and  giving-  my 
views  of  the  railway  interests  of  the  United  States,  1  would  say  no. 
As  I  stated  before,  I  can  not  believe  that  it  is  right  and  proper  that 
the  individual  capital  of  this  country  should  be  obliged  to  compete  with 
the  subsidized  railways  of  Canada,  backed  by  the  Dominion  of  Canada. 
I  believe  that  the  capital  invested  in  the  railways  of  this  country  is 
quite  as  much  entitled  to  protection  against  competition  carried  on  in 
that  way  as  the  capital  invested  in  any  other  enterprise  in  this  country. 

Senator  Blair.  That  seems  to  be  the  vital  point,  really,  of  the  whole 
thing.  To  avoid  that  competition,  what  practical  method  or  measure 
occurs  to  yonr  mind  ! 

Mr.  Roberts.  I  would  approach  the  remedy  gradually.  I  would 
bring  all  Canadian  lines  that  desire  to  do  business  in  the  manner  in- 
dicated by  the  Senator  under  the  same  law  as  our  domestic  lines  and  try 
that.  If  we  lind  that  that  is  not  going  to  protect  us,  that  the  capital 
invested  in  Canadian  roads  is  going  to  be  used  for  the  purpose  of  ac- 
quiring lines  in  the  United  States,  this  capital  having  been  Jurnished 
directly  or  indirectly  through  the  Canadian  government — and  tiic 
traffic  of  our  country  carried  out  through  those  lines  for  the  i)urpose  of 
fostering  the  transportation  interests  of  Canada,  I  would  go  further 
and  apply  the  same  law  to  the  railways  as  is  applied  to  the  coastwise 
vessels. 

Senator  Blair.  That  would  mean  that  all  American  transportation 
should  be  on  American  roads,  all  transportation  within  the  lines  of  the 
United  States  should  be  carried  on  by  American  agencies. 

Mr.  Roberts.  Yes;  there  are  no  points  in  the  United  States  where  I 
have  ever  been  that  are  not  quite  well  served  by  American  enterprise 
and  transportation  interests. 

Senator  Gorman.  If  you  exclude  the  Canadian  roads  what  effect 
would  it  have  on  the  freight  charges  to  our  people  t  In  other  words, 
would  the  American  lines  be  equal  to  the  demands  of  the  carrying  trade 
to-day,  or  would  there  be  an  increased  charge  ? 

Mr.  Roberts.  I  do  not  think  it  would  increase  the  charges  of  the 
American  roads  to  any  appreciable  extent,  if  at  all. 

Senator  Gorman.  You  think  not. 

Mr.  Roberts.  I  think  not.  The  competition  of  our  railways  and 
other  industries  of  this  country  is  so  great  that  I  do  not  think  the  pub- 
lic has  any  reasons  to  object  to  the  iirices  charged. 

Senator  Gorman.  I  asked  you  that  question  in  view  of  an  intimation 
made  by  one  of  the  gentlemen  who  have  been  before  us,  I  think  Mr. 
Wiman.  He  intimated,  I  think,  that  if  we  repealed  the  act  of  1S(;G, 
which  permits  cars  to  pass  to  and  from  this  country  sealed,  the  result 
would  be  an  increased  charge  to  the  producers  or  consumers  of  this  coun- 
try, because  of  the  want  of  facilities  on  the  part  of  our  roads ;  in  other 
words,  that  it  would  enhance  the  cost  of  transportation. 

Mr.  Roberts.  I  do  not  share  in  that  view  for  a  moment. 

Senator  Gorman.  Do  you  think  the  existing  lines  have  the  facilities 
to  move  all  the  tonnage  east  and  west  without  regard  to  the  Cauatiian 
lines'? 


THE    UNITED    STATES   AND    CANADA.  211 

Mr.  Roberts.  They  Lave  both  the  facilities  and  the  ability  to  do  it. 

Senator  Keagan.  Can  not  our  lines  carry  from  Chicago  to  the  east- 
era  sea-board  cheaper  than  the  Grand  Trunk  road  ? 

Mr.  KoBERTS.  Yes. 

Senator  Reagan.  Because,  first,  for  the  reason  of  the  longer  route  by 
the  Grand  Trunk. 

Mr.  Roberts.  Yes. 

Senator  Reagan.  And,  again,  because  of  the  sparsely  settled  terri- 
tory in  Canada,  and  consequently  a  less  volume  of  business. 

Mr.  Roberts.  Yes. 

Senator  Reagan.  And  the  Canadian  roads  are  not  so  well  supplied 
with  good  rollijig  stock"? 

Mr.  Roberts.  I  imagine  some  of  the  equipment  of  the  Canadian 
roads  is  quite  up  to  our  own. 

Senator  Keagan.  Then  the  crossing  of  the  St.  Lawrence  by  boats, 
or  across  to  Port  Huron,  makes  some  disadvantages,  and  the  re-cross- 
ing at  Butfalo  and  elsewhere  would  make  it  in  favor  of  our  roads,  would 
it  not  ? 

Mr.  Roberts.  Yes,  sir;  our  roads  are  quite  able  to  carry  the  traffic 
cheaper  than  the  lines  through  Canada,  and  remunerate  the  capital  in- 
vested in  them. 

Senator  Reagan.  And  that  is  why  the  other  roads  feel  that  they 
mnst  allow  a  differential  to  those  roads  ? 

Mr.  Roberts.  Yes,  sir. 

Senator  Reagan.  Allow  the  differential  because  our  roads  can  carry 
cheaper  ? 

Mr.  Roberts.  Yes;  the  allowing  of  a  differential  to  a  line,  that  is, 
allowing  a  line  to  charge  a  less  rate  where  it  costs  more  to  transport 
the  traflic,  for  the  purpose  of  enabling  it  to  earn  money,  would  seem  to 
be  rather  an  absurdity. 

Senator  Reagan.  If  that  is  not  the  reason  ifor  it,  what  is  the  reason 
for  the  differential? 

Mr.  Roberts.  It  is  simply  from  the  fact  that  if  a  line  of  that  char- 
acter does  not  carry  at  a  lower  rate  it  will  not  secure  any  traffic.  Rail- 
way enterprises  are  different  from  manufacturing  industries,  and  such 
roads  can  not  live  without  carrying  traffic. 

Senator  Reagan.  The  point  that  I  was  trying  to  get  at  was  this,  to 
inquire  of  you  whether  because  of  a  road  not  having  a  traffic  which 
would  sustain  it,  you  allow  it  a  differential  ! 

Mr.  Roberts.  I  think  I  would  say  this,  that  those  lines  insist  upon 
carrying  traffic,  and  if  they  can  not  get  the  traffic  at  one  price  they  will 
take  it  at  another. 

Senator  Reagan.  Is  it  not  true  that  they  can  not  get  it  because  of 
the  reasons  I  have  suggested  ? 

Mr.  Roberts.  Yes,  sir. 

Senator  Barbour.  Is  there  not  another  element  that  enters  into  the 
question,  and  that  is  that  these  people  run  their  lines  anywhere  without 
regard  to  business  locally,  and  what  they  may  get  in  the  way  of  through 
business  is  that  much  clear  profit? 

Mr.  Roberts.  To  a  certain  extent;  yes. 

control   of   traffic   in  CANADA. 

Senator  Reagan,  In  speaking  of  the  effect  of  the  interstate-com- 
merce act,  as  connected  with  the  Canadian  commerce,  I  believe  I  under- 
Stood  you  to  suggest  that  within  our  territory  they  had  operated  their 


212  TRANSPORTATION    INTERESTS    OP 

roads  in  conformity  to  law,  but  after  the  freight  passed  out  of  our  ter- 
ritory they  did  not  act  in  conformity  to  the  law. 
Mr.  Egberts.  I  do  not  know  whether  they  operated  under  the  law  or 

Senator  Keagan.  I  suppose  you  are  aware  that  the  law  requires  the 
Canadian  lines  operating  in  this  country,  as  to  freight  originating  in  the 
United  States  and  passing  through  the  United  States  into  Canada  and 
returning  again  to  the  United  Staves,  to  furnish  their  schedules  of  rates 
up  to  the  point  where  the  freight  leaves  the  territory  of  the  United 
States,  and  the  schedules  of  their  through  rates  to  the  final  terminus 
of  the  road. 

Mr.  Egberts.  Yes,  sir. 

Senator  Eeagan.  In  order  to  secure  the  enforcement  of  that,  the  act 
provides  that  if  they  fail  to  furnish  this  schedule,  the  goods  on  being  re- 
turned to  our  territory  are  subject  to  duties  as  any  other  foreign  mer- 
chandise. Are  you  aware  that  the  interstate-coin merce  act  provides 
that  the  Canadian  roads  doing  business  in  this  country  must  subject 
themselves  to  the  provisions  of  that  act  or  make  themselves  liable  to 
have  their  trade  cut  off! 

Mr.  Egberts.  lean  not  say  that  the  act  contains  the  provision  that 
you  have  just  referred  to,  but  even  if  it  did  I  do  not  see  how  you  could 
in  anywise  control  a  line  within  the  Canadian  territory. 

Senator  Eeagan.  Have  you  seen  a  decision  recently  made  by  the 
Interstate  Commerce  Commission  in  relation  to  the  transjiortation  of 
coal  across  the  Niagara  frontier,  and  read  the  principlts  that  are  laid 
down  in  that  decision  ? 

Mr.  Egberts.  No,  sir;  I  have  not. 

Senator  Eeagan,  It  is  a  decision  made  perhaps  within  the  last  two 
or  three  weeks,  in  which  the  Interstate  Commerce  Commission  aflirm 
that  under  the  provisions  of  the  interstate-commerce  act  Canadian  roads 
doing  business  in  the  United  States,  must,  as  to  that  business,  be  gov- 
erned by  the  provisions  of  that  act,  and  that  they  can  not  be  permitted 
to  enjoy  the  commerce  of  this  country  without  being  placed  under  the 
same  restrictions  as  are  our  own  roads.  I  call  your  attention  to  that 
because  1  think  it  was  overlooked  in  your  statement  of  the  case. 

Mr.  Egberts.  Assuming  that  to  be  the  case  1  do  not  see  yet  why 
they  have  not  the  full  facility  of  handling  tljat  traHic  on  lines  incorpo- 
rated in  Canada  just  as  they  like.  The  trailic  may  be  brought  to  them 
at  the  Canadian  frontier.  After  the  traffic  passes  out  of  the  States  it 
becomes  wholly  their  trafific,  and  they  may  carry  it  for  nothing  if  they 
see  proper. 

Senator  Eeagan.  I  call  your  attention  to  the  fact  that  the  law  pro- 
vides that  any  change  of  cars — any  stoppage  in  transit — shall  not  de- 
feat the  operation  of  the  law  between  the  point  of  shipment  and  point 
of  destination,  and  besides  the  law  contains  the  i)rovision  that  there 
shall  be  no  advance  of  rates  without  ten  days'  notice  or  reduction  with- 
out three  days'  notice. 

Mr.  Egberts,  I  remember  all  those  provisions,  but  still  it  does  not 
seem  to  prevent  independent  action  of  the  Canadian  roads  on  traffic 
after  it  gets  on  their  lines.  If  they  bill  goods  from  New  York  to  a  point 
in  the  Dominion  on  a  through  manifest,  then  we  may  assume  that  the 
Federal  Government  through  its  law  has  some  control  of  that  traffic. 
But  if  that  traffic  is  billed  to  the  International  Bridge,  or  even  if  it  is 
billed  to  its  destination  on  the  Canadian  road,  after  it  reaches  its  desti- 
nation if  the  Canadian  road  sees  tit  to  make  a  rebate  to  the  shipper  how 
are  you  going  to  prevent  it  ? 


THE    UNITED    STATES   AND    CANADA.  213 

Senator  Reagan.  If  the  Commission  is  right  in  its  statement  tbat  the 
Canadian  roads  doing"  business  in  this  country  come  under  the  restric- 
tions of  the  law  the  same  as  our  roads  do,  then  I  assume,  Mr.  Roberts, 
that  your  conchisions  are  not  correct,  because  they  could  not  avoid  the 
provisions  of  the  act  by  anything  that  was  intended  to  defeat  its  opera- 
tion, such  as  billing  a  part  of  the  way  and  then  rebilling.  They  can 
not  do  it  by  change  of  cars  or  by  any  other  arrangement  that  is  de- 
signed to  defeat  the  operation  of  the  act. 

The  Chairman.  Or  by  handing  over  a  check  after  the  goods  are  de- 
livered ? 

Mr.  Roberts.  Suppose  they  do,  however,  what  are  you  going  to  do 
with  them  ? 

Senator  Reagan.  The  Commission  says  the  remedy  would  be  to  stop 
them  from  dealing  in  our  commerce. 

Mr.  Roberts.  I  want  to  know  how,  under  the  present  law,  you  are 
going  to  reach  them  "?  You  can  not  prevent  a  road  from  carrying  goods 
from  here  to  the  Canadian  frontier.  After  it  gets  to  the  Canadian  fron- 
tier the  Canadian  road  may  do  with  it  what  it  likes.  It  may  carry  it  or 
not.  You  may  remonstrate  as  much  as  you  like,  but  how  are  you  go- 
ing to  control  them  ?  Now,  understand  me,  I  do  not  assume  that  any 
of  the  Canadian  roads  are  doing  so,  but  until  some  laws  are  passed  that 
will  get  a  more  thorough  grasp  upon  this  character  of  business  than 
anything  existing  at  the  present  time  you  are  powerless  to  control  any 
action  that  the  Canadian  roads  desire  to  take  in  reference  to  traffic 
passing  over  their  lines.  You  are,  1  think,  in  the  same  condition  in 
reference  to  lines  wholly  within  our  commonwealth — roads  in  this  State, 
for  instance,  that  do  not  reach  beyond  the  border  of  the  State.  This  is 
gradually  correcting  itself,  because  we  are  one  people,  and  what  is  to 
the  interest  of  one  State  is  to  the  interest  of  all,  and  I  think  the  States 
will  gradually  conform  to  the  National  Government  in  their  laws,  so 
that  the  conflicts  we  now  have  with  reference  to  national  rights  and 
States  rights  in  transportation  will  gradually  fade  out. 

Senator  Reagan.  There  is  no  disagreement  of  opinion  upon  the  fact 
that  tratiic  originating  in  Canada  and  terminating  in  Canada  is  exclu- 
sively under  the  control  of  the  Canadian  Government,  so  that  the  whole 
question  for  us  to  consider  is  the  conditicn  of  commerce  that  passes 
from  the  Uniced  States  into  Canada  and  from  Canada  back  into  the 
United  States,  and  from  Canada  into  the  United  States  and  from  the 
United  States  back  into  Canada.  As  to  commerce  that  originates  and 
terminates  in  Canada  all  agree  that  it  is  under  the  control  of  the  Cana- 
dian Government.  The  question  before  us  is  that  of  international 
traffic. 

Mr.  Roberts.  What  control  have  you  over  traffic  that  starts  from 
Chicago  and  goes  to  Montreal  and  there  takes  the  steamer  for  Liver- 
pool? 

Senator  Reagan.  It  is  interstate  commerce  and  goes  partly  through 
our  territory,  and  according  to  the  interstate  law  and  the  decision  of  the 
Interstate  Commerce  Commission  it  comes  distinctively  under  the  in- 
fluence of  our  legislation. 

Mr.  Roberts.  Suppose  that  for  any  good  reason  a  railroad  wholly 
within  the  Dominion  of  Canada  made  an  arrangement  from  Montreal  to 
Liverpool  by  which  it  subsidized  the  steam-ship  line,  what  would  you 
do  with  it  ? 

Senator  Reagan.  We  do  not  assume  to  regulate  rates  for  any  road. 
The  law  does  not  assume  that.    But  under  the  law  there  is  this  check 


214  TRANSPORTATION   INTERESTS   OF 

upon  tliem,  that  tbey  are  comi>elled  by  its  provisions  to  give  notice  of 
tljeir  intes,  so  that  the  other  road^s  may  know  what  tlieir  rates  are. 

Mr.  Roberts.  On  that  portion  of  the  line  that  is  witliin  the  United 
States  running  to  the  line.  But  after  they  get  the  traflic  into  Canada 
it  is  wholly  theirs.  They  can  allow  what  car  mileage  they  like.  They 
can  make  what  arrangement  they  like  in  reference  to  loading  steamers. 
They  can  do  anything  they  desire. 

Senator  Gorman.  Notwithstanding  the  decision  which  Senator  Rea- 
gan refers  to,  it  has  been  stated  here  that  the  Grand  Trunk  Railway 
within  the  last  two  mouths  has  suddenly  increased  its  dead-freight  tmtlie 
from  20  to  39  per  cent.,  nearly  double.  Now,  as  an  expert  in  railroad 
matters,  I  ask  you  if  that  occurred  to  any  of  your  trunk  lines  would  it 
not  seem  to  you  positive  evidence  that  some  advantage  or  drawback  had 
been  given  the  shipper  to  obtain  that  traffic  ? 

Mr.  Roberts.  Yes,  that  is  generally  the  conclusion  reached.  If  it 
were  one  of  our  roads  we  would  say  that  it  had  been  allowing  some  draw- 
back and  doing  something  that  we  do  not  know  about.  We  would  say 
to  them,  ''Tl)e  shippers  will  not  leave  our  line  and  go  to  yours  unless 
you  oli'er  them  some  inducement." 

Senator  Gorman.  It  has  been  intimated  that  that  is  precisely  what 
lias  occurred  on  the  Grand  Trunk  Line  ;  that  by  giving  a  drawback  or 
some  inducement  to  the  8hipi)ers  they  have  obtained  the  traffic.  Have 
you  any  information  on  that  subject  ? 

Mr.  Roberts.  I  liave  not.  I  do  not  want  anything  that  I  have  said 
here  to  be  taken  in  any  way  as  a  retlection  upon  the  nranagement  of  the 
Grand  Trunk,  because  1  have  the  highest  respect  for  the  managers  of 
that  road.  But  I  want  to  state  clearly  that  the  United  States  (iovern- 
nient  has  no  possible  control  over  the  alnlity  of  the  Canadian  roads  to 
regulate  rates  on  foreign  traffic  in  any  manner  they  may  see  fit.  They 
can  subsidize  their  steamers.  They  can  siibsiilize  a  line  of  steamers  from 
Portland,  and  1  do  not  see  how  you  are  going  to  put  your  linger  on 
them  ;  you  can  not  get  any  service  on  them. 

Senator  Gorman.  Would  it  be  a  fair  ])roposition  to  say  to  the  Cana- 
dian Government  that  "so  long  as  we  give  your  lines  the  right  to 
trausiiort  goods  within  our  territory,  the  cars  to  come  and  go  freely, 
you  must,  by  your  own  legislation,  or  by  an  international  arrangement, 
subject  your  roads  to  the  long  and  short  haul  [irovisions  aiul  all  the  con- 
ditions of  the  interstate  commerce  act,  and  give  the  Interstate  Com- 
merce Commission  the  right  to  ascertain  the  facts  with  resi)ect  to  your 
railroads  in  Canada  and  your  steam  ship  lines  just  as  they  have  the 
right  to  ascertain  the  fiicts  in  the  United  States,  or  else  we  will  exclude 
you  from  ]»articipating  in  our  traffic?" 

Mr.  Roberts.  And  after  jiassing  the  laws  that  they  will  enforce 
thein  as  rigidly  as  the  Interstate  Commerce  Commission  is  trying  to  en- 
force them  in  the  States "? 

Senator  Gorman.  Yes.     Now,  is  that  an  unfair  proposition  ? 

Mr.  Roberts.  I  can  not  say  it  is.  It  tends  to  the  general  reciprocity 
between  the  two  countries,  which  must,  in  my  judgment,  tend  to  the  ad- 
vancement of  the  interest  of  both  countries. 

Senator  Gorman.  And  it  is  your  opinion  that  it  is  the  only  way  in 
which  you  can  put  the  two  systems  on  an  equality  ? 

Mr.  Roberts.  Yes,  because  1  have  failed  to  see  in  my  own  mind  how 
you  can  control  a  Canadian  line  by  any  legislation  that  you  ])ass  in  this 
country.  You  can  do  it  to  a  certain  extent.  Vou  can  do  it  in  reference 
to  through  bills  of  lading,  provided  the  commerce  started  in  this  coun- 
try; not  otherwise.     You  may  probably  control  it  if  the  commerce 


THE    UNITED    STATES    AND    CANADA.  215 

started  in  Ijiverpool  and  is  cariied  under  bond  to  Chicago.  When  it 
gets  into  tlie  States  you  can  put  your  tinger  on  the  trailic  and  liold  it  for 
violation  of  law,  and  before  it  gets  out  of  the  State  you  can  hold  it. 
But  outside  of  that,  if  the  traffic  starts  here  and  crosses  the  boundary 
line  and  gets  on  the  Canadian  line,  ihe  moment  it  passes  over  tliat  line 
they  can  do  with  it  what  tliey  like. 

Senator  Gorman.  If  it  be  true,  as  alleged,  that  they  have  steamers 
subsidized  to  the  extent  of  a  half  million'  dollars  a  year  from  Halifax 
or  St.  John  to  the  English  ports,  how  much  advantage  would  that  give 
tiiem  in  the  ordinary  course  of  business  over  our  American  lines  iu  the 
rates  of  freight "? 

Mr.  Egberts.  It  would  be  a  very  considerable  advantage.  The  abil- 
ity of  railroad  companies  to  control  subsidized  foreign  steam-ship  lines 
and  make  such  arrangements  with  them  as  they  please  would,  if  they 
desired  it,  give  them  the  ability  to  control  the  through  business. 

Senator  Gorman.  This  is  a  subsidy  by  the  English  or  Canadian  Gov- 
ernment that  J  refer  to. 

Mr.  Roberts.  That  would  give  them  full  ability  to  control  the  traffic. 

Senator  Gormam.  Now,  how  are  we  to  meet  it  from  our  Atlantic 
ports? 

Mr.  Roberts.  As  I  stated  previously,  I  think  it  is  unfair  to  permit 
those  Canadian  lines  to  be  engaged  in  commerce  of  that  character  unless 
they  are  willing  to  bring  themselves  under  the  laws  in  the  manner  you 
indicate ;  either  laws  made  by  their  own  government,  or  the  laws  that 
govern  our  own  railroads,  or  else  that  we  put  our  hands  upou  their 
property  when  in  the  States  if  they  do  not. 

Senator  Gorman.  But  taking  the  trade  from  the  Asiatic  ports ;  they 
having  a  line  of  steamers  on  the  Pacihc  coast  that  is  about  to  be  inaugu- 
rated and  subsidized  at  the  rate  of  a  million  and  a  half  a  year  to  connect 
with  the  Canadian  Pacific,  which  was  practically  built  by  public  money, 
and  capable  of  reaching  the  tide  on  the  Atlantic  coast  without  touching 
any  American  territory  whatever,  what  in  your  opinion,  then,  will  be 
our  condition  with  respect  to  the  control  of  that  through  trade  from 
China  and  Japan  ? 

Mr.  Roberts.  Under  those  arrangements  they  have  the  first  call  on 
that  traiEc.     It  could  not  be  otherwise. 

Senator  Gorman.  And  necessarily  would  divert  the  greater  portion 
of  that  trade. 

Mr.  Roberts.  I  would  not  say  divert  the  greater  portion,  but  it  gives 
them  the  first  call  and  control  of  the  traflic.  You  will  notice  by  an 
examination  of  the  maj)  that  a  portion  of  their  route  passes  through  the 
State  of  Maine  to  reach  a  suitable  Atlantic  port,  and  we  ought  in  some 
way  to  protect  our  railway  interest  in  this  country,  by  holding  a  control 
over  that  traffic  when  it  passes  through  our  States. 

Senator  Gorman.  In  other  words,  I  uiulerstand  you  to  say  that  un- 
less some  general  arrangement  embracing  all  trade  originating  in  the 
United  States  as  well  as  that  coming  through  the  United  States  could 
be  made,  you  would  require  an  adjustment  of  all  those  interests  or  else 
cut  oft'  their  American  feeders. 

Mr.  Roberts.  I  would.  I  think  it  is  due  to  the  people  in  this  coun- 
try who  have  their  money  invested  in  our  railroads  that  they  should 
not  be  brought  into  such  competition  with  lines  that  are  subsidized  iu 
that  manner  by  a  foreign  government.  If  the  American  roads  are  to 
be  brought  into  competition  with  subsidized  Canadian  lines,  then  it  is 
the  duty  of  the  United  States  to  protect  the  American  lines  also.  I 
think  our  citizens  are  entitled  to  just  as  much  aid  from  their  Govern- 


216  TRANSPORTATION    INTERESTS    OF 

meut  in  the  pursuit  of  their  avocations  as  the  people  of  Canada,  when 
Congress  insists  on  regulating  one  and  does  not  regulate  the  other. 

LEGALIZING  POOLING. 

Senator  Gorman.  Now,  Mr.  Roberts,  referring  to  your  association, 
which  is  an  arrangement, practically,  to  take  the  place,  so  far  as  it  can 
legally,  of  the  pool,  by  adjusting  the  business  between  the  difterent 
lines,  I  think  Mr,  Depew  and  Mr.  King  and  other  gentlemen  connected 
with  corporations  who  have  given  their  statements  are  of  one  opinion, 
and  that  is  that  it  would  be  to  the  interest  of  the  producers  and  con- 
sumers of  the  country  as  well  as  of  the  railroads  if  what  are  known  as 
pools  were  legalized.  I  think  it  was  Mr.  Depew  who  went  so  far  as  to  say 
that  he  was  almost  prepared  to  say  that  if  pools  were  legalized  he  would 
be  willing  to  have  the  rates  which  might  be  agreed  upon  by  the  rail- 
roads approved  by  the  Interstate  Commerce  Commission  before  the  pool 
was  permitted  to  go  into  operation.  What  do  jou  say  upon  that  sug- 
gestion ? 

Mr.  Roberts.  Our  company  had  reached  the  conclusion  before  the'pas- 
sage  of  the  interstate  commerce  act  that  pools  were  not  exactly  the  best 
thing  for  the  interest  of  our  railways  and  our  comijany.  We  paid  a  very 
large  sum  of  money  under  the  pools,  but  they  did  not  result  in  what  was 
expected.  We  always  felt  as  if  the  pools  tended  to  suj)press  activity  and 
development.  Again,  I  believe  the  tendency  of  pools  was  to  increase 
the  construction  of  competitive  lines.  The  new  lines  that  were  built 
prior  to  the  enactment  of  the  interstate  commerce  law  started  out  gen- 
erally to  cut  rates  until  they  got  a  very  large  percentage  of  the  traffic. 
Then  they  would  come  into  the  pool,  and  would  say,  "We  have  carried 
10,  or  15,  or  20  per  cent,  of  the  traffic  ;  we  must  have  that  or  we  will  go 
out  of  the  pool  and  destroy  all  railroad  pro]>erty  that  is  in  comiietition 
with  us."  I  believe  that  our  railroads  in  tiiis  country,  if  the  National 
Government  protects  them  by  proper  legislation  and  the  different 
States  will  treat  them  fairly  in  their  local  legislation  and  the  banking 
interests  of  this  country  will  not  furnish  capital  for  the  promotion  of 
unnecessary  enterprises,  and  none  of  these  matters  are  beyond  what  we 
might  reasonably  expect,  I  believe  that  our  railroads  will  all  get  into  a 
fairly  prosperous  condition;  but  they  never  can  reach  it  unless  the 
country  prospers. 

Senator  Gorma-N.  Now,  by  the  arti(;les  of  association  of  the  trunk 
lines,  approved  February  20,  1889,  with  which  you  are  perfectly  famil- 
iar, did  not  the  railroads  which  signed  that  agreement  practically  enter 
into  a  i)Ool  for  the  division  of  traffic;  ?  Is  not  that  really  the  object  of 
the  association,  stripped  of  all  verbiage? 

Mr.  Roberts.  No,  sir  ;  it  is  not.  The  object  of  tiiat  association  was 
to  prevent  any  one  company  doing  any  act  that  would  in  anywise  in- 
jure the  property  of  another  company  without  consultation  with  that 
company,  and  if  they  could  not  agree,  that  they  should  leave  their  dif- 
ferences to  arbitration  before  going  into  a  war  to  destroy  each  other's 
property  5  that  for  the  purpose  of  protecting  themselves  they  should 
combine  as  a  unit  in  an  effort  to  have  the  interstate  commerce  law 
strictly  enforced  by  all  the  railroads.  There  is  nothing  in  the  articles 
of  agreement  of  the  association  that  in  anywise  says  that  one  road  shall 
carry  20  per  cent,  of  a  certain  ainount  of  traffic  and  another  carry  10 
percent.,  and  if  it  does  not  carry  the  20  per.  cent  that  it  will  be  paid 
the  revenue  thereof;  but  the  agreement  does  provide  that  no  road  shall 
make  or  alter  their  rates  or  do  anything  that  will  in  anywise  interfere 


THE    UNITED    STATES   AND    CANADA.  217 

with  the  interests  of  any  other  line  in  that  direction  without  consulta- 
tion. 

Senator  Gorman.  But  you  go  one  step  beyond  that  so  as  to  insure  to 
the  Erie  road  their  fair  proportion  of  the  trade.  You  give  them  a  dif- 
ferential of  5  or  10  cents  in  order  to  do  that. 

Mr.  Roberts.  We  believe  that  under  that  administration  the  Erie 
road  will  get  a  fair  proportion  of  the  traffic. 

Senator  Gorman.  By  permitting  them  to  have  the  aid  of  a  differen- 
tial of  5  or  10  cents  a  hundred  on  west  bound  freight  ? 

Mr.  Roberts.  In  reference  to  that,  the  differential  is  the  subject,  as 
well  as  the  rates  themselves,  of  a  full  and  thorough  discussion,  and  it  is 
arrived  at  so  as  to  give  each  line  no  particular  proportion  of  the  traffic, 
but  simply  a  fair  share  of  the  trade  that  is  moving. 

Senator  Gorman.  I  understand  that.  The  suggestion  was  made  by 
tbese  gentlemen  that  it  would  be  to  the  advantage  of  everybody — to 
the  ad  vantage  of  all  sides — if  practically  such  an  arrangement  were  per- 
mitted by  law,  and  when  approved  by  the  Interstate  Commerce  Commis- 
sioners, could  be  enforced  as  a  j^art  of  the  act. 

Mr.  Roberts.  It  might  be  wise  if  an  organization  of  that  kind  could  . 
be  legalized  so  that  it  could  be  enforceable  by  one  party  against  the 
other. 

Senator  Gorman.  I  know  the  word  "  pool "  is  used  a  little  offensively 
and  is  really  misunderstood  by  the  countr3\  I  meant  to  ask  you  whether, 
in  your  opinion,  it  would  be  advantageous  to  permit  the  railroads  under 
the  law  to  enter  into  a  proper  business  arrangement  as  to  rates,  and 
after  a  contract  was  made  between  the  roads,  when  approved  by  the 
Commission,  it  should  be  enforced  by  the  law? 

Mr.  Roberts.  I  should  not  take  exception  to  a  provision  that  any 
contract  or  traffic  agreement  which  might  be  right  aud  proi)er  between 
railroad  companies  should,  when  approved  by  the  Commission,  become 
enforceable. 

Senator  Gorman.  What  would  be  the  effect  of  such  an  arrangement 
to  the  public "? 

Mr.  Roberts.  I  do  not  think  it  would  be  bad;  but  I  am  not  at  all 
prepared  to  admit  that  the  ability  to  pool  the  traffic  of  the  country  at 
competitive  points  and  to  make  those  pools  clearly  enforceable  by  law 
is  a  wise  thing  at  present.  It  may  be  further  on.  We  have  worked 
under  the  pooling  arrangement  for  a  good  while.  Kow  we  are  working 
under  something  else.  1  would  like  to  see  that  given  a  fair  trial.  Let 
the  present  law  be  enforced  gradually.  We  will  soon  discover  the 
weak  points  in  the  law  and  they  can  be  corrected. 

Senator  Blair.  Is  not  the  principle  of  the  pool  that  of  combination  ; 
whereas  the  principle  on  which  you  would  operate  a  railroad  is  that  of 
competition? 

Mr.  Roberts.  Yes,  sir. 

Senator  Blair.  So  that  the  adoption  of  the  pool  and  legalizing  it 
would  be  legalizing  the  principle  of  the  consolidation  of  railroad  man- 
agement and  the  abandonment  of  comi)etition  among  railroads,  would 
it  not  ? 

Mr.  Roberts.  Yes,  to  a  certain  extent,  it  would.  Probably  you  are 
stating  it  very  strongly,  though. 

Senator  Blair.  If  1  have  stated  it  too  strongly,  will  you  not  give  us 
your  views  in  regard  to  it? 

Mr.  Roberts.  I  would  say  that  before  the  passage  of  the  interstate 
commerce  law,  when  we  believed  that  i)ools  were  legal  and  they  were 
made  as  strong  as  they  could  be,  they  did  not  succeed  in  combining  the 


218  TRANSPORTATION  INTERESTS  OF 

railroad  interests  of  the  country  in  such  a  manner  as  to  prodnce  what 
is  the  natural  result  of  combination.  The  natural  result  of  combination 
is  the  advancement  of  the  cost  of  the  commodity  to  the  public  who  re- 
quire it. 

Now,  singularly  enough,  the  eflfect  of  these  pools  seemed  to  be  almost 
in  the  opposite  direction,  and  that  is  one  of  the  serious  difficulties  of 
the  question  of  pooling.  Some  of  the  roads  found  themselves  continu- 
ally paying  money  into  the  pool  with  the  hope  tliat  the  rates  would  be 
remunerative,  but  fouiul  that  tlie  rates  were  continually  depressed. 

Senator  Blair.  Was  not  the  reasons  of  these  depressions  of  which 
you  speak  the  fact  that  the  pool  was  broken,  and  not  because  it  was 
kepi  ! 

Mr.  Roberts.  The  pool  was  kept.  The  percentages  were  adjusted 
and  paid  up  to  the  5th  day  of  April,  when  the  law  went  into  elfect,  and 
the  accounts  were  closed.  We  find  now  that  the  demoralization  un<ler 
those  pools  was  even  greater  than  it  has  been  since. 

Senator  Blair.  How  do  you  account  for  that  if  the  agreement  that 
was  entered  into  Wits  kept  by  all  parties  in  good  faith? 

Mr.  Roberts.  That  is  one  of  the  questions  that  I  can  not  answer, 
but  none  the  less  the  fact  clearly  exists  that  the  percentages  agree«l 
upon  were  pnid  by  the  parties.  I  think  the  Pennsylvania  Kadroad  paid 
from  $l,r)00,()0()  to  $2,000,000  into  the  pool  witl^  the  hope  that  they 
would  get  lair,  uniform,  and  equitable  rates. 

Senator  Blair.  Is  it  not  a  i)art  of  the  agreement  in  a  pool  that  there 
shall  be  uniformity  of  rates  i  Were  not  certain  rates  agreed  upon  by 
the  pool  ? 

Mr.  Roberts.  Yes,  sir. 

Senator  Blair.  And  ought  not  stability  in  the  observation  of  that 
part  of  the  agreement  to  have  gone  in  equal  step  with  the  payment  of 
the  balances  1 

Mr.  Roberts.  It  should  have. 

Senator  Blair.  Then,  if  there  was  unsteadiness  in  the  tarift's,  is  it 
not  an  admission  in  that  regard  that  the  pool  was  broken  ? 

Mr.  Roberts.  Yes,  sir. 

Senator  Blair.  You  perhaps  confound  my  question  as  relating  only 
to  that  portion  of  the  pool  which  regards  the  payment  of  what  roads 
like  your  own  had  agreed  to.  The  pool,  as  I  understand  it,  embraced 
not  only  that  stipulation,  but  had  as  the  foundation  of  it  that  certain 
tariffs  should  be  observed  by  all  the  parties.  Now,  when  that  part  of 
the  agreement  is  abandoned  the  pool  is  abandoned  and  the  effect  de- 
stroyed, is  it  not  ? 

Mr.  Roberts.  Practically  no.    The  pool  held  together. 

Senator  Blair.  You  mean,  I  suppose,  that  those  who  paid  balances 
held  to  their  part  of  the  agreement  ? 

Mr.  Roberts.  Yes. 

Senator  Blair.  Then  the  pool  was  gone,  was  it  not  ? 

Mr.  Roberts.  It  was  gone  as  far  as  reaching  the  result  desired  was 
concerned,  but  it  was  not  gone  so  far  as  reaching  the  other  result  of 
paying  money  by  the  stronger  lines,  like  the  Pennsylvania,  into  the 
pool. 

Senator  Blair.  What  is  a  pool,  as  you  understand  it,  Mr.  Roberts  ? 

Mr.  Roberts.  It  is  an  association  of  railroad  companies  for  the  pur- 
pose of  a  proper  division  of  the  traffic  at  competitive  points,  and  the 
maintenance  of  equitable  rates  that  may  be  agreed  ui)on. 

Senator  Blair.  Now  as  long  as  they  did  that  in  good  faith  was  not 
the  effect  beneficial  ? 

Mr.  Roberts.  It  should  have  been. 


THE  UNITED  STATES  AND  CANADA.  219 

Senator  Blair.  Then  the  violntioii  of  that  agreement  by  somebody 
in  some  way  produced  a  harmful  effect  ? 

Mr.  Egberts.  Yes,  sir. 

Senator  Blair.  Then  does  it  not  follow  that  if  the  principle  of  the 
pool  is  combination  and  the  pool  is  kept,  that  combination  is  the  true 
principle  to  do  business  upon  rather  than  competition  among  roads? 

Mr.  KOBERTS.  No,  sir;  it  is  not.  There  is  too  much  logic  in  your 
questions  for  me  to  agree  with  your  deductions. 

Senator  Blair.  If  the  situation  will  not  admit  of  logic,  perhaps  there 
may  be  some  other  explanation.  You  are  opposed  to  ])Ools,  and  yet  you 
say  that  when  the  pool  was  observed  it  had  good  results. 

Mr.  Egberts.  When  all  its  parts  were  observed  it  had  good  results. 

Senator  Blair.  It  is  not  a  pool  when  it  is  broken  in  part,  then "? 

Mr.  Egberts.  Yes,  sir.  A  contract  may  be  observed  in  part  and 
still  be  broken  in  part. 

Senator  Blair.  It  was  a  pool,  then,  which  was  broken  in  part? 

Mr  Egberts.  It  was  kept  in  that  way,  a  contract  with  some  provision 
violated. 

Senator  Blair.  Is  it  not  apparent,  Mr.  Eoberts,  that  a  contract  vio- 
lated by  one  or  more  parties  to  it,  persistently  and  continually,  ceases 
to  be  a  contract  for  its  natural  and  anticipated  operation  1 

Mr.  Egberts.  It  is.  But  you  can  conceive  of  a  contract  which  has 
various  clauses,  and  which  is  broken  in  some  one  part,  so  that  some  of 
the  parties  to  it  could  say,  "  We  will  not  observe  the  contract  thus 
broken,"  but  yet  might  not  think  it  wise  to  do  so. 

Senator  Blair.  I  am  speaking  of  the  actual  condition  of  the  old  pool 
after  any  of  its  members  violated  part  of  its  provisions.  I  am  speak- 
ing of  a  theory  of  doing  business  which  you  embodied  in  the  old  pool 
with  good  results  until  parties  to  the  pool  violated  it.  Others  of  course 
may  have  kept  their  agreement  and  waived  the  violation  on  the  part 
of  their  associates,  for  fear  it  might  become  still  worse;  and  you  did  so, 
as  I  understand.  But  to  get  at  the  true  theory  of  railroad  management 
is  the  real  question.  Now,  I  understand  that  those  pool  arrangements, 
taking  the  railroad  system  of  the  country  as  it  is,  when  they  were  kept, 
operated  to  the  advantage  of  all ;  and  it  was  only  when  they  were 
violated  that  the  injury  came.     Now,  1  understood  you  to  say 

Mr.  Egberts.  I  would  hardly  subscribe  to  the  statement  that  when 
the  pools  were  kept  they  operated  to  the  advantage  of  all.  I  believe 
they  operated  to  the  advantage  of  producing  more  money  for  the  time 
being;  but  they  tended  to  suppress  the  proper  development  of  the  in- 
dustries of  the  line.  It  did  not  require  much  effort,  on  the  part  of  our 
company,  to  get  its  allotted  percentage  of  the  traffic;  and  it  would  thus 
tend  to  prevent  the  development  of  the  traffic  of  the  corporation  to 
be  restricted  to  any  fixed  amount.  That  is  one  of  the  difficulties  and 
one  of  the  points  that  was  in  my  mind  as  against  the  theory  of  pools. 

Senator  Blair.  So  that  you  would  not  be  willing  to  adopt  as  the 
general  principle  of  railroad  management  that  of  combination  rather 
than  of  competition  among  the  roads! 

Mr.  Egberts.  No,  sir ;  I  prefer  well  regulated  competition  under  clear 
and  proper  laws  governing  both  the  transportation  interests  and  the 
shipper;  I  believe  that  is  preferable  to  any  pooling  system  for  the  de- 
velopment of  the  country  and  the  stability  of  rates. 

Senator  Plair.  Then  I  suppose  that  we  might  assume  that  it  is  your 
opinion  as  representing  the  greatest  railroad  in  the  world,  probably, 
that  the  pooling  system  is  on  the  whole  a  bad  system,  and  that  there  is 
a  better  one  ? 


220  TRANSPORTATION    INTERESTS    OP 

Mr.  Roberts.  I  believe  under  well  regulated  laws  tbat  the  trans- 
portatioT)  interests  could  be  jjoverned  better. 

Senator  Blair.  I  would  like  to  ask  you  a  question  in  regard  to  the  rela- 
tion between  local  traffic  and  the  through  traffic.  Which  is  of  the  greater 
consequence  to  the  leading  railroads  of  the  country,  their  local  traffic  or 
their  through  traffic? 

Mr.  Roberts.  The  local  traffic  is  of  greater  consequence  to  the  rail- 
roads. It  is  greater  in  volume  ;  but  I  am  not  prepared  to  believe  that 
the  profits  on  the  local  traffic  are  as  great  as  the  profits  upon  the  through 
traffic. 

Senator  Blair.  Could  you  give  us  an  ide.a — of  course  not  very  accu- 
rately, but  still  an  idea — of  the  relative  importance  of  the  local  traffic  of 
your  road,  for  instance,  as  compared  with  the  through  traffic? 

Mr.  Egberts.  What  we  define  as  local  traffic  upon  our  system  of 
lines  is  about  90  per  cent,  of  the  entire  traffic  carried. 

Senator  Harris.  Do  you  mean  in  volume  t 

Mr.  RoRERTS.  In  tons. 

Senator  Blair.  And  how  as  to  net  income  to  the  treasury  of  the  road  f 

Mr.  Roberts.  I  do  not  think  we  keej)  our  accounts  in  that  way.  I 
do  not  remember. 

Senator  Blair.  Of  course  the  net  income  must  be  very  large  if  your 
local  traffic  is  nine-tenths  of  the  whole  traffic  in  volume.  Now,  you 
were  speaking  as  to  your  belief  that  if  tlie  railroad  vsystem  of  Canada 
and  that  of  tlie  United  States  were  placed  under  the  same  general  laws 
and  regulations,  our  railroads  could  c()mi)ete  successfully  with  those  of 
Canada,  and  you  spoke  as  though  we  might  then  be  obliged  to  rely 
upon  our  superior  capacity  in  doing  the  business  to  secure  the  traffic. 
That  being  so,  what  is  tJie  prospect  of  continuing  that  competition  ad- 
vantageously with  the  Canadian  railroads  if  we  go  on  and  develop  a 
local  traffic  for  those  Canadian  railroads  in  the  future,  of  which  they 
are  now  practically  destitute  !  Supjwse,  for  instance,  the  Canadian 
Pacific  Railroad  is  now  so  situated  that  you  regard  a  change  in  condi- 
tions and  the  equalizing  of  conditions  necessary  in  order  to  live  in  com- 
petition, and  by  introducing  those  conditions  we  proceed  to  give  them 
nine  times  as  much  local  traffic  as  they  now  have,  and  the  rates  are 
upon  an  equality  with  reference  to  their  local  system,  would  there  be 
any  i)rospect  that  we  could  then  continue  to  compete  with  those  roads? 

Mr.  Roberts.  Yes,  sir,  under  proper  regulations  and  laws,  without 
the  interference  of  governmental  assistance  such  as  the  Canadian  Pa- 
cific has  been  given  by  the  Canadian  Government. 

Senator  Blair.  But  take  the  existing  Canadian  roads.  They  have 
been  subsidized  to  such  an  extent  by  the  Canadian  (Government  that 
it  is  impossible  for  a  road  with  private  capital  to  compete  with  them, 
even  if  the  Canadian  roads  are  i)laced  under  the  same  restrictions  and 
regulations  as  the  American  roads. 

Mr.  Roberts.  Yes,  sir;  but  that  is  to  be  guarded  against. 

Senator  Blair.  How  can  that  be  guarded  against? 

Mr.  Roberts.  Well,  as  I  said  before,  I  think  that  it  is  a  matter  to 
be  approached  gradually ;  it  is  a  little  farther  ahead.  The  development 
of  the  local  business  and  the  prosperity  of  the  Canadian  roads  have  not 
become  so  great  as  yet  for  us  to  have  any  serious  feeling  as  to  the  ettect 
of  their  competition,  but  probably  it  would  (;ome  in  a  very  reasonable 
period  of  time.  I  take  it  that  the  increase  of  local  ])rosperity  upon  our 
own  lines  will  be  very  much  greater  than  upon  the  Cauadiaii  roa<is.  I 
do  not  believe  the  Canadian  roads  will  ever  catch  up  to  us.    Therefore, 


THE  UNITED  STATES  AND  CANADA.  221 

if  you  will  remember,  I  said  1  did  uot  tbiuk  it  would  be  wise  to  take 
radical  steps  as  yet. 

Senator  Blair.  Now,  upon  auotber  poiut,  Mr.  Roberts.  Allusion  is 
made  to  the  traffic  in  given  States  as  exempt  from  the  operation  of  the 
interstate  commerce  law.  Are  you  able  to  regulate  the  tarifis  of  fares 
and  freights  withiu  the  State  of  Pennsylvania  without  relation  to  tar- 
itFs  of  fares  and  freights  within  amd  without,  or  in  other  words,  without 
relation  to  the  interstate  charges  of  transportation  ? 

Mr.  Roberts.  No,  sir ;  we  are  peculiarly  affected.  In  the  State  of 
Pennsylvania  a  law  of  the  Commonwealth  enacted  the  long  and  short 
haul  clause,  in  our  case,  as  it  is  popularly  known. 

The  Chairman.  That  was  a  good  while  ago. 

Mr.  Roberts.  Yes,  sir. 

The  Chairman.  Suppose  that  not  to  have  been  the  case — and  I  sup- 
pose it  is  not  the  case  in  New  York,  unless  it  is  the  law  here  limiting 
the  maximum  of  charge  to  passengers,  and  that  it  is  similar  to  the  con- 
dition in  the  country,  generally  speaking,  with  respect  to  traffic  within 
the  States — are  not  the  interdependencies  of  the  traffic  such  in  the 
country,  as  a  whole,  that  the  charges  upon  interstate  traffic  involve  the 
charges  upon  State  traffic? 

Mr.  Roberts.  Yes,  sir  ;  the  national  law,  through  its  ramitications,  so 
affects  the  various  properties  that  the  independence  of  any  particular 
piece  of  property  lying  wholly  within  a  Commonwealth  is  almost  de- 
stroyed. It  has  little  opportunity  of  asserting  its  absolute  independence, 
and  if  it  does  so  it  is  generally  met  by  the  interstate  law,  saying  "  you 
are  independent  of  us  in  that  matter  but  not  upon  this,"  and  conse- 
quently the  national  law  brings  the  Pennsylvania  system  under  its  con- 
trol. 

The  Chairman.  And  generally  the  railroad  systems  of  the  country 
come  under  the  operation  of  this  law. 

Mr.  Roberts.  Very  largely. 

The  Chairman.  I  would  like  you  to  furnish  the  committee  hereafter 
with  a  statement  of  the  rates  of  freight  over  your  road  between  Chicago 
and  New  York  for  the  last  ten  years. 

Mr.  Roberts.  I  will  do  so.     The  statement  is  as  follows: 

Statement  of  rate  per  ion  per  mile  from  Chicago  to  New  York  over  the  Pennsi/lrania  Rail- 
road. 

Cents.    I  Cents. 


1879 6.73 

1880 8.94 

1881 6.79 

1882 7.56 

1883 8.98 


1884 7.90 

1885 6.28 

1886 8.90 

1887 8.00 

1888 6.57 


222 


TRANSPORTATION    INTERESTS    OF 


The  following  statement  shows  for  each  year  siuce  1865  the  uiimber 
of  tons  of  freight  moved  one  mile,  the  rate  i)er  ton  i)er  mile,  and  the 
amount  of  reduction  in  any  given  year,  con)puted  on  the  <liftereuce 
between  the  rate  m  that  year  and  that  which  was  charged  in  1865,  over 
the  Pennsylvania  Kaihoad  Division,  between  Philadelphia  and  Pitts- 
burgh: 


Years. 


1865. 

1866. 

1867. 

1868 

1869. 

1870. 

1871. 

1872. 

1873  . 

1874  . 

1875  . 
1876 
1877. 
1878 
1879 
1880. 
1881 
1882. 
1883. 
1881. 
1885. 
1886. 
1887 
1888. 


Totol  tons  one 
mile. 


Total  reduction  for  twenty-three  years. 


420, 

513, 

565, 

675, 

752, 

825, 

1,011, 

1,  100, 

1,  384, 

1,372, 

1.  479, 

1,029, 

1,494, 

1,  732, 

2.  i:«5, 
2,  2fl8, 
2,  655, 

2,  879. 
2.096, 

3,  082, 
3,318, 
3,  399, 

3,  957, 

4,  364, 


060,260 
102,181 
657,813 
775,560 
711,312 
979,  692 
892,  207 
144,  036 
831,970 
566,976 
414,466 
742,  021 
798,  198 
0O3,  131 
708,  887 
317,323 
438,  764 
RJ2,  701 
892,567 
499, 986 
im,  263 
769,  583 
601,512 
407, 278 


Average 

rate  per  ton 

per  mile. 


2.665 
2.282 
2.092 
1.906 
1.718 
1.549 
1 .  389 
1.416 
1.416 
1 .  255 
1.058 
0.892 
0.980 
0.918 
0.790 
0.880 
0.790 
0.817 
0.810 
0.740 
0.627 
0.605 
0.670 
0.634 


Ainouiit  of  reiliic- 
liou  t'acli  year, 
C  u  ni  p  u  t  e  d  on 
rate  of  1865. 


$1,9<'>5, 
3,  241, 
5.  129, 
7,  128, 
9,217, 
12.911, 
14,  8(U, 
17,296, 
19,  :<53, 
23.  774, 
28.  895, 
2.'i.  187, 
30.  2.'^.8. 
39.  9:'5, 
41.  (2t, 
49,  .■).'«, 
5,3,213. 
55,  322, 
59,  338, 
67,  630, 
6(5,  775, 
78.  951, 
88,  641, 


181.35 
219.27 
130.50 
176.  12 
933.  36 
744. 56 
899.01 
551.31 
194.36 
190.47 
326.  03 
349.  64 
094. 70 
088.91 
964.22 
487.  :W 
949.11 
6:«.  79 
124.73 
:U2. 44 
460.  79 
150.17 
112.82 


709,  609, 313.  00 


Decrease  of  over  76  per  cent,  in  rate  per  ton  per  mile^in  twenty -three  years. 

STATEMENT  OF  WILLIAM  C.  VAN  HORNE. 

Mr.  William  C  Van  Horne,  president  of  the  Canadian  Pacific  Rail- 
way Company,  appeared. 

The  CnAiRMAN.  You  are  the  president  at  this  time,  I  believe,  of  tlic 
Canadian  Pacific  Hailway  Company,  are  you  not? 

Mr.  Van  Horne.  Yes,  sir. 

The  Chairman.  AVhere  do  you  reside? 

Mr.  Van  Uorne.  In  Montreal. 

The  Chairman.  Have  you  become  a  citizen  of  that  Dominion  ? 

Mr.  Van  Horne.  Y^es;  but  becoming  a  citizen  of  Canada  is  a  very 
ditterent  thing  from  becoming  a  citizen  of  the  I'nited  States.  You  are 
not  required  there  to  forswear  your  allegiance  to  your  native  country. 
If  I  returned  to  the  United  States  1  would  owe,  of  course,  no  further 
allegiance  to  Canada. 


THE   CANADIAN  PACIFIC   LINES. 

The  Chairman.  Will  you  please  describe  to  the  committee  the  vari- 
ous lines  of  your  railroad,  the  termini  and  connections,  water  ami  rail  ? 

Mr.  Van  Horne.  The  main  line  extends  from  Quebec,  by  way  of 
Montreal,  Ottawa,  Winnipeg,  to  Vancouver  on  the  Pacific  coast,  a  dis- 
tance of  L',905  miles. 

The  Chairman.  That  is  what  you  call  the  main  line  t 


THE    UNITED    STATES    AND    CANADA.  223 

Mr.  Van  Horne.  Yes,  sir.  lu  addition  to  that  we  Lave  a  line  ex- 
tending from  Montreal,  by  way  of  Toronto,  to  St.  Thomas  and  London, 
in  Ontario,  which  line  is  being  at  present  extended  from  London  to  the 
Detroit  River  to  make  a  connection  there  with  the  Wabash  Railway. 
We  have  a  leased  line  from  Montreal  across  the  State  of  Maine  to  Mat- 
tawamkeag,  in  that  State.  Mattawamkeag  is  56  miles  from  the  eastern 
boundary  of  Maine.  That  line  is  practically  continued  to  a  connection 
with  the  railway  system  of  New  Brunswick,  and  by  a  trackage  arrange- 
ment we  are  a  joint  user  of  the  Maine  Central  Railway.  That  afibrds 
a  short  line  between  the  maritime  provinces  and  Montreal.  That  line 
is  not  yet  in  operalion,  but  will  be  in  two  or  three  weeks. 

The  Chairman.  Where  will  be  the  final  terminus  of  that  line  ! 

Mr.  Van  Horne.  It  is  practically  completed  now.  The  real  termi- 
nus of  the  railway  leased  by  the  company  is  Mattawamkeag.  We  go 
56  miles  farther  over  the  Maine  Central. 

The  Chairman.  Where  does  that  New  Brunswick  system  carry  you  f 

Mr.  Van  Horne.  That  carries  us  to  St.  John  and  Halifax. 

The  Chairman.  So  that  when  those  links  are  filled  in  you  will  have 
a  line  from  Puget  Sound  to  St.  John  or  Halifax. 

Mr.  Van  Horne,  Yes ;  it  is  practically  a  line  to  Halifax,  although 
we  have  to  depend  upon  other  lines  from  Maine  eastward.  We  have  a 
branch  line  from  Sudbury  Junction  to  Sault  Ste.  Marie,  connecting  with 
the  American  railway  system  at  that  point.  We  have  quite  a  number 
of  local  branch  lines  of  various  descriptions. 

The  Chairman.  Where  are  they  ? 

Mr.  Van  Horne.  Do  you  want  all  the  branches,  however  short ! 

The  Chairman.  Yes ;  if  they  are  branches  in  the  United  States. 

Mr.  Van  Horne.  No  ;  these  are  local  Canadian  lines.  The  only  line 
we  have  in  tlie  United  States  is  this  leased  line  that  I  speak  of,  running 
part  way  across  the  State  of  Maine. 

The  Chairman.  Making  a  part  of  your  main  line  ? 

Mr.  Van  Horne.  Yes,  sir. 

THE   "SOO"  lines. 

The  Chairman.  Have  you  or  not  a  branch  line  or  a  feeder  from  Min- 
neapolis to  the  Sault  Ste.  Marie  ? 

Mr.  Van  Horne.  No,  sir.  There  are  two  independent  railway  lines 
counecting  with  us  at  the  Sault  Ste.  Marie;  one  leading  to  Minneapolis 
and  the  other  to  St.  Paul,  in  which  some  of  the  friends  of  the  Canadian 
Pacific  Company  had  to  take  an  interest,  in  one  case  at  least,  to  help  to 
complete  the  railroad. 

The  Chairman.  Is  it  not  true  that  the  Canadian  Pacific  controls  that 
road  now  ! 

Mr.  Van  Horne.  Not  the  Canadian  Pacific  Railway  Company.  I 
presume  the  friends  of  the  Canadian  Pacific  Railway  Company  hold  a 
majority  of  the  common  stock. 

Senator  Reagan.  In  both  roads  ? 

Mr.  Van  Horne.  In  both  roads. 

The  Chairman.  Who  owns  the  bridge  there  at  the  Sault  ? 

Mr.  Van  Horne.  The  Sault  Ste.  Marie  Bridge  Company,  an  Ameri- 
can company,  nominally.  It  is  owned  one-half  by  the  Canadian  Pacific 
Railway  Company.  One-fourth  is  owned  by  the  Minneapolis,  St.  Paul 
and  Sault  Ste.  Marie  Railroad  Company,  and  one-fourth  by  the  Duluth^ 
South  Shore  and  Atlantic  Railway  Company. 

The  Chairman.  Who  owns  that  roadi 


224  TRANSPORTATION    INTERESTS    OF 

Mr.  Van  Horne.  It  is  tlie  old  Marquette,  Houghton  and  Ontonogan 
Eailroad  with  some  extensions  and  additions.  It  is  a  line  running  from 
the  Sault  Ste.  Marie  to  Duluth.  The  friends  of  the  Canadian  racitic 
hold  quite  a  large  interest  in  its  common  stock,  probably  a  little  more 
than  one  half. 

The  Chairman.  So  that  in  fact  the  Canadian  Pacific  controls  the 
bridge  through  its  control  of  other  roads,  and  controls  those  two  lines 
of  railroad. 

Mr.  Van  Horne.  The  Canadian  Pacific  does  not  control  the  two 
lines  of  railroad.     It  controls  or  owns  a  half  interest  in  the  bridge. 

The  Chairman.  You  say  this  other  road  is  i)ractically  controlled  by 
th<j  Canadian  Pacific,  and  they  own  a  one-fourth  interest  in  the  bridge  ? 

Mr.  Van  Horne.  It  is  controlled  by  parties  interested  in  the  Cana- 
dian Pacific.  In  one  case  they  were  assisted  temporarily  by  the  Cana- 
dian Pacific. 

The  Chairman.  Is  it  not  now,  for  all  practical  purposes,  substantially 
under  the  control  of  the  Canadian  Pacific  Railroad  ? 

Mr.  Van  Horne.  It  is  not. 

The  Chairman.  Well,  what  are  your  relations  to  it  T 

Mr.  Van  Horne.  They  are  friendly  connections.  Their  interests  are 
directly  with  us.  As  far  as  the  South  Shore  line  is  concerned  there  is 
another  connection.  It  connects  with  the  Michigan  Central  and  with 
the  Pennsylvania  system,  and  it  works  freely  with  any  connections.  I 
may  make  the  situation  a  little  clearer  by  explaining  that  tiie  action  of 
the  friends  of  the  Canadian  Pacific  in  respect  of  these  two  lines  was 
first  brought  about  by  the  necessity  of  having  to  assist  the  Minneai)olis 
])eople  in  completing  their  line.  They  ran  out  of  money.  The  Canadian 
Pacific  had  built  a  line  nearly  L*0(>  miles  in  length  for  the  purpose  of 
making  tiiis  connection,  and  it  would  ha\  (^  hecn  a  \  i-iy  serious  matter  tor 
us  to  have  the  work  on  this  Minneapolis  line  stopp«Ml  for  want  of  money. 
Therefore  someof  the  friends  of  the  ('anadiau  Pacific  Company  came  to 
their  assistance,  and  in  the  case  of  the  Duluth,  South  Shore  and  Atlan- 
tic Company  they  were  actuated  partly  by  the  desire  to  i)rotect  the 
money  they  had  put  in  the  Minneapolis  line  and  partly  by  a  desire  to 
head  olf  the  Grand  Trunk  road,  and  prevent  it  from  building  to  Sault 
Ste.  Marie. 

The  Chairman.  Then,  the  relation  of  the  Canadian  Pacific  to  those 
two  railroads  is  ilifterent  from  its  relation  toother  roads  in  which  it  has 
no  capital  invested,  is  it  not  ? 

Mr.  Van  Horne.  1  do  not  know  to  what  extent  we  could  control  it. 
I  have  no  doubt  that  in  matters  affecting  the  interest  of  the  Canadian 
Pacific  the  friends  of  that  company  who  have  an  interest  in  these  other 
companies  would  naturally  work  with  the  Canadian  Pacific.  We  have 
never  had  any  occasion  to  use  any  control  or  to  attempt  to  exercise  any 
control. 

The  Chairman.  So  that  they  are  entirely  free  and  independent  cor- 
I)orations  I 

Mr.  Van  Horne.  Yes,  sir;  except  when  they  are  hard  up  and  want 
some  of  our  people  to  lend  them  some  money. 

The  Chairman.  Who  are  tiie  directors  of  these  two  roads,  if  you  can 
name  them  ? 

Mr.  Van  Horne.  I  can  not  name  them.  In  a  general  way  I  think  I 
might  name  them.  I  do  not  think  any  of  them  are  in  the  Canadian 
Pacific.  In  the  case  of  the  Duluth,  South  Shore  and  Atlantic  I  think 
Sir  Donald  Smith,  Sir  George  Stephen,  and  myself  are  on  the  board, 
and  likewise  on  the  Canadian  Pacific  board. 


THE  UNITED  STATES  AND  CANADA.  225 

The  Chairman.  And  ou  each  of  the  other  boards  ? 

Mr.  Van  Uorne.  No;  this  is  ou  the  Duluth,  South  Shore  and  At- 
hiutic.  I  do  not  think  any  of  our  people  are  on  the  board  of  the  Min- 
neapolis, St.  Paul  and  Sault  Ste.  Marie. 

The  Chairman.  Are  any  of  your  stockholders? 

Mr.  Van  Horne.  1  do  not  think  any  of  our  stockholders  are  on  the 
board  of  the  Minneai)olis,  St.  Paul  and  Sault  Ste.  Marie. 

The  Chairman.  Who  is  the  president  of  the  Minneapolis,  St.  Paul 
and  Sault  Ste.  Marie  f 

Mr.  Van  IIorne.  General  Washburn. 

The  Chairman.  And  who  is  president  of  the  other  road  ? 

Mr.  Van  Horne.  Mr.  McMillan.  They  are  both  United  States  Sena- 
tors, I  believe. 

The  Chairman.  So  you  say  you  do  not  undertake  to  control  them 
nor  they  you. 

Mr.  Van  Horne.  No,  sir;  we  have  never  had  any  case  of  that  kind. 
No  cases  have  ever  come  up,  so  far,  where  our  interests  have  conflicted. 

THE   TRAFFIC   OF   THE   CANADIAN  PACIFIC. 

The  Chairman.  1  will  ask  you  to  describe  your  traffic  in  general 
terms — Canadian,  United  States,  and  foreign. 

Mr.  Van  Horne.  The  chief  traffic  of  the  Canadian  Pacific  Eailway 
is  the  local  Canadian  traffic,  strictly  Canadian  traffic,  probably  amount- 
ing to  00  per  cent,  of  the  whole. 

Senator  Harris.  In  tonnage  or  revenue ! 

Mr.  Van  Horne.  Both. 

The  Chairman.  The  chief  traffic,  j'ou  say,  is  the  local  traffic  in  your 
country  ! 

Mr.  Van  Horne.  Yes;  1  include  in  that  such  traffic  as  cotton  goods 
from  Canadian  points  to  China — freight  originating  in  Canada  and  car- 
ried over  the  Canailian  Pacific,  not  in  any  w^ay  relating  to  the  United 
States.  We  have  very  little  State  to  State  business  passing  by  way  of 
the  Detroit  frontier  or  crossing  the  Detroit  or  St.  Clair  Kivers.  We 
have  some  States'  traffic  connected  with  the  two  lines  west  of  the  Sault 
Ste.  Marie.     It  is  not  a  paying  traffic,  and  we  have  not  sought  it. 

The  Chairman.  Where  does  it  go  when  you  carry  it? 

Mr.  Van  Horne.  We  carry  it  by  way  of  Montreal  to  Newport,  Vt., 
ai^d  there  we  hand  it  over  to  the  Boston  and  Lowell.  I  will  say,  in 
connection  with  the  Canadian  lines,  that  the  company  has  a  controlling 
iutiuence  in  the  line  extending  from  the  St.  Lawrence  lliver  to  Newport, 
in  Vermont.  That  railway  runs  a  short  distance  into  Vermont  and  out 
again  into  Canada  and  then  back  again  into  Vermont.  Its  construc- 
tion was  forced  that  way  by  the  topography  of  the  country.  This  new 
England  business  that  is  got  from  Minneapolis  and  St.  Paul  and  that 
district  partly  goes  by  way  of  Newport  to  Boston  over  the  Boston  and 
Lowell  Kailway,  and  is  i)artly  delivered  to  the  Canada  Atlantic  Kail- 
way,  in  Canada,  and  St.  Polycarp,  and  reaches  New  England  points  by 
way  of  the  Central  Vermont. 

Senator  Blair.  That  is  Minneapolis  business ! 

Mr.  Van  Horne.  Yes  ;  Minneapolis  business.  We  practically  do  no 
business  to  Duluth. 

Senator  Blair.  By  what  lines  does  it  proceed  from  Newport,  Vt., 
to  Boston  ? 

Mr.  Van  Horne.  By  the  Boston  and  Lowell.     Some  business  goes 

by  way  of  the  White  Mountain  notch,  over  the  Portland  and  Ogdens- 

burg  Bailroad.     Some  of  that  business  goes  by  the  line  I  s]>oke  of  in 

the  State  of  Maine.    For  instance,  the  Bangor  business  goes  that  way. 

6543 15. 


226  TKANSPORTATION   INTERESTS    OF 

We  have  a  little  State  to  State  traffic  over  some  of  the  eastern  districts 
and  some  from  the  Mississippi  Valley  and  some  from  Seattle,  aud  a 
very  small  amount  to  aud  from  San  Francisco.  That  amounts  to  but 
little.     We  do  not  seek  the  business. 

Tlie  Chairman.  Is  that  done  by  steamer  ? 

Mr.  Van  iIorne.  That  goes  by  steamer.  We  have  no  rail  connec- 
tion on  the  Pacific  coast. 

The  Chairman.  That  goes  under  an  arrangement  for  bonding. 

Mr.  Van  Horne.  It  is  bonded.  The  steam-ship  line  running  from 
Vancouver  to  San  Francisco  is  an  American  line. 

The  Chairman.  What  proi)ortion  of  your  tratlic  is  taken  from  the 
United  States,  at  any  place  ? 

Mr.  Van  Horne.  And  destined  to  United  States  points  again  ?  Do 
you  mean  State  to  State  traffic? 

The  Chairman.  How  much  tonnage  do  you  get  that  originate  in  tiie 
United  States! 

Mr.  Van  Horne.,  Excluding  coal  it  is  very  small.  1  intended  to 
have  had  the  figures  for  that,  showing  the  exact  business,  but  our  ac- 
counts, I  find,  are  not  kei)t  with  a  view  to  showing  it.  It  is,  however,  a 
very  inconsiderable  proi)ortion. 

The  Chairman.  Can  you  furnish  tliat? 

Mr.  Van  Horne.  Yes,  sir. 

The  Chairman.  At  the  same  time  can  you  furnish  the  amount  of  traf- 
fic that  you  bring  into  the  United  States,  showing  where  it  comes  from  ? 

Mr.  Van  Horne.  Yes,  sir;  that  is  mainly  lumber.  The  statement  is 
as  follows : 

FREIGHT  statistics,  1«88. 

rounds. 

European  freight  via  Uuited  States  to  Canadian  points 14,740,:520 

United  States  freight  to  Canadian  points :{.V.t. i:«,'J'.tO 

Canadian  freight  to  Europe  via  United  States 17,7l4,f^t>0 

Canadian  freight  to  Uuited  States 5b:i,U;56,l3IH 

competition   with   AMERICAN   LINES. 

The  Chairman.  For  what  traffic  do  you  compete  with  the  American 
lines? 

Mr.  Van  Horne.  We  compete  with  the  American  lines  for  all  this 
traffic  I  have  described,  and  we  also  compete  with  them  for  our  own 
Canadian  traffic,  that  is,  traffic  passing  from  Ontario  to  Manitoba,  or 
possibly  it  might  be  more  accurate  to  say  that  they  compete  with  us 
there.    They  keep  our  rates  very  low. 

senator  Platt.  You  think  they  do  not  get  much  of  it,  do  you  ? 

Mr.  Van  HoiiNE.  They  keep  oiir  rates  pretty  well  down. 

The  Chairman.  Do  you  have  any  part  with  American  roa<Is  in  deal- 
ing in  dijtterentials  f 

Mr.  Van  IIorne.  I  think  there  is  some  dealing  in  differentials  with 
regard  to  the  passenger  traffic  on  tl^e  Pacific  coast. 

The  Chairman,  Do  you  on  Oregon  traffic,  for  instance  f 

Mr.  Van  Horne.  I  think  at  Portland,  Oregon,  but  not  Puget  Sound 
points. 

The  Chairman.  Do  you  get  the  benefit  of  it  ? 

Mr.  Van  Horne.  Yes,  sir. 

The  Chairman.  What  is  it,  if  you  know  ? 

Mr.  Van  Horne.  I  do  not  remember  what  it  is. 

The  Chairman.  You  have  a  differential  also  on  your  San  Francisco 
traffic,  have  you  not  ? 

Mr.  Van  Horne.  Yes ;  I  do  not  know  whether  that  applies  to  freight 
or  not,  but  it  does  not  count  for  much  anyway,  because  we  do  not  do 
much  freight  business  there. 


THE    UNITED    STATES    AND    CANADA.  227 

The  Chairman.  Does  it  apply  to  passengers  I 

Mr.  Van  Horne.  I  tliiuk  it  applies  to  passengers,  and  probably  to 
freight. 

The  Chairman.  Yon  do  not  know  what  that  is  ? 

Mr.  Van  Horne.  I  think  it  is  the  same  ditferential  as  to  Portland.  I 
am  under  the  impression  that  it  is  $10  for  hrstclass  passengers  and  $5 
for  second  class. 

The  Chairman.  Why  is  it  so  large  ? 

Mr.  Van  Horne.  For  that  distance  it  is  not  a  large  differential.  It 
is  not  as  much  relatively  as  the  differentials  existing  between  the  Amer- 
ican lines. 

The  Chairman.  To  where  is  the  freight  that  you  get  at  San  Fran- 
cisco and  Portland  destined  1 

Mr.  Van  Horne.  It  is  mostly  for  Boston. 

The  Chairman.  What  is  the  character  of  it  ? 

Mr.  Van  Horne.  Wool  and  hides.  We  carried  a  little  sugar  at  one 
time  for  Mississippi  Valley  points,  but  that  was  carried  for  some  spe- 
cial reason.  I  do  not  now  remember  what  it  was.  It  was,  however, 
only  a  small  amount,  and  carried  for  a  short  time. 

HISTORY  of   the   CANADIAN   PACIFIC. 

The  Chairman.  Will  you  please  to  inform  the  committee  as  to  the 
origin  of  your  company,  the  purposes  for  which  it  was  projected,  and 
briefly  the  leading  facts  of  a  historic  nature  touching  the  transfer  of  the 
work  from  the  hands  of  the  Government  to  the  corporation  over  which 
you  preside  ? 

Mr.  Van  Horne.  The  building  of  the  Canadian  Pacific  Railway  was 
first  undertaken  by  the  Dominion  Government  for  the  purpose  of  car- 
rying out  an  agreement  with  the  Province  of  British  Columbia,  one  of 
the  terms  under  which  British  Columbia  came  into  the  confederation 
being  that  this  road  should  be  constructed.  The  work  went  on  very 
slowly,  and,  as  government  railway  work  usually  is,  it  was  very  expen- 
sive. The  country  became  tired  of  it.  A  very  large  amount  of  money 
bad  been  expended  and  very  little  had  been  accomplished.  After  a 
good  many  years  only  a  few  miles  of  line  were  comi)leted  and  they  were 
only  at  work  on  that  section  between  Lake  Superior  and  Red  River, 
and  a  section  in  British  Columbia,  some  200  miles  east  from  the  Pacific 
coast.  Public  sentiment  eventually  demanded  that  the  work  shonld 
be  turned  over  to  a  private  company,  and  after  several  unsuccessful 
attempts  to  find  a  party  able  and  willing  to  undertake  it,  an  arrange- 
ment was  made  with  the  present  Canadian  Pacific  Railway  Company, 
under  which  the  Government  agreed  to  surrender  the  work  it  had  in 
hand,  to  complete  the  sections  then  under  construction,  but  without 
rolling  stock  or  equipment,  to  complete  both  of  these  pieces  of  work 
through  a  country  not  furnishing  any  local  traffic.  Of  the  main  line 
there  were  six  hundred  and  some  odd  miles  built  and  a  branch  to  con- 
nect with  the  Minnesota  lines  at  Emerson. 

Senator  Gorman.  What  was  the  total  mileage  ? 

Mr.  Van  Horne.  I  think  the  total  mileage  surrendered  by  the  Goa^- 
ernment  was  710  miles. 

Senator  Harris.  Of  completed  railroad  ? 

Mr.  Van  Horne.  Yes,  sir;  that  is,  completed  road  without  equip- 
ment. The  company  undertook  to  complete  the  rest  of  the  line  from 
Lake  ]Sipissing  to  the  Pacific  Ocean  for  a  subsidy  of  $25,000,000  in 
money  and  twenty  five  million  acres  of  land. 


228  TRANSPORTATION    INTERESTS    OF 

Senator  Blair.  Where  is  Lake  Niplssiiig  ? 

Mr.  Van  Horne.  It  is  northeast  of  Georgian  Bay. 

For  clearness  1  may  say  that  the  subsidies  given  to  the  Canadian  Pa- 
cific Railway,  and  these  are  the  only  subsidies,  I  believe,  gnveu  directly 
to  that  company,  were  for  the  purpose  of  building  tbis  line  west  of  Lake 
Nipissing— from  Lake  Nipissing  to  the  Pacific  Ocean.  The  company 
was  organized  in  February,  1881,  and  laid  the  last  rad  on  its  main  line 
in  November,  1885,  and  opened  for  through  passenger  trafiic  in  July, 
188G,  and  for  through  freight  traffic  in  August,  1880.  During  the  con- 
struction of  the  line  the  company  borrowed  $35,00(),0()0  Ironi  the  Do- 
minion Government,  but  about  the  time  of  tbe  completion  of  its  work 
it  paid  back  $25,000,000  in  cash,  and  the  Government  agreed  to  accept 
six  and  three-quarters  or  seven  millions  of  acres  of  land  in  lieu  of  the 
other  ten  millions.  So  that  practically  the  subsidies  from  the  Cana- 
dian Government  were  $35,000,000  in  cash  and  eighteen  millions  acres 
of  land. 

SUBSIDIES  TO  THE  CANADIAN  PACIFIC. 

The  Chairman.  I  will  hand  you  a  statement  which  I  tliink  is  prob- 
ably verified  by  your  reports,  or  by  the  action  of  your  I'arliament,  and 
would  be  glad  if  you  would  take  up  those  items  as  you  find  them  on 
that  paper  and  see  whether  or  not  they  are  substantially  correct. 
[Handing  paper  to  Mr.  Van  ilorne.J 

Mr.  Van  Horne.  This  subsidy  of  $25,000,000  is  correct. 

Seven  hundred  and  fourteen  miles  of  railroad  conBtructed  l>y  the  Dominion  Govern- 
ment, costing  |:3ri,00U,000. 

That  is  the  line  from  the  IJed  Kiver  to  Lake  Superior  and  Kandoo])S 
Lake  to  Port  Moody.  That  railway  is  i»ut  down  here  as  valued  at 
$35,000,000.  This  siim  of  $35,000,000  represents  the  total  expenditure 
of  the  Dominion  Government  on  the  Canadian  ]*acific  Railway.  '1  liere 
are  several  millions  of  dollars  included  in  that  for  surveys.  The  714 
miles  of  railway  should  not  be  figured  as  worth  anything  at  all  as  a 
piece  of  property.  It  could  not  earn  anythincf.  ()ne  section  was  in 
the  Fraser  Canon,  in  British  Columbia,  and  the  other  section  was  in 
the  rocky,  broken  country  between  Lake  Superior  and  Winnipeg. 

Senator  Blair.  But  they  are  part  of  your  main  line  nowf 

Mr.  Van  Horne.  Yes,  and  as  such  tliey  are  valuable. 

Senator  Blair.  It  was  stated  here  yesterday  that  portions  of  the 
Canadian  Pacific  Railway  cost  as  much  as  a  hundred  thousand  dollars  a 
mile. 

Mr.  Van  Horne.  One  mile  cost  $700,000.  Several  miles  cost  $500,000 
each.  The  line  around  the  shore  of  Lake  Sui)erior  was  built  by  t  he  com- 
])any,  and  this  line  built  by  the  government  was  from  Lake  Superior  to 
Winnipeg  and  from  Kamloops  Lake  to  Port  Moody,  liritish  Columbia. 

The  Chairman.  What  do  you  say  with  respect  to  that  sum  of 
$35,000,000  as  stated  in  the  paper  f 

Mr.  Van  Horne.  I  do  not  know  what  those  thirty  five  millions  repre- 
sent. It  is  charged  in  the  government  account  to  the  construction  of 
the  Canadian  Pacific  Railway.  It  is  the  total  amount  the  government 
had  expended. 

The  Chairman.  It  is  an  aid  substantially  by  the  government  as 
stated  there,  is  it  not?  The  value  of  it,  according  to  your  rejxirts,  or 
the  ])ublic  accounts  of  Canada  for  1887,  amounted  to  8(11, 700,785. 40. 

Mr.  Van  Horne.  That  is  an  item  that  appears  as  a  note  in  the  bal- 


THE    UNITED    STATES    AND    CANADA.  229 

ivuce  sheet  of  this  company,  not  in  the  footing  at  all.  It  is  just  a  note. 
It  only  refers  to  the  land  grant  and  this  piece  of  property  that  cost  the 
government  $ii5,000,000.  It  is  simply  put  in  as  a  memorandum,  and  it 
is  not  in  the  account. 

The  Chairman.  This  document  that  I  have  in  my  hand  is  the  Cana- 
dian Public  Accounts  for  the  fiscal  year  ending  June 30, 1887.  On  page 
14  I  see  it  stated  that  714  miles  of  railroad  were  constructed  by  the 
Dominion  Government,  costing  $35,000,000,  and  presented  to  the  Cana- 
dian Pacific  Company  as  a  gift. 

Mr.  Van  IIorne.  That  is  adding  the  cash  subsidy  to  the  total  amount 
the  government  expended  on  what  they  call  the  Canadian  Pacific  liail- 
way.  A  large  amount  of  that  money  was  not  spent  on  that  line  at  all. 
They  spent  several  millions  on  surveys. 

The  Chairman.  But  this  expenditure  for  surveys  resulted  in  the  lo- 
cation of  the  line. 

Mr.  Van  Horne.  The  government  line  was  abandoned.  We  did  not 
follow  their  surveys  after  taking  the  work  in  hand. 

The  Chairman.  What  do  you  say  about  the  next  item  ? 
■    Mr.  Van  Horne.  As  far  as  this  $35,000,000  is  concerned,  I  say  that 
as  a  piece  of  railroad  property  by  itself  it  was  worth  absolutely  nothing. 

The  Chairman.  I  am  Inquiring  whether  the  government  did  not  ex- 
pend this  money  on  it? 

Senator  Gorman.  As  a  i)art  of  your  main  line,  what  is  it  worth  ? 

Senater  Blair.  What  would  it  cost  to  reproduce  it  ? 

Mr.  Van  Horne.  Well,  we  would  not  have  built  it  where  it  is.  We 
could  have  got  through  by  another  line  at  an  expenditure  of  about,  I 
presume,  twelve  millions  of  dollars,  or  perhaps  fifteen  millions. 

Senator  Blair.  Twelve  millions  of  dollars  to  build  seven  hundred 
miles  of  railroad  ? 

Mr.  Van  Horne.  Yes. 

Tbe  Chairman.  As  it  is,  does  it  form  a  part  of  the  main  line? 

Mr.  Van  Horne.  Yes;  a  part  of  the  main  line. 

Senator  Blair.  Is  it  not  a  better  location  for  it  as  a  part  of  your  line 
than  you  could  construct  for  twelve  millions  of  dollars  elsewhere! 

Mr.  Van  Horne.  It  is  very  much  worse.  It  passes  through  the  Era- 
ser Gallon,  one  of  the  worst  places  in  the  world. 

Tbe  Chairman.  Take  the  item  concerning  the  capital  stock  ;  is  that 
correct  ? 

Senator  Gorman.  Mr.  Van  Horne  had  better  read  the  entire  state- 
ment first  and  then  take  it  up  item  by  item. 

The  Chairman.  All  right. 

Mr.  Van  Horne.  I  will  do  so. 

Revised  estimate  of  fjifis  from  the  Dominion  Government  to  the  Canadian  Pacific  Railwat/ 
Companji,  and  securities  which  tliat  company  has  been  enahted  to  float  (stock  and  bonds) 
as  the  result  of  the  Dominion  (jnarantee  and  the  land  grant  o/ 25,000,000  acres  of  land. 

(1)  Cash  snljsidies  as  follows  : 

(a)  Subsidy  of  $25,000,000  mentioned  in  section  3  of  act  of  Febru- 

ary i:3,  1881. 

(b)  714  miles  of  railroad  constructed  by  tbe  Dominion  Government, 

costing  $35,000,000,  which  was  presented  to  tbe  Canadian 
Pacific  Company  as  a  gift,  with  interest,  to  Juno  30,  1887 
(see  Public  Accounts  of  Canada  for  1867) $61,760,785 

(2)  Capital  stock  originally  $100,000,000,  but  reduced  to  $65,000,000,  with 

a  minimum  dividend  of  3  per  cent,  guaranteed  for  ten  years 

(see  Poor's  Manual ) '. 65,  000, 000 


230  TRANSPORTATION    INTERESTS    0¥* 

(3)  Daring  tlie  session  of  Parliament  of  1884  the  Dominion  Government 

authorized  a  loan  to  the  company  of  $-29,880,012,  to  be  paid 
as  the  work  of  construction  progressed,  and  for  the  i)urpose 
of  expediting  construction.  Of  this  nmount  ^yji^HU.Ql'i  is 
secured  by  lien  on  the  entire  road  and  laud  grant,  subject  to 
the  then  outstanding  land-grant  bonds;  also  Government 
bonds  to  the  amount  of  $iU,000,OU(i,  which  was  exchanged 
for  a  like  amount  of  the  company's  loan  of  $35,0(»0,(i00,  which 
had  been  issued  in  the  place  of  the  !Si35,000,0U0  of  original 
stock  which  had  been  retired  (see  sec.  4,  Act  20th  July, 
1885) $29,880  912 

(4)  Balance  of  $35,000,000  loan  afrerdedncting  ?20,000,0(I0  placed  in  the 

hands  of  the  Government  in  order  to  secure  tlic  |20,000,000 

bonds  above  nu'utioned 15,  000,  000 

(5)  Land  grant  bonds  issued  by  the  company  as  a  lien  upon  the  lands 

which  it  acquired  by  gift  of  the  Douiinion 25, 000, 000 

(0)  Bonds,  interest  guar'antced  by  the  Dominion  for  lifty  years  at  '.^  per 
cent,  issued  to  the  c(>n)))any  for  the  )iurpo.se  <>t  remunerating 
it  for  the  lossof  its  relinquishment  of  thenmnopolv  of  railroad 

l)uilding  in  Manitoba ' If,  000,  000 

(7)  Subsidy  of  ijil8(),000,  a  vear  for  twentv  vears  for  a  line  through  tin- 

State  of  Mainb 3,720,000 

Total 215,301,097 

The  Chairman.  Take  the  item  concerning  cajiital  stock. 

Capital  stock  originally  |;100,000,000,  but  reduced  to  >;u5,000,000,  with  a  minimum 
dividend  of  3  per  cent,  guaranteed  for  ten  years  (see  Poor's  Manual),  fG5,000,0(Hi. 

Is  that  correct  ? 

Mr.  Van  UoRNE.  The  word  "  inininmin"  i.s  not  correct.  It  \vasartxe«l 
dividend  of  3  per  cent.  I  notice  that  the  hcadinj,'  of  the  pajjcr  liandcd 
to  uie  makes  this  gnaranteeddi\  idcnd  apprar  as  a  subsiily.  It  was  not 
so  in  any  sense.  The  money  for  the  divi(U'n<l  was  deposited  by  the 
company  with  the  Dominion  (lovernmcnt  in  advance. 

The  Chairman.  Yon  say  the  word  minimnnj  is  not  correct? 

Mr.  Van  Horne.  Yes,  sir;  it  is  not  correct. 

The  Chairman.  Now  the  next  item. 

During  the  session  of  Parliament  of  1884,  tlic  Dominion  ({overnment  authorized  a 
loan  to  the  company  of  ipiit.SMO/.tPi.  to  be  paid  as  tlic  work  of  construction  progressed, 
and  for  the  purpo.se  of  expediting  constnut ion.  Of  this  aiuount  ^9,8^0,912  is  se- 
cured by  lien  on  the  entire  road  and  land-grant,  suliject  to  the  then  outstanding  land- 
grant  bonds;  also  Government  tionds  to  the  amount  of  $2(i.(MiO,(iU(i,  which  was 
exchanged  for  a  like  amount  of  the  company's  loan  of  §35,00(1,000  which  had  been 
issued  in  the  place  of  the  $3.5,000.000  of  original  stock  which  hail  be.-n  retired  (.see 
section  4,  act  20t.h  July,  1885),  -|29,8d0,9]2. 

Is  that  correct? 

Mr.  Van  Hokne.  That  is  a  very  badlv-mixed  item. 

The  Chairman.  1  think  it  is  a  "little  mixed  myself. 

Mr.  Van  Horne.  The  company  borrowed  $21),880,912  from  the  Do- 
minion Government. 

The  Chairman.  On  what  terms? 

Mr.  Van  Horne.  At  4  per  cent ,  secured  by  everythinp:  they  had  in 
the  world— their  railway  rolling-stock,  and  everything  connected  with 
the  railway,  their  land-grants  and  all. 

The  Chairman.  That  was  borrowed  from  the  Govern  men  tf 

Mr.  Van  Horne.  Yes,  sir.  Subsequently — I  suppose  you  do  not  care 
about  going  through  all  the  details  of  the' transaction  so  that  vou  gt't 
substantial  results 

The  Chairman.  I  tind  this  item  in  section  4  of  the  act  of  July  20, 

i8srj ^     ' 

Mr.  Van  Horne.  The  company  borrowed  $20,880,912.    Subsequeutly 


THE  UNITED  STATES  AND  CANADA.  231 

they  borrowed  $5,000,000  more,  making,  prncticHlly,  $35,000,000.  At 
the  time  they  borrowed  the  last  $5,000,000  they  obtained  power  to 
mortgage  their  property,  reducing  their  capital  stock  from  $100,000,000 
to  $65,000,000,  issuing  in  lieu  of  the  $35,000,000  in  stock  $35,000,000  in 
bonds.  From  the  sale  of  these  bonds  they  paid  the  Government  $25,- 
000,000  in  cash,  and  the  Government  agreed  to  take  over  about  7,000,- 
000  acres  of  land  for  the  remainder  of  the  obligation  at  $10,000,000. 
In  other  words,  to  reduce  their  land-grant  that  much.  That  is  the  long 
and  short  of  that  transaction. 

The  Chairman.  As  an  original  transaction  that  money  was  advanced 
for  the  construction  of  that  road,  was  it  not"? 

Mr.  Van  Horne.  Yes,  sir;  borrowed  from  the  Government  for  that 
purpose. 

The  Chairman.  Loaned  by  the  Government  to  the  road  to  aid  in  its 
construction  f 

Mr.  Van  Horne.  The  company  was  unable  to  sell  all  of  its  stock  as 
it  expected  to  do,  and  found  itself  in  financial  difficulties.  It  could  not 
borrow  any  money  at  the  time.  Mr.  Villard  collapsed  just  at  that  time 
and  i)revented  it  from  securing  the  money  for  carrying  on  its  work,  and 
it  was  obliged  to  turn  to  the  Government,  and  the  Government,  rather 
than  have  the  work  stopped,  loaned  the  money. 

The  Chairman.  What  became  of  the  $5,000,000! 

Mr.  Van  Horne.  That  covers  all  of  it. 

The  Chairman.  Part  of  it  was  taken  back,  was  it  not  ? 

Mr.  Van  Horne.  The  company  paid  back  $25,000,000  in  cash  and 
$10,000,000  in  land.  In  other  words,  the  Government  reduced  the  com- 
pany's laud  grant  7,000,000  acres,  and  released  the  company  from  the 
repayment  of  the  $10,000,000  in  cash. 

Th'  Chairman.  The  balance  of  the  $35,000,^00  loan,  after  deducting 
$20,000,000  placed  in  the  hands  of  the  Government  in  order  to  secure 
the  $20,000,000  of  bonds  which  you  have  mentioned — what  about  that 
item  ? 

Mr.  Van  Horne.  That  is  simply  an  intermediate  transaction.  After 
the  company  received  the  power  to  issue  $35,000,000  in  bonds — at  the 
time  they  got  that  power — the  Government  agreed  to  permit  them  to 
put  out  $15,000,000  of  those  bonds  on  an  equal  footing  with  the  com- 
pany's obligation  to  the  Government,  the  Government  taking  the  other 
$20,000,000  as  security  for  its  loan.  The  company  paid  ofl  $15,000,000, 
and  the  Government  took  $20,000,000  in  bonds  and  held  them  as  secur- 
ity for  its  loan.  The  company  simply  saved  1  percent,  interest  for  that 
time. 

The  Chairman.  Take  the  next  item,  Mr.  Van  Horne: 

Land-grant  bonds  issued  by  the  company  as  alien  upon  the  lands  which  it  acquired 
by  gift  of  the  Dominion,  |25,000,000. 

How  about  that  I 

Mr.  Van  Horne.  That  item  is  correct.  Those  bonds  are  practically 
all  paid  oft"  and  canceled  except  about  $4,000,000,  but  these  were  the 
company's  bonds  and  in  no  sense  a  subsidy. 

The  Chairman.  Paid  off  and  canceled  ? 

Mr.  Van  Horne.  Yes,  sir ;  all  that  were  ever  issued.  They  were  not 
all  issued. 

The  Chairman.  If  you  regard  it  as  a  fair  question,  has  the  company 
earned  the  money  to  pay  oft"  these  bonds  ? 

Mr.  Van  Horne.  No;  they  were  paid  off  from  the  proceeds  of  the 
land  grant.    Five  millions  of  these  land-grant  bonds  were  never  issued. 


232  TRANSPORTATION    INTERESTS    OF 

but  were  banded  over  to  tbe  Government  as  secuiity  for  tbe  completion 
of  tbe  road  witbiu  a  given  time,  and  tbo.se  were  afterwards  released  and 
canceled.  Tbey  were  beld  by  the  (yovernment  without  interest.  Of 
the  other  twenty  millions,  sixteen  millions  were  paid  ott"  from  tbe  pro- 
ceeds of  land  sales. 

The  Chairman.  So  that  whatever  indebtedness  you  contracted  by 
the  Government  advancing  the  money,  if  you  i)aid  it  at  all,  has  been 
paid  by  tbe  sale  of  property  given  you  by  tbe  Government? 

Mr.  Van  Horne.  Oh,  no  ;  we  sold  bonds  to  the  public  to  the  extent 
of  $3r»,000,000  chiefly  for  the  puri)0se  of  paying  the  Govenunent  oif. 

The  Chairman.  Were  those  bonds  issued  without  any  guaranty  by 
the  Government? 

Mr.  Van  Horne.  Yes,  sir;  just  an  ordinary  Canadian  Pacific,  tirst- 
mortgage  5  per  cent.  bond. 

The  Chairman.  What  did  those  bonds  sell  for  ? 

Mr.  Van  Horne.  They  sold  for  about  94, 1  believe. 

The  Chairman.  Take  the  next  item  : 

Bonds,  interest  p;iiarantied  l)y  the  Dominion  for  fifty  years  at  :^  i)ercent.,  issncd  to 
the  company  for  the  purpose  of  romuneratin;;  it  for  the  loss  of  its  reliu<|iiishiiient  of 
the  monopoly  of  railroad  building  iu  Mauitoha,  §15,000,000. 

How  is  that  ? 

Mr.  Van  Horne.  That  is  not  correct.  It  is  not  a  i)roper  statomect 
of  tbe  case. 

The  Dominion  Government  agreed  not  to  authorize  the  construction 
of  any  railroad  leading  to  the  international  bonntbiry  south  of  the  Can- 
adian Pacific  for  a  term  of  twenty  years.  That  was  the  jtrotection  pro- 
vided for  the  very  heavy  investment  the  compiiny  had  to  make  in  build- 
ing the  line  north  of  Lake  Superior.  Jbit  it  was  soon  found  that  this 
monojwly  would  be  inii)racticable,  that  it  woubl  cause  a  good  deal  ot 
trouble,  and  it  was  finally  j)ro])osed  to  wipe  it  out.  The  company  did  not 
ask  anything  for  its  canceHation,exce]»t  that  as  Englisli  i)eople  to  whom 
we  have  to  look  for  money  attach  a  gieat  deal  ol  importance  to  a  monop- 
oly, and  it  was  on  the  faith  largely  of  this  monopoly  in  the  Nctrtliwest 
that  they  put  their  money  in  tiie  Canadian  Pacific  oiigwiiilly,  and  as 
tbe  company  had  a  great  deal  of  work  to  «lo,  which  it  required  money 
from  timetotime,  audit  was  fearful  that  tlie  caucellation  of  this  monop- 
oly would  render  it  difficult  to  secure  money  in  l^nglaujl,  it  was  pro- 
posed that  if  the  Government  would  guarantee  the  interest  on  the  bonds 
to  the  amount  the  comi)any  would  i)robal)ly  re(|uire  for  two  or  three 
years  the  company  would  relin<]uish  tbe  mcuiopoly.  The  Government 
guaranteed  the  interest  on  these  sl.'3,()(tO,()(»()  in  bonds  for  lifty  years  and 
took  all  the  land  grant  at  a  dollar  and  ten  cents  an  acre  as  security. 

The  Chairman.  The  guaranteeing  ot  tbe  interest  for  fifty  years  was 
substantially  guaranteeing  the  bonds,  was  it  not  ? 

Mr.  Van  Horne.  They  argued  that  it  would  be  so,  but  tbe  people 
who  bought  the  bonds  did  not  see  it  in  that  light. 

The  Chairman.  How  did  those  bonds  sell  in  market? 

Mr.  Van  Horne.  They  sold  at  93, 1  think.  They  were  3i  per  cent 
bonds. 

The  Chairman.  Well,  how  about  the  last  item  ! 

ftQ^o^f 'n-^' "^  ''^^*^*'''*^^^  a   year  for  20  years  for  a  line  tlirouf,'h  the  State  of  Maine, 

Is  that  correct? 

Mr.  Van  Horne.  Not  as  to  its  being  a  subsidy  to  the  Canadian  Pa- 
cific Railway.    That  subsidy  was  given  to  a  comi)any  which  was  orgsin 


THE    UNITED    STATES    AND    CANADA.  233 

ized,  I  believe,  before  the  Cauadiau  Pacific  came  into  existence.  It  was 
the  Interuational  Railway  Company  of  Canada  and  the  International 
Railway  Company  of  Maine  to  which  the  subsidy  was  given.  This  inter- 
national railway  was  subsequently  sold  to  the  Atlantic  and  North- 
western Railway, another  organization,  antedating  theCanadian  Pacific, 
the  control  of  which  the  Canadian  Pacific  acquired  for  the  reason  that 
its  charter  gave  pretty  broad  powers  in  the  way  of  building  and  acquir- 
ing lines  eastward.  The  Canadian  Pacific  powers  stopped  at  Lake 
Nipissing.  The  Atlantic  and  Northwest  took  traffic  over  the  Interna- 
tional Railroad  of  Canada,  which  controlled  the  International  Railroad 
of  Maine,  and  it  was  in  that  way  that  this  subsidy  came  to  the  Canadian 
Pacific.  It  was  a  subsidy  granted  by  the  Dominion  Government  on  the 
demand  of  the  maritime  provinces,  the  people  of  which  were  not  satis- 
fied with  the  roundabout  line  belonging  to  the  Government.  It  took 
them  ten  or  twelve  hours  longer  to  reach  Montreal  and  Ottawa  than  it 
would  over  this  line. 

The  Chairman.  When  was  that  subsidy  given  ? 

Mr.  Van  Horne.  I  do  not  know  when  that  subsidy  was  given  to  the 
International  Railway.     I  can  not  remember.     It  was  some  years  ago. 

The  Chairman.  Before  the  line  was  built  ? 

Mr.  Van  Horne.  Oh,  yes ;  before  the  line  was  built. 

The  Chairman.  Has  it  been  kept  alive  ? 

Mr.  Van  Horne.  Do  you  mean  has  this  subsidy  been  kept  alive? 

The  Chairman.  Yes. 

Mr.  Van  Horne.  Yes;  it  was  transferred  to  the  Atlantic  and  North- 
west Company  and  then  came  to  the  Canadian  Pacific  on  the  lease  of 
the  Atlantic  and  Northwest. 

The  Chairman.  Is  the  subsidy  being  given  now  f 

Mr.  Van  Horne.  Yes  ;  its  payment  was  commenced  on  the  first  of 
last  January,  on  the  completion  of  the  line  from  Montreal  to  Mattawam- 
keag. 

The  Chairman.  Is  that  line  in  operation  f 

Mr.  Van  Horne.  No;  butit  will  be  open  for  traffic  on  the  2nd  of  next 
month. 

The  Chairman.  Some  testimony  was  given  here  the  other  day  that 
indicated  that  the  subsidy  on  different  sections  or  parts  of  the  Cana- 
dian Pacific  was  greater  than  $100,000  and  really  amounted  to  $250,000. 

Mr.  Van  Horne.  The  additional  amount  is  on  a  piece  of  line  in  New 
Brunswick.  That  line  has  yet  to  be  built.  The  Canadian  Pacific  has 
nothing  to  do  with  that  line. 

The  Chairman.  Now,  the  total  of  these  gifts  and  aids  and  guarantees 
in  one  way  and  another,  saying  nothing  about  what  became  of  them 
afterwards,  amounted  to  $215,361,697. 

Mr.  Van  Horne.  We  do  not  figure  it  that  way. 

The  Chairman.  You  are  figuring  what  is  paid  back  and  what  is  bor- 
rowed.    You  do  not  count  those  items  at  all. 

Mr.  Van  Horne.  Well,  if  we  borrowed  money  and  paid  it  back  it 
was  not  a  gift. 

The  Chairman.  It  was  an  aid  to  the  construction  though,  was  it  not  I 

Mr.  Van  Horne.  I  do  not  see  how  it  can  be  figured  as  a  subsidy  or 
anything  akin  to  a  subsidy.  It  was  simply  borrowed  money.  We  bor- 
rowed money  from  the  Government  instead  of  borrowing  from  a  bank. 

The  Chairman.  I  understand,  but 

Mr.  Van  Horne.  I  can  recapitulate  the  subsidies.  Thirty-five  mill- 
ion dollars  in  money,  eighteen  millions  of  land 

The  Chairman.  What  is  the  land  worth  "? 


234  TRANSPORTATION    INTERESTS    OF 

Mr.  Van  Horne.  Thatdopend.s  entirely  on  the  future.  We  sold  what 
the  Government  took  back  at  a  dollar  and  a  half  an  acre.  We  got  three 
dollars  and  a  half  an  acre  for  some. 

The  Chairman.  What  would  the  land  grant  amount  to  at  $1.50  an 
acre? 

Mr.  Van  Horne.  It  would  amount  to  $27,000,000. 

The  Chairman.  What  else  ? 

Mr.  Van  IIorne.  That  is  all  besides  those  ])ieceM  of  railway. 

Senator  Gorman.  You  got  $10,000,000  on  the  land  from  the  Govern- 
ment, did  you  not? 

Mr.  Van  Horne.  I  put  that  in. 

The  Chairman.  Do  you  state  that  you  have  not  received  anything 
more  than  that? 

Mr.  Van  Horne.  Wc  have  received  thirty-live  millions  in  money, 
eighteen  million  acres  of  land,  forwhatever  it  is  worth,  and  tiiese pieces 
of  railway,  aggregating 714  miles,  for  whatever  they  are  woith. 

The  Chairman.  What  did  you  say  these  714  miles  of  railway  were 
worth? 

Mr.  Van  Horne.  On  the  day  that  we  received  it,  as  it  stood,  it  was 
worth  nothing  as  a  property.  It  was  worth  to  the  Canadian  I'acitic 
road  as  part  of  their  lines  not  over  $10,000,000,  for  this  reason :  The 
company  would  have  gone  by  an  entirely  ditferent  route,  and  would 
have  saved  a  great  deal  of  money  on  the  rest  of  the  line  that  they 
built  if  it  had  not  been  for  the  necessity  of  making  use  of  these  i)iece8. 
That  is  especially  true  of  the  line  in  liritish  Columbia. 

The  Chairman.  It  ai>pears  from  section  1(>  of  the  organic  act  that 
your  company  received  a  grant  of  land  for  terminals,  water  frontage, 
and  the  privilege  of  importing  all  soi'ts  of  mat»'rial  free  of  duty.  Have 
you  ever  estimated  the  valiu^  of  these  gifts  or  bonuses  f 

Mr.  Van  Horne.  The  only  terminal  pro|)erty  we  ever  got  was  at  the 
Pacific  terminus,  which  was  practically  valueless. 

The  Chairman.  The  section  of  the  law  reads: 

In  fnrther  consideration  of  tlie  preniises  tlio  Goveninieut  shall  also  grant  to  thr 
coini)auy  the  hiiids  required  for  the  rond  bed  of  the  railway  and  it.s  statioiiH,  station 
grounds,  worksliojy.s,  dock-yards,  and  Avater  frontage  at  the  tcrinini  on  navigahle 
waters;  huihlings,  yards,  and  otlier  appurtenances  retjuired  for  the  convenient  and 
efi'ectual  construction  and  working  of  the  railway,  in  so  far  as  such  laud  shall  be  vested 
in  the  Government. 

Mr.  Van  Horne.  We  never  got  anything  from  that  except  the  ordi- 
nary right  of  way  over  the  wild  prairie,  which  was  practically  valueless. 
We  never  got  any  water  frontage  from  the  Dominion  Government,  be- 
cause we  made  use  of  none  that  was  vested  in  the  Crown. 

The  Chairman.  The  Dominion  Government  extinguished  certain  In- 
dian titles  in  favor  of  your  company,  did  it  not  ?  Can  you  state  the 
cost  or  valiie  of  this  benefit  conferred  upon  your  company  ? 

Mr.  Van  Horne.  Not  so  far  as  I  know.  Nothing  of  that  kind  has 
been  done  that  I  am  aware  of. 

The  Chairman.  Does  this  schedule  which  I  gave  you  for  criticism 
embrace  a  loan  of  $22,500,000  mentioned  in  section  4  of  tlie  act  of 
March  5, 1884  ? 

Mr.  Van  Horne.  It  is  embraced  in  th.it.  That  is  one  of  the  trans- 
actions in  connection  with  the  $35,000,000  loan. 

Before  leaving  this  subject  I  ought  to  say  that  I  do  not  quite  ap- 
prove of  the  reference  to  714  miles  of  railway  constructed  by  the  Do- 
minion Government — 

Seven  hundred  and  fourteen  uules  of  railroad  constructed  bv  the  Dominion  Govoru- 
ment,  costing  iJilJo, 0(10,000,  which  was  presented  to  the  Canadian  Pacific  Company  as 
a  gift,  with  interest  to  June  30,  1887,  etc. 


THE  United  states  and  Canada.  285 

It  was  not  presented  to  tbe  Canadian  Pacific  Company  at  all.  It  was 
part  of  the  bargain. 

The  Chairman.  Does  this  schedule  embrace  the  temporary  loan  of 
five  millions  a  year  granted  to  your  company  by  the  act  of  July  20, 
1880  ? 

Mr.  Van  Uorne.  Yes ;  it  embraces  all  the  loans. 

The  Chairman.  Does  it  embrace  or  include  a  subsidy  of  a  million  and 
a  half  dollars  granted  for  the  purpose  of  enabling  you  to  secure  a  line 
to  Quebec! 

]\lr.  Van  Hornp:.  We  never  received  that. 

The  Chairman.  The  act  provided  you  could  get  it? 

Mr.  Van  Horne.  No,  it  did  not  provide  that  the  Canadian  Pacific 
could  have  it,  or  we  would  have  secured  it,  probably. 

The  Chairman.  Railroads  generally  get  ail  they  are  entitled  to.  You 
say  you  did  not  get  the  money  at  all  'i 

Mr.  Van  Horne.  No,  sir;  we  never  received  that  money. 

TRANSCONTINENTAL   TRAFFIC. 

The  Chairman.  1  see  by  reference  to  your  report  of  1886  that  in  the 
first  year  of  your  through  traflic  your  line  succeeded  in  securing  a  con- 
siderable share  of  the  through  traftic  in  competition  with  the  transcon- 
tinental lines  of  the  United  States,  and  mostly  at  remunerative  rates. 
Does  that  still  continue  f 
:      Mr.  Van  Horne.    We  get  considerable  through -passenger  traffic; 
\'  very  little  through-freight  traffic,  it  does  not  pay,  and  we  do  not  seek  it. 
The  Chairman.  You  state  iu  your  report : 

Notwiibstaudiiig  this,  our  Hue  succeeded  in  securing  a  considerable  share  of  tbe 
tbroiigli  tratfic,  mostly  at  remunerative  rates. 

Does  that  refer  to  freight! 

Mr.  Van  Horne,  It  refers  to  general  traffic. 

The  Chairman.  It  is  stated  in  your  report  for  1886  that  during  the 
first  five  months  of  through  trafiic  you  transported  seven  cargoes  of  tea 
and  other  Chinese  and  Japanese  goods,  consigned  to  the  principal  cities 
of  Canada,  and  to  St.  Paul,  Chicago,  New  York,  and  other  cities  in  the 
United  States.     Has  that  trade  continued,  and  has  it  increased  ? 

Mr.  Van  Horne.  Yes. 

The  Chairman.  What  does  it  amount  to  now  on  your  road  ! 

Mr.  Van  Horne.  It  amounts  to  sutHcieut  to  keep  running  a  line  of 
monthly  steamers — steamers  of  about  U,700  tons  capacity. 

The  Chairman.  It  is  sufficient  to  keep  them  running  from  where? 

Mr.  Van  Horne.  From  Hong  Kong  and  Yokohama  to  Vancouver. 

The  Chairman.  Who  owns  that  line  ? 

Mr.  Van  Horne.  The  Fairfield  Ship  Building  Company,  Scotland. 

The  Chairman.  Are  those  subsidized  steamers? 

Mr.  Van  Horne.  No,  sir. 

The  Chairman.  Not  subsidized  by  anybody? 

Mr.  Van  Horne.  No,  sir. 

The  Chairman.  Have  you  not  a  subsidized  line  of  steamers  running 
from.  Chic  a,  or  Japan,  to  Vancouver? 

Mr.  Van  Horne  No,  we  have  settled  the  terms  of  an  arrangement, 
but  the  contract  has  never  been  signed.  An  arrangement  was  substan- 
tially reached  with  the  Imperial  Government  by  which  a  subsidy  was 
to  be  given  to  a  line  of  fast  mail  steamers  to  run  between  Vancouver 
and  Yokohama  and  Hong-Kong,  touching  at  the  mouth  of  the  Woosung 


236  TRANSPORTATIOX   INTERESTS    OF 

Eiver,  for  SbangLai.  The  contract  has  never  been  signed,  however,  and 
the  line  has  not  been  estal)lished. 

The  Chairman.  What  share  of  the  transcontinental  traffic  are  you 
getting  in  competition  with  other  transcontinental  lines  ? 

Mr.  Van  Horne.  You  mean  American  trafilic  ? 

The  Chairman.  Traffic  from  the  West  to  the  East,  including  the 
China  trade. 

Mr.  Van  Uorne.  I  should  say  we  were  getting,  including  the  Pacific 
coast  trade,  aud  counting  the  Australian  trade,  and  that  of  China  and 
Japan,  10  or  12  per  cent. 

The  Chairman.  Of  the  total  ? 

Mr.  Van  Horne.  Yes,  I  doubt  if  we  are  getting  12  percent,  though. 
It  is  about  10  per  cent.,  1  should  thiuk. 

The  Chairman.  You  state  in  your  report  for  1886  that — 

Negotiatious  are  in  progress  with  the  Imperial  Govoriiniont  for  the  establishineiit 
of  a  tirst-class  Jiue  ofsteaiu-whipa  bef.wecn  Vancouver  and  China  aud  Japan,  iind  the 
Imperial  interests  involved  in  these  questious  are  so  important  that  there  can  be  no 
doubt  of  a  satisfactory  result. 

Will  you  be  so  kiud  as  to  inform  the  committee  if  the  arrangements 
referred  to  were  carried  out,  and  precisely  the  nature  of  the  im])eiial  in- 
terests referred  to  f 

Mr.  Van  Horne.  That  is  what  I  just  referred  to.  The  contract  has 
never  beeu  signed.  Tlie  terms  have  been  practically  agreed  upon,  but 
the  contract  has  never  been  signed. 

Tbe  Chairman.  Do  you  apprehend  it  will  bef 

Mr.  Van  Horne.  I  hope  it  wdl. 

The  Chairman.  What  are  those  terms  ? 

Mr.  Van  Horne.  The  steamers  are  to  be  cai)able  of  making  17i  knots 
an  hour  on  trial,  and  they  are  to  run  at  suck  times  as  may  suit  thei)ur- 
poses  of  the  Imperial  GovMument  lor  mails  and  under  the  usual  mad- 
system  contract.  They  are  to  be  fitted— as  all  steamers  subsidized  by 
the  British  Government  are  now  required  to  be  fitted— with  gun-i)lat- 
forms,  so  as  to  be  useful  in  case  of  war.  They  are  simply  constru(;ted 
so  that  they  can  carry  one  or  two  guns  in  case  of  necessity. 

The  Chairman.  What  is  the  amount  of  the  subsidv,  if  tiie  contract  is 
made  I 

Mr.  Van  Horne.  Sixty  thousand  pounds  per  annum— $300,000  a 
year— which  includes  the  railway  transportation  from  Ualilax  to  Van- 
couver, back  aud  forth.  It  woild  probably  l)e  about  half  for  the  railroad 
and  half  for  the  steamers. 

The  Chairman.  Is  it  the  design  of  the  company  and  the  Government 
to  make  a  faster  line  than  you  have  had  heretofore  between  China  and 
Japan  ? 

Mr.  Van  Horne.  Yes,  that  is  what  we  hope  to  do. 

Ihe  Chairman.  How  much  better  time  do  you  expect  to  make  than 
you  make  at  present? 

Mr.  Van  Horne.  We  hope  to  be  able  to  take  passengers  in  London 
''^"m  '^'Jr        "^  ^^  Yokohama  in  twenty-one  or  twButv-two  days. 

Ihe  chairman.  What  is  the  time  required  now  tor  that  trq)  ? 

Mr  Van  Horne.  The  time  by  way  of  the  Suez  Canal  from  London 
to  Yokohama,  IS  about  thirty  eight  or  thirtv nine  davs.  We  can  make 
•it  now  somewhat  quicker  than  that.  The  Suez  Canal  is  our  chief  com- 
l)etitor. 

The  Chairman.  How  long  does  it  take  to  go  from  Lon<lon  to  Yoko- 
hama, g-oing  across  the  continent,  as  the  route  exists  now  I 
Mr.  Van  Horne.  About  thirty  days,  I  think.     It  mav  be  more  than 


THE    UNITED    STATES    AND    CANADA.  237 

that  to  LoDdon.  I  think  the  steamers  make  the  trip  ordinarily  from 
Yokohama  to  San  Francisco  in  about  sixteen  days,  as  I  understand  it — 
I  am  not  personally  lamiliar  with  that — and  it  takes  about  six  days  to 
cross  the  continent,  making  twenty-two  days  ;  then  six  days  across  tiie 
Atlantic,  and  you  have  to  allow  for  delays. 

The  Chairman.  You  will  save  about  eight  days'  time  by  this  new 
arrangement,  if  you  comi)lete  it. 

Mr.  Van  Horne.  Y^es ;  but  we  will  save  more  than  that  as  against 
our  chief  competitor,  because  the  bulk  of  the  IJritish  busuiess  goes  by 
way  of  the  Suez  Canal. 

The  Chairman.  This  line  referred  to  in  your  report,  1  believe,  is  re- 
ferred to  as  a — 

Periuaneut  line  of  first-class  steam-sliiiis,  suitable  for  service  as  armed  cruisers  in 
case  of  need. 

Why  were  vessels  of  the  type  "  armed  cruisers "  ordered  for  this 
service  ? 

Mr.  Van  Horne.  That  is  the  rule.  The  British  Government  re- 
quires that  all  steam-ships  which  receive  mail  subsides  shall  l)e  so 
iitted.  The  Cunarders  are  fitted  in  the  same  way.  Your  own  Inman 
boats  are  fitted  in  this  same  way  under  their  contract  with  the  Imperial 
Government.  The  Imperial  Government  has  the  right  to  take  them  in 
case  of  war.  This  plan  grew  out  of  the  excessive  ])rices  which  it  had 
to  pay  for  armed  cruisers  and  trooji-ships  during  the  last  war  scare 
with  Russia,  and  it  is  with  reference  to  Eussia  especially,  I  think,  that 
they  -want  the  ships  fitted  as  armed  cruisers. 

The  Chairman.  The  reportstates,  further,  that  the  Canadian  Pacific 
ilailway,  of  which  you  are  president,  was  built  to  i)reserve  to  Canada 
and  its  seaports  the  carrying  trade,  and  also  for  the  accomi)lishiiK'nt  of 
certain  imperial  objects  which  are  previously  referred  to  in  the  report. 
That  is  true,  is  it  not '? 

Mr.  Van  Horne.  I  do  not  think  any  report  of  ours  says  that.  The 
Canadian  Pacific  was  built  for  the  purjjose  of  making  money  for  the 
share-holders  and  for  no  other  iHir})ose  under  the  sun. 

The  Chairman.  The  report  states  that  the  temporary  st<'am-sliii) 
service  between  Vancouver  and  Yokohama  and  Hong-Kong,  referred  to 
in  your  last  annual  report,  has  fully  justified  the  expectations  of  your 
directors  as  to  the  value  and  the  importance  of  the  trade  to  be  devel- 
oped in  that  direction.  The  negotiations  then  in  progresswith  the  Impe- 
rial Government  for  the  establishment  of  a  permanent  line  of  first-class 
steam-ships  suitable  for  service  as  armed  cruisers  in  case  of  need  re- 
sulted in  an  ofiicial  notification  early  last  autumn  that  Her  Majesty's 
Government  had  decided  to  grant  a  subsidy  of  £  0,(l()t)  per  annum  tor 
a  monthly  service  between  Vancouver  and  Hong-Kong  via  Yoko- 
hama  

Mr.  Van  Horne.  How  many  pounds  ? 
■  The  Chairman.  Sixty  thousand  iH)uuds  i)er  annum. 

Mr.  Van  Horne.  Did  I  understand  you  to  say  tliat  you  are  reading 
quotations  from  the  reports  of  the  company  ? 

The  Chairman.  No,  sir;  but  it  is  practically  so.  This  is  the  Cana- 
dian Pacific  report  [exhibiting],  ftnd  you  refer  to  this  line  in  it. 

Mr.  Van  Horne.  But  not  in  those  terms. 

The  Chairman.  It  refers  more  especially  to  the  steam-ship  line  than 
to  the  Canadian  Pacific. 

Mr.  Van  Horne.  But  not  in  those  terms. 

The  Chairman.  When  will  the  new  steam-ship  line  connect  with  your 
short  line  across  the  State  of  Maine  I 


238  TRANSPORTATION    INTERESTS    OF 

Mr.  Van  Horne.  The  Canadian  Pacific  Las  nothing  to  do  with  that. 
The  Chairman.  Have  you  any  knowledge  of  the  proposed  8ubsidize<l 

line? 

'  Mr.  Van  Horne.  Ko,  sir  ;  but  I  infer  from  the  newspapers  and  hom 
conversations  I  have  had  that  no  ;irranj,U'iiuMits  liave  been  made  as  yet. 
I  know  that  the  Dominion  Government  obtained  anthority  from  Parlia- 
ment at  its  last  session  to  negotiate  for  a  fast  line  of  steamers  for  this 
service. 

The  Chairman.  1  was  going  to  ask  you  if  it  were  not  true  that  tlic 
Canadian  Government  adds  to  the  sixty  thousand  pounds  of  subsidy 
so  as  to  make  it  nearer  $400,000  a  year  than  $.500,000  ! 

Mr.  Van  Horne.  No,  sir.  They  contributed  £I.">,000  per  annum  in 
addition  to  the  £G0,000.  That  is  an  arrangement  betweeii  the  Imi)erial 
and  Dominion  Governments.  The  Government  of  Camula  contributed 
an  amount  to  the  Imperial  Government  to  re])resc'nt  its  interest  in  the 
mails  to  be  carried  by  the  line. 

The  CIIAIR3IAN.  I  suppose  these  ships  will  carry  all  kinds  of  freight 
as  well  as  the  mails  ? 

Mr.  Van  Uokne.  Yes,  sir. 

The  Chaikman.  Including  i)rovisions,  grain — <lead  freight,  as  you 
call  it— all  kinds  of  freight  i 

Mr.  Van  Hoiine.  Yes,  sir;  I  snpi)ose  so. 

The  CHAiR3rAN.   Wlmt  sort  of  steamers  are  they  to  be,  do  you  know  ! 

Mr.  Van  Horne.  They  will  be  boats,  I  i)resume,  something  like  the 
North  German  Lloyd  steamers.  They  are  to  be  bouts  of  that  descrij)- 
tion. 

At  1  o'clock  p.  m.  the  committee  took  a  recess  until  li  o'clock. 

At  the  expiration  of  the  recess  tin*  committee  resumed  its  se.><sion. 

The  Chairman.  Mr.  Van  Horne,  during  the  examination  this  morn- 
ing reference  was  made  to  the  relationship  and  the  rontrol  on  either 
side  of  the  Canadian  Pacilic  r)y  which  the  road  could  be  run  to  Win- 
nipeg thiough  the  Canadian  c(»unlry.  There  was  some  controversy 
between  the  people  of  the  Winnipeg  region  and  the  Donnnion  Govern- 
mont,  was  there  not  ? 

J\lr.  Van  Horne.  Subsequently,  or  previously! 

The  Chairman.  Pefore  the  road  was  built  and  before  they  were  al- 
lowed to  build  it.  Fnially  the  right  was  given  to  build  it,  and  the 
Dominion  Government  satisfied  the  Canadiaii  Pacific,  as  I  have  been 
given  to  understand,  by  giving  them  a  bonus  some  way  or  other  in 
money  or  land.     Was  that  so,  or  not? 

Mr.  Van  Horne.  No;  they  simi)ly  guaranteed  the  interest  on  $15,- 
000,000  by  3.]  per  cent,  land  grant  bonds— something  that  woid-l  never 
cost  the  Dominion  Government  a  cent. 

The  Chaikman.  In  this  report  of  the  Cana«lian  Pacific  K'ailway  for 
the  year  18S7,  there  is  an  agreement  between  the  Dominion  of  Canada 
on  the  one  part  and  the  Canadian  Pacific  Ilailwav  Comi>anv  on  the 
other  part.     It  goes  on  to  say : 

Whereas  it  has  been  agreed  between  the  Gm-eriiment  :iim1  ih.-  <-.>iiii.;inv.  aiiinngMt 
otlier  things,  that  the  restrietions  contained  in  elause  1."..  of  the  contract"  daleil  the 
21.st  day  of  Oetober,  IdfO,  aud  executed  bet wein  the  (Jovernnient  anil  tlie  sai«I  Sir 
George  Stephen  and  others  on  behalf  of  the  eonij>anv,  Nhall  be  removed,  and  that  in 
order  to  enable  the  company,  notwithstaniinig. such  removal,  to  preserve  to  Canada 
and  Its  waports  the  carrying  trade  lor  which  the  Canadian  ra.ilic  Railway  wait  de- 
signed and  ((.nslnutcd,  the  Government  shall  assist  the  company  iu  the  nn'mnor  and 
upon  the  conditions  hereinafter  described,  in  obtaining  funds  wherewith  to  perfect 
its  connectiou8,  increase  its  rolling  stock,  etc. 


THE    UNITED    STATES    AND    CANADA.  239 

And  then  again : 

The  Government  agrees  to  guarantee  the  payment  of  interest  up  to  the  time  of 
maturity  on  bonds  of  the  company,  to  be  hereafter  issued,  to  an  amount  not  exceed- 
ing in  the  aggregate  $15,000,000,  or  its  equivalent  in  sterling  money,  the  principal 
to  be  payable  not  later  than  fifty  years  from  their  date,  and  the  interest  thereon  to  bo 
payable  half  yearly  at  the  rate  of  three  and  one-half  per  centum  per  annum,  such 
bonds  to  be  secured,  as  hereinafter  specified,  on  the  unsold  lands  to  which  theconipany 
is  still  entitled  out  of  the  subsidy  of  25,000,000  acres  mentioned  in  the  said  contract, 
and  which  unsold  lands  are  now  estimated  at  14,934,238  acres. 

That  seems  to  be  a  contract  that  was  executed  about  the  time  the 
people  of  Winnipeg  or  Manitoba  demanded  that  lines  be  built  into  that 
country. 

Mr.  Van  Horne.  I  do  not  know  whether  it  was  by  reason  of  that. 
This  monopoly  clause  was  obnoxious  to  the  people  of  Manitoba,  as 
monopolies  of  that  kind  are  obnoxious  to  Anglo-Saxons  everywhere; 
they  desired  to  get  rid  of  it,  and  this  contract  was  entered  into. 

The  Chairman.  What  did  the  Canadian  Pacific  Railway  cost  in  toto  ? 

Mr.  Van  Horne.  It  cost,  leaving  out  the  cost  of  the  714  miles  built 
by  the  Government,  about  which  we  know  nothing — that  is,  as  to  the 
legitimate  cost — about  $153,000,000  exclusive  of  the  leased  lines.  That 
is,  the  Canadian  Pacific  Kailway  Company  has  charged  that  amount  to 
the  cost  of  the  road.  Of  course  that  is  taking  the  stock  at  its  face  value. 
Only  about  half  of  that  was  realized  upon  the  capital  stock  itself.  I 
presume  the  actual  money  put  into  the  Canadian  Pacific,  aside  from 
its  leased  lines  and  outside  of  the  714  miles  constructed  by  the  Govern- 
ment, was  about  $120,000,000  in  cash.  From  $85,000^000  to  $88,000,000 
was  private  capital  and  the  balance  was  Dominion  subsidy  and  proceeds 
of  land  sales. 

The  Chairman.  I  see  here  a  section,  taken  I  suppose  from  the  charter, 
which  reads  as  follows: 

The  capital  stock  of  the  company  is  $100,000,000,  upon  which  the  Dominion  Gov- 
ernment has  guaranteed  a  minimum  dividend  of  3  per  cent,  per  annum  for  ten  years, 
the  company  having  placed  with  the  government  a  sum  which,  at  4  per  cent,  interest, 
will  be  equal  to  the  dividend  ou  the  stock  at  3  ijer  cent,  for  ten  years. 

What  have  you  to  say  as  to  that  ? 

Mr.  Van  Horne.  That  must  be  an  old  item.  After  that  the  capital 
was  reduced  to  $05,000,000  at  the  time  the  government  authorized  the 
company  to  issue  $  i5, 000,000  in  bonds  on  the  road.  This  guarantee 
was  simply  an  annuity  purchased  by  the  company  for  its  shareholders. 
They  deposited  with  the  Dominion  Government  $16,800,000,  upon 
which  the  government  agreed  to  pay  to  its  shareholders  twenty  semi- 
annual installments  of  1^  per  cent.  each.  This  sum  of  $16,800,000,  at 
4  per  cent.,  would  afford  just  the  amount  required  to  pay  the  twenty 
semi-annual  installments  of  1^  per  cent,  on  $65,000,000. 

The  Chairman.  I  will  not  fake  up  any  more  of  your  time  in  regard 
to  the  capital  of  your  road  or  its  credit,  or  the  manner  in  which  it  was 
built. 

Can  you  tell  us  the  total  value  of  the  business  of  your  road,  taking 
tJie  whole  trunk-line  ? 

Mr.  Van  Horne.  The  gross  receipts  last  year  were  $13,195,535. 
Those  were  the  receipts  of  the  Canadian  Pacific  lines  proper,  not  ineliul- 
ing  any  outside  lines  in  which  the  company  or  its  friends  might  be  in- 
terested. 

The  Chairman.  Does  that  include  the  line  running  through  the 
State  of  Maine  ? 

Mr.  Van  Horne.  That  was  not  in  operation  then. 

The  CHAiR]iiAJ>f.  What  were  the  net  earnings  ^ 


240  TRANSPORTATION    INTERESTS    OF 

Mr,  Van  Horne.  The  net  earnings  were  $3,870,774.  That  is  taken 
from  our  annual  report  of  last  year.  .      ,   » 

The  Chairman.  Those  were  the  actual  earnings  received  from  the 
carrying  of  freight  and  passengers  over  that  road  ? 

mV.  Van  Uorne.  Yes ;  and  the  telegraph  and  express  business,  etc. 
We  own  all  those  things.  ,    ,  .    ,. 

The  Chairman.  Does  that  include  any  subsidized  ship  lines  T 

Mr.  Van  Horne.  We  have  no  ship  lines  of  any  description.  It  in- 
cludes the  earnings  of  our  lake  steamers. 

The  CIIAIR3IAN.  Where  do  the  lake  steamers  run  T 

Mr.  S^AN  Horne.  They  run  between  the  Owen  Sound  and  Port 
Arthur,  connecting  our  Ontario  lines  with  our  western  division  beyond 
Lake  Superior. 

RATES  ON   THE  CANADIAN   PACIFIC. 

The  Chairman.  Can  you  give  the  rates  per  ton  per  mile  on  the 
through  business  on  your  road  f 

Mr.  Van  Hohne.  I  have  not  the  through  business  separate  from  the 
rest.  The  earnings  per  ton  per  mile  on  freight  hist  year  were  oue  and 
two  one-hundredlhs  of  a  cent  i)er  t«»n  j»er  mile. 

The  Chairman.  Local  and  through  business  together? 

Mr.  Van  Horne.  Yes,  sir;  everything. 

The  Chairman.  What  is  it  on  through  business  alone  ! 

Mr.  Van  Horne.  1  could  not  tell  you. 

The  Chairman.  Could  you  furnish  it  on  the  through  business  alone  f 

Mr.  Van  Uorne.  I  i)resuine  we  could  figure  it  out.  It  is  rather  diffi- 
cult to  say  what  is  through  business,  and  what  is  not.  Praetieally  a 
consignment  from  the  Pacific  coast  to  a  point  IM)  miles  out  froui  Mon- 
treal would  be  through  busines.s,  but  technically  it  would  be  local  busi- 
ness.    1  do  not  know  how  we  could  very  ac<nrately  tlefiiu'  it. 

The  Chairman,  How  much  diflerence  in  charges  is  tliere  between 
what  you  technically  call  tlirough  business  an«l  local  business! 

Mr.  Van  IIornk.  I  luesume  there  is  not  very  much  at  present.  It 
is  rather  uniformly  graded  now  on  the  bulk  of  the  business. 

The  Chairman.  l>y  what  are  you  governed  in  carrying  freight  from 
the  Pacitic  Ocean  eastward  ! 

Mr.  Van  Horne.  Do  you  mean  Canadian  freight  T 

The  Chairman.  Any  freight  that  you  get  at  Puget  Sound  or  any- 
where else  on  the  coast. 

Mr.  Van  Horne.  We  are  governed  in  the  first  place  by  the  cost  of 
the  transi)Oitation. 

The  Chairman.  Are  you  always  governed  by  that ! 

Mr.  Van  Horne.  We  never  take  anything  for  less  than  it  costs  to 
carry  it  if  we  know  it,  except  that  we  have  for  s|)ecial  reasons  taken 
a  few  consignments  from  the  Pacific  coast  to  the  East  at  a  good  deal 
less  than  the  cost  of  transi)ortation. 

The  Chairman.  Why  did  you  do  that  ? 

Mr.  Van  Horne.  To' resent  attacks  on  us  at  Victoria,  B.  C,  by  the 
Northern  Pacific  and  our  other  neighbors  at  the  South. 

The  Chairman.  Are  you  governed  by  any  schedule  of  rates  by  which 
other  roads  operate,  or  do  you  make  your  schedules  of  rates  irrespect- 
ive of  any  other  line  or  lines  ? 

Mr.  Van  Horne.  We  act  with  all  the  transcontinental  lines. 

The  Chairman.  Have  you  any  association  t 

Mr.  Van  Uorne.  There  is  a  trauscouUneutal  association. 


THE    UNITED    STATES    AND    CANADA.  241 

The  Chairman.  Where  are  the  headquarters  of  this  transcontinental 
association  ? 

Mr.  Van  Horne.  I  do  not  know.  There  is  to  be  a  meeting  of  it  in  a 
few  days  at  St.  Louis.     I  think  the  headquarters  of  it  are  at  St.  Louis. 

The  Chairman.  And  you  are  governed  by  that  association,  which  is 
composed  of  the  several  transcontinental  lines  running  across  the  con- 
tinent, American  as  well  as  Canadian? 

Mr.  Van  Horne.  Yes. 

The  Chairman.  Do  you  adhere  to  the  rates  ? 

Mr.  Van  Horne.  I  think  we  do  religiously. 

The  Chairman.  You  take  a  consignment  at  Puget  Sound  at  very 
much  less  than  you  take  a  consignment  500  miles  this  side  of  Puget 
Sound  coming  east,  do  you  not? 

Mr.  Van  Horne.  No.  Our  local  rates  in  Canada  have  been  graded 
down  to  meet  the  requirements  of  the  United  States  interstate-com- 
merce act. 

The  Chairman.  Bo  you  pay  any  attention  to  that  act? 

Mr.  Van  Horne.  Yes,  we  are  as  strictly  bound  by  it  as  if  we  were 
operating  in  the  United  States. 

The  Chairman.  With  respect  to  goods  that  you  take  at  Puget  Sound, 
or  goods  tliat  you  get  in  the  United  States  and  take  to  Montreal,  do  you 
regard  the  interstate-commerce  act? 

Mr.  Van  Horne.  Yes,  sir ;  we  regard  every  pound  of  it  as  subject  to 
the  interstate  commerce  act. 

The  Chairman.  Suppose  it  comes  down  to  the  United  States  at  any 
other  point;  do  you  carry  much  freight  east  from  Winnipeg  that  goes 
down  to  St.  Paul? 

Mr.  Van  Horne.  We  do  not  carry  much  freight  from  San  Franscisco 
or  Portland  by  way  of  Winnipeg  to  St.  Paul. 

The  Chairman.  SVhere  do  you  get  it? 

Mr.  Van  Horne.  The  freight  we  send  to  St.  Paul,  Chicago,  etc.,  is 
trans-Pacific  freight. 

The  Chairman.  Y'"ou  mean  it  comes  from  a  foreign  country  and  lands 
on  your  own  soil,  and  you  carry  it  to  Winnipeg,  and  then  it  drops  down 
to  St.  Paul,  Chicago,  etc.  ? 

Mr.  Van  Horne,  Yes.  We  may  have  a  consignment  now  and  then 
from  a  Puget  Sound  point  to  St.  Paul  and  Chicago,  and  now  and  then  a 
consignment  from  Alaska.  We  are  better  situated  as  to  the  Alaska 
trade  than  the  American  roads. 

The  Chairman.  Take  goods  that  are  received  on  Canadian  territory 
and  sent  down  to  St.  Paul  or  Minneapolis  or  Kansas  City  ;  do  you  ever 
get  goods  consigned  in  that  way? 

Mr.  Van  Horne.  From  the  West  ? 

The  Chairman.  From  the  West. 

Mr.  Van  Horne.  I  do  not  think  we  have  for  a  good  while.  We  had 
a  little  fight  out  on  the  Pacific  coast  at  one  time,  and  we  took  freight 
for  pretty  much  everywhere  to  show  that  we  were  around,  but  we  do 
not  do  that  for  a  living. 

The  Chairman.  I  am  informed  that  merchants  at  Omaha  and  Den- 
ver could  get  goods  that  come  originally  from  the  West  cheaper  over 
your  line  from  the  North  than  they  could  get  them  by  the  Union  Pacific, 
for  instance,  coming  straight  through. 

Mr.  Van  Horne.  I  think  they  could  once  for  about  two  weeks. 

The  Chairman.  Has  that  practice  been  entirely  broken  up? 

Mr.  Van  Horne.  It  only  lasted  a  little  while.  It  was  the  result  of 
a  little  row  we  had  out  on  the  Pacific  coast,  J  believe  it  started  from 
6543 16 


242  TRANSPORTATION    INTERESTS    OF 

attempts  at  poaching  ou  our  territory.  We  threw  a  stone  through  their 
plate-glass  windows  to  remind  them  that  it  would  not  do. 

The  Chairman.  What  do  you  call  your  territory? 

Mr.  Van  Horne.  British  Columbia.  I  will  say  this,  that  we  di<l  not 
quote  a  rate  south  of  the  international  boundary  on  the  Pacific  coast 
until  our  rates  in  British  Columbia  were  broken  by  tlie  transcontinental 
lines,  and  when  we  heard  of  that  we  sent  agents  down  to  Portland  and 
other  points,  and  made  it  just  as  interesting  as  we  conhl  for  a  little 
while. 

The  Chairman.  And  the  result  was  that  you  came  together  and 

settled  the  matter! 

Mr.  Van  Horne.  Yes,  sir. 

The  Chairman.  So  you  state  now  that  you  are  carrying  freights  as 
other  trauscontinentariines,  and  under  agreements  with  them  ? 

Mr.  Van  Horne.  Yes;  but  there  may  be  a  ditterential  on  some 
trafJic. 

The  Chairman.  But  that  ditl'erential  is  agreed  to  by  them,  is  it! 

Mr.  Van  Horne.  Yes;  it  is  agreed  to  by  them. 

the  trade  with  china  and  .iapan. 

Senator  Gorman.  It  has  been  stateil  in  some  of  the  English  [)nbli(;a- 
tions  that  bj'  your  steam  shij)  line  on  the  Pacific  to  Vani-onver  and  by 
your  railroad  lino  to  Halifax,  and  then  by  a  line  of  steamers  to  connect 
with  yon  there,  you  have  about  two  days  advanta;^*'  in  |K>int  «»f  time 
between  Jajian  and  LiverjKX)!  over  any  otluT  route,     llow  is  ihat  ? 

Mr.  Van  Horne.  1  do  not  think  we  regard  the  American  Wuoh  jwour 
competitors  in  the  China  and  Jajian  trade.  So  far  our  chief  competitor 
has  been  the  Suez  Canal.  Our  bnsin«'ss  from  (,'hina  and  .Japan  has 
been  taken  almost  wholly  from  the  Suez  ('anal.  There  is  more  business 
done  between  San  Francisco  and  Tacoma  and  China  and  .lapan  than 
before  we  opened.  But  the  trad*-  between  China  and  .Japan  and  Can- 
ada and  the  United  States,  via  the  Suez  Canal,  1ms  lallen  off  T.')  jK-r 
cent,  since  we  opened.  The  business  we  do  is  not  <lone  at  the  e.\i)ense 
of  the  American  lines.  [  jtresume  with  our  fast  Atlantic  service,  and 
with  our  geographical  advantages,  we  wouhl  be  able  to  make  with  rel- 
atively the  same  sfieed  on  land  an<l  on  the  Atlantic  two  or  three  ilavs 
better  time  l>ossibly  than  c^tn  be  made  by  way  of  San  Franscisco. 

Senator  Blair.  What  has  been  the  diminution  of  Biiii.sh  trade  by 
way  ot  Asia  ? 

Mr.  Van  Horne.  Between  .Jai)an  and  China  and  the  United  States 
and  Canada,  passing  through  the  Suez  Canal,  it  has  been  reduced  75 
I)er  cent. 

Senator  Gorman.  That  comes  from  the  establishnn-nt  of  this  line  of 
steamers  that  you  have  on  now. 

Mr.  Van  Horne.  I  think  that  is  the  cause  of  the  increase  by  way  of 
the  American  and  Canadian  ])orts  on  the  J'a(;ific  coast.  It  set  the  lineH 
running  from  San  Francisco  and  Tacoma  a  little  more  actively  at  work 
ancl  between  us  all  we  have  carried  across  about  twice  the  annmnt.  I 
think  tlie  trathc  has  doubled  over  any  j.eriod  before  we  opened 

Senator  Gorman.  Now  as  to  the  through  trade  to  Liverpool,  1  under- 
stand you  to  say  you  have  from  two  and  a  half  to  three  «iav.s'  advantage. 

Mr.  VAN  Horne.  That  is  respecting  passengers;  we  expect  never  to 
have  any  freight  business  between  Liverpool  an.l  China  and  .Japan. 
JNot  even  tea.  ^\e  carried  three  or  four  chests  to  Liverpool  once  to  show 
what  we  could  do,  but  it  docs  not  pay.  The  Fnglish  teaw  are  from 
l^iiHia.     1  liey  do  not  use  any  Japanese  teas,    i^ot  vix'lmiidredth  of  1 


TgE    UNITED    STATES    AND    CANADA.  243 

per  cent,  of  the  teas  they  use  are  Japanese  teas.  In  fact  I  think  only 
one-half  ton  of  Japanese  tea  was  used  in  one  year  by  England.  The 
Japanese  trade  in  teas  is  with  Canada  and  the' United  States,  and  not 
with  England. 

Senator  Gorman.  So  you  are  looking  for  the  development  of  the  pas- 
senger trade  and  you  rely  upon  that  for  compensation  ? 

Mr.  Van  Horne.  As  far  as  Great  Britain  is  concerned  we  rely  upon 
that. 

Senator  Gorman.  Taking  New  England  and  New  York  points,  what 
would  be  the  difference  in  time  from  the  United  States  ? 

Mr.  Van  Horne.  Assuming  that  there  are  just  as  fast  vessels  run- 
ning from  San  Francisco  and  China,  the  difference  will  not  be  much. 
We  have  a  few  hundred  miles  advantage  in  distance,  but  the  time  de- 
pends on  the  engines  a  good  deal. 

Senator  Gorman.  What  difference  will  that  make  in  the  rate  of 
freights  as  between  your  ships  and  American  ships? 

Mr.  Van  Borne.  It  will  not  be  much.  Our  boats  are  more  expen- 
sive to  build.  The  diffeiencein  subsidy  will  not  cover  the  difference,  I 
tbiuk.  That  is,  what  subsidy  there  is  that  is  applicable  to  the  ocean 
part  of  the  service.  This  subsidy  covers  not  only  the  transportation  of 
mails  across  the  Pacific  but  across  the  continent  between  Halifax  and 
Vancouver. 

Senator  Gorman.  Still  there  are  £30,000  per  annum  left  for  that 
service. 

Mr.  Van  Horne.  I  assume  thatit  would  divide  about  equally.  Really 
the  railway  will  get  the  whole  benefit  of  it.  It  costs  just  as  much  to 
send  the  steamer  across  whether  it  carries  the  mails  or  not,  but  in 
carrying  mails  across  the  continent  we  have  the  hauling  four  times  a 
month  of  what  would  be  equivalent  to  hauling  acar  four  times  a  month 
some  3,500  miles;  say  14,000  car  miles  a  month. 

PACIFIC   COAST   TRAFFIC. 

Senator  Gorman.  I  understood  you  to  say  that  up  to  this  time  the 
through  trade  over  your  road  from  the  Sound  port  does  not  pay. 

Mr.  Van  Horne.  From  the  United  States  coast  south  the  freight 
business  does  not  pay. 

Senator  Gorman.  Why  ? 

Mr.  Van  Horne.  Well,  the  rates  are  too  low  for  the  distance.  We 
have  heavy  arbitraries  to  pay  at  both  ends.  We  have  to  pay  on  the 
San  Francisco  freight  an  arbitrary  rate  to  the  Pacific  Coast  Steam-shii) 
Company  for  bringiug  freight  up  to  Vancouver,  and  after  we  get  it  to 
the  St.  Lawrence  frontier  we  have  to  pay  arbitraries  to  the  American 
lines  leading  to  New  York  and  other  points  east. 

Senator  Gorman.  Do  you  own  the  line  of  steamers  between  San 
Francisco  and  Vancouver? 

Mr.  Van  Horne.  It  belongs  to  the  American  company  at  San  Fran- 
cisco, and  they  charge  there  what  they  like. 

Senator  Gorman.  Did  not  your  road  establish  that  line  ? 

Mr.  Van  Horne.  It  was  in  existence  years  before  the  Canadian 
Pacific  was  heard  of. 

Senator  Gorman.  Between  where  ? 

Mr.  Van  Horne.  Between  San  Francisco  and  Victoria,  British  Co- 
lumbia, and  I  think  it  is  yet  enjoying  a  Canadian  subsidy  for  keeping 
up  the  trade  between  San  Francisco  and  British  Columbia, 

Se^iitor  Gorman.  How  much  is  tliat  subsidy? 


244 


TRANSPORTATION    INTERESTS    OF 


Mr.  Van  Horne.  I  think  $15,000  or  $20,000  a  year. 

Senator  Gorman.  Are  tliey  weekly  or  daily  steamers! 

Mr.  Van  Horne.  Weekly  steamers. 

Senator  Gorman.  You  say  it  is  an  American  line  ! 

Mr.  Van  Horne.  A  San  Francisco  line. 

Senator  Gorman.  How  much  tonnage  do  you  get  from  San  Fran- 
cisco, taking  the  tonnage  of  last  year? 

Mr.  Van  Horne.  I  do  not  know.  It  was  not  very  much ;  in  fact  I 
have  never  seen  any  statistics  covering  it.  It  is  nothing  that  wc  ever 
deemed  important  enough  to  keep  account  of. 

Senator  Gorman.  Can  you  furnish  a  statement  showing  that? 

Mr.  Van  Horne.  If  you  would  like  such  a  statement  of  course  we 
can  furnish  it. 

Senator  Gorman.  You  n)ay  incorporate  it  in  your  statement  before 
the  committee, 

Mr.  Van  Horne.  The  statistics  of  the  entire  "State  to  State"  freight 
traffic  carried  by  the  Canadian  Pacitic  Ivailway  for  the  years  18S7  and 
1888  are  as  follows,  and  to  these  I  have  added  the  freight  traffic  sta- 
tistics of  the  Transcontinental  Association  for  the  first  full  twelve 
months  after  its  organization,  namely  from  31st  January,  1888,  to  31st 
January,  1880. 

States  to  States  freight  traffic  carried  hij  the  Canadian   Pacijic  liailvatf   Company  ria 

I'ancourvr. 


In  1888 

Total  transcontinental  tonnngp  carriefl  by  nil  tlip  tmnnrontfnpntal  asMtcfa- 

tion  lino.s  for  twelve  moiithn  eniling  .laniiarv  '.i\.  1KkS»    

Percentiif:!'  of  interstite  trauMi-ontinental  tonnage  haniUed  by  the  Cooudian 

Pacitic  Kail  way  Company  iliiiinf;  above  period 

Via  Sault  Ste.  Marie,  from  February  22  to  December  31,  1888 


Statement  of  interstate  tonnage  ria  f'anroiircr  to  and  from  I'ugcl  f<onnd  and  San  Francisco, 


Consigned  via— 

Went  bouniL 

East  bound. 

1887. 

1888. 

1887. 

1888. 

Tons. 
1,381 

Tom. 

1,1)73 

JO."; 

2 

4.10 

1.31fi 

I 

811 

Torn. 

1,  I0« 
437 
622 

Tons. 
121 

Montreal  Junction 

1  778 

IJrock  villa 

643 

Prescott 

131 

48 

104 

841 

....  ^. 

"6,'442 

861 

Ottawa 

7 

St.  Pol vcarpo 

42 

St.  Thomas 

Toronto 

6 
2,685 

1 
4,764 
ISiii 

Em  erson 

1  ''17 

Gretna "/ 

Total 

1  804  1  II  a-ynx 

0. 6.')! 

4,026 

Grand  total : 

1887 

1888 


Tons. 
14..^4.S 
U  8J2i 


THE  UNITED  STATES  AND  CANADA. 


245 


Statement  of  interstate  tonnage  via  Sault  Sfe.  Marie,  east  and  west  hound'  from  opening  of 
line,  February  22, 18b8,  to  December  31,  1888. 


Consigned  via — 

Westbound. 

East  bound. 

Montreal 

Tons. 
360 

3.  ^miu 

5,72Uyif5 
2, 512 

Tons. 
15,  m,',?.h! 
2  658j3g5 

St.  Polvcai'pe 

21.  ii^^ 
9,  3262oVij 

Total 

12, 105  4=«8 

49  1345SSS 

Grand  total 

61,  240Jg§g 

Statement  of  tonnaije  carried  by  all  lines  in  the  Transcontinental  Association  for  the  year 

ending  January  1,  1889. 

Tons. 

"Westbound 509,  724123  J 

East  bound 235, 1965Vci"ij 

Total 744,  92Cj;i§ 

I  beg  leave  to  draw  particular  attention  to  the  fact  that  of  the  744,921  tons  carried 
by  the  Transcoutiueutal  Association  for  the  year  ending  January  31,  1889,  the  earn- 
ings from  which  were  $17,146,641,  the  Canadian  Pacific  Railway  carried  1.72  percent, 
of  the  tonnage  and  received  1.25  per  cent,  of  the  earnings. 

Owing  to  the  large  number  of  tourists  traveling  by  the  Canadian  Pacific  Railway 
and  to  the  large  emigration  to  the  northern  part  of  Washington  Territory,  near  its 
Pacific  terminus,  its  pr^portion  of  the  "States  to  States"  passenger  traffic  was  con- 
siderably greater  than  its  proportion  of  the  "  States  to  States"  freight  traffic,  but 
this  proportion  was  less  than  5  per  cent,  of  the  total  number  of  "States  to  States" 
passengers  carried  by  the  Transcontinental  Association.  The  exact  percentage 
can  not  be  stated  because  of  the  impossibility  of  distinguishing  between  States  and 
Canadian  passengers  ticketed  locally  to  and  from  our  Pacific  terminus  and  to  and 
from  eastern  Canadian  terminal  points. 

Statement  of  interstate  tonnage  via  Vancouver  to  and  from  San  Francisco,  year  ending 

December  31,  1888. 


Consigned  via — 

West 
bound. 

East 
bound. 

Tons. 
1,  tj55 
92 
2 
419 
1,  09Vi 
1 
81i 
1 
2,55  8 
96J 

T071S. 

70 

1,C88 

835 

7 

42 

1215 

Total 

6,  003J 

3,857 

Correct. 


W.  R.  MacInnes. 


Senator  Gorman.  Those  goods  all  come  to  you  under  bond,  as  a 
matter  of  course  ? 

Mr.  Van  Horne.  Yes. 

Senator  Gorman.  What  is  the  operation  ?  I  suppose,  of  coarse, 
they  come  in  bulk  in  the  hold  of  the  vessel  and  then  the  goods  are 
transferred  to  your  cars. 

Mr,  Van  Horne.  Transferred  to  our  cars. 


246  TRANSPORTATION    INTERESTS    OF 

Senator  Gorman.  Of  course  when  these  jjoods  are  being  transferred 
to  tbe  cars  a  United  States  otlieer  is  i)resent. 

Mr.  Van  Horne.  1  am  under  tlie  inipressicui  that  there  is  a  United 
States  officer  at  Vancouver,  or  an  oflicer  representing  tbe  collector  at 
Port  Townsend,  which  is  not  tar  away. 

Senator  Gorman.  And  your  cars  are  sealed  there  ? 

Mr.  Van  Horne.  I  do  not  know.  1  aiu  not  familiar  with  the  details 
of  moving  that  freight.  The  necessary  steps  are  taken  for  the  identili- 
cation  of  it  when  it  reenters  the  I'nited  States  at  the  St.  Lawrence 
frontier. 

Senator  Gorman.  Your  road  gives  bond  to  the  Government  i 

Mr.  Van  Horne.  The  Pacific  Coast  Steamship  Company  gives  the 
bond  and  we  indemnify  them. 

Senator  Reagan.  1  here  is  a  notice  that  has  to  be  put  upon  tiie  ships, 
I  believe. 

Mr.  Van  Horne.  They  give  some  sort  of  a  general  bond  I  know,  be- 
cause we  have  to  give  them  a  bond  of  indeinniiy. 

Senator  Keagan.  I  know,  as  a  relief  for  a  go(»tl  deal  of  detail,  they 
label  tlie  shijjs. 

Senator  (Jorman.  I  was  aware  of  that,  and  that  is  why  I  wanted  to 
get  from  Mr.  Van  Horne  the  exact  details.  Do  you  think  it  is  under 
the  direction  of  a  United  States  officer  and  that  tiie  United  States  is 
protected,  Mr.  Van  H«)rne  ? 

Mr.  Van  Horne.  Yes,  sir. 

OBJECT   OF   THE   CANADIAN    PACIFKJ   SI  HSIDIES. 

Senator  Gorman  Now  is  it  not  a  fact  that  the  inducement  for  grant- 
ing this  immense  subsidy  to  the  Canadian  I'acilic,  is  the  building  up 
of  a  great  through  line  between  Asia  and  I']urope? 

Mr.  Van  Hounk.  i  think  so  far  as  the  iWitisli  (iovernment  is  con- 
cerned, their  inducement  is  to  have  on  the  Pacific  Ocean  as  many  ships, 
which  may  be  ser\  iceable  in  case  of  war,  as  pu.ssible.  1  think  that  is 
their  chief  object.  They  do  not  care  much  aliout  saving  a  w«'ek  or  two 
with  tlie  mails.  I  i)resume  that  you  are  pidbaldy  aware  of  the  jealous 
watchfulness  of  both  Great  Britain  and  l{ussia,eacli  of  tlie  othi-r,  on  the 
Pacific,  and  that  Great  Ibitainseeks  to  keep  ln'rself  as  strong  as  possible 
on  the  Pacific  and  ])rei)ared  to  meet  an  emer;:ency.  I  think  that  the 
moving  cause  of  our  getting  the  subsidy  from  the  Imperial  (Government 
was  that  consideration.  Of  course  the  commercial  advantage  of  short- 
ening the  mail  communication  a  week  or  ten  days  between  Vokohoma, 
Shanghai,  and  Hong  Kong,  and  Great  Ibitain,  is  of  j^n'at  impoiiunce 
as  well,  but  they  could  not  be  moved  by  that  aigiiment  alone.  Of 
■course  iu  trying  to  get  a  subsidy  we  used  every  arjiument  that  we  couhl 
think  of. 

So  far  as  the  Canadian  Government  is  concerned,  the  Canadian  peo- 
ple generally  take  a  great  pride  in  the  Camulian  l'acili<-  Ivailway.  They 
look  upon  it  as  their  great  national  enterprise.  It  is  the  greatest  enter- 
l)rise  that  was  ever  carried  out  in  their  country.  It  <()nne<'t«  togetlu-r 
'.ill  their  provinces.  1  think  a  great  majority  of  the  people  an)  very 
anxious  to  see  it  succeed. 

Senator  Gorman.  So  that  it  has  two  objects,  one  military  and  jwlit 
ical  and  the  other  purely  commercial ! 

Mr.  Van  Horne.  Yes;  but  so  far  as  the  Canadian  Pacific  Kailway 
Company  are  concerned,  as  1  said  before,  their  only  object  is  to  nmke 
the  most  money  they  can  out  of  the  Canadian  Pacific  Kailwav  for  their 


THE  UNITED  STATES  AND  CANADA.  247 

share-holders.  They  are  not  moved  by  sentiment  or  political  considera- 
tions very  much. 

Senator  Goeiian.  That  is  the  private  share-holder  ? 

Mr.  Van  Horne.  The  private  share  holder  and  the  directors,  and  I 
can  speak  for  the  president,  too. 

observance  of  the  interstatecoioierce  law. 

Senator  Gorman.  I  understood  you  to  say  a  moment  ago  that,  in 
point  of  fact,  the  Canadian  Pacific  observed  the  requirements  of  tlie 
interstate-commerce  law.     What  do  you  mean  by  that  ? 

Mr.  Van  Horne.  1  mean  that  all  United  States  freight  and  all 
freight  we  take  from  one  point  in  the  United  States  going  into  Canada 
and  freight  from  Canada  into  the  United  States  to  another  point  in  the 
United  States,  is  carried  in  conformity  to  the  provisions  of  the  inter- 
state commerce  act,  so  far  as  we  understand  those  provisioiis. 

Senator  Gorman.  That  is  to  say,  you  publish  your  rates  on  the  roads 
located  within  our  territory  ? 

Mr.  Van  Horne.  Yes. 

Senator  Gorman.  And  you  take  the  freight  through  to  the  point  of 
destination  without  giving  rebates  or  drawbacks  of  any  description. 

Mr.  Van  Horne.  Yes,  sir.  I  believe  we  fully  comi>ly  with  the  re- 
quirements of  the  act  in  that  respect.  Every  agent  we  have  working 
on  United  States  territory,  as  I  understand  the  law,  is  liable  to  impris- 
onment if  we  fail  to  do  so. 

Senator  Gorman.  What  portion  of  the  dead  freight  goes  through 
from  your  sea-port  to  Europe  ? 

Mr.  Van  Horne.  We  have  done  practically  none  of  that  business. 
Of  the  export  business  from  United  States  points  to  Great  Britain  we 
have  not  much.  It  is  almost  infinitesimal.  There  is  nothing  in  it.  We 
have  not  sought  the  business.  We  are  building  a  line  to  the  Detroit 
Eiver  now,  and  possibly  we  may  try  to  get  some  of  it  when  it  pays. 

Senator  Gorman.  You  observe  the  provisions  of  our  law  upon  that 
trade  alone. 

Mr.  Van  Horne.  Yes,  sir. 

Senator  Gorman.  But  how  as  to  the  other  branch,  where  our  roads 
are  required  not  to  charge  more  for  a  shorter  haul  than  a  longer  haul  ? 
Do  you  observe  that  as  to  all  freight  going  over  your  road,  no  matter 
where  it  originates  ? 

Mr.  Van  Horne.  I  think  it  is  observed  all  the  way  through.  I  re- 
member overhauling  our  traffic  department  only  a  few  months  ago  for 
a  reduc.ion  of  rates  in  the  interior  of  British  Columbia,  and  I  was  told 
that  it  had  to  be  done  on  account  of  the  interstate-commerce  act.  Our 
intermediate  rates  were  governed  by  the  provisions  of  that  act  as  well 
as  the  intermediate  rates  of  railways  in  the  United  States.  I  do  not 
know  but  that  we  have  misconstrued  the  law  in  that  respect. 

Senator  Gorman.  You  do  not  mean  to  say  that  you  apply  that  prin- 
ciple to  freight  originating  in  Canada  for  delivery  to  points  in  Canada  ? 

Mr.  Van  Horne.  Yes,  sir.  We  have  no  higher  intermediate  rate 
than  the  rate  we  get  on  State  to  State  traffic  carried  over  the  same 
line,  80  I  am  informed  by  our  traffic  department. 

Senator  Gorman.  So  you  voluntarily  enforce  the  long  and  short  haul 
clause  ? 

Mr.  Van  Horne.  We  had  to  do  it  or  stay  out  of  the  business,  as  we 
construed  the  law.  We  did  not  want  to  pay  the  fines  or  have  our  agents 
go  to  prison.     I  think  our  tariff  manager  was  so  advised,  and  he  made 


248  TRANSPORTATION    INTERESTS    OP 

Lis  tariffs  in  accordance  witl»  this  advice.  This  was  the  case  only  a 
short  time  ago.  1  do  not  thiuli  there  has  been  any  change  or  1  should 
have  heard  of  it. 

CONTROL   OF   THE   SAULT   STE.  MARIE  BRIDGE. 

Senator  Gorman.  The  chairman  asked  you  about  the  control  of  the 
bridge  over  the  Sault  Saint  Marie.  I  heard  your  statement  about 
various  roads  centered  there  in  which  you  have  an  interest.  Is  it 
not  a  practical  fact,  notwithstan<liiig  the  two  or  three  organizations, 
that  your  road  has  absolute  control  of  that  bridge.  I  ask  you  if  that  is 
not  tije  fact  without  going  into  the  teciniicalities  of  it.  Is  it  not  tiie 
fact  that  the  men  wiio  control  the  Canadian  Pacific  have  the  absolute 
control  of  that  bridge  and  «lett-rmine  the  conditions  upon  which  any 
other  line  may  enter  and  cross  it  i 

Mr.  Van  Hokne.  If  the  friends  of  the  Canadian  Tacilie,  who  are  in- 
terested in  the  Washburn  road  or  the  Atlantic  or  St.  I'anl  and  Sault 
Saint  INIarie  Railways,  were  to  act  together  with  the  Canjvdian  Pacific 
they  undoubtedly  would  control  that  bridge. 

Senator  Gorman.  And  that,  in  point  of  fact,  as  we  understand  it  in 
business  attairs,  puts  it  absolutely  under  one  control  f 

Mr.  Van  Hokne.  No,  sir.  We  have  never  ventured  to  act  in  any 
matter  connected  with  the  Sault  Saint  Marie  bridge  without  the  consent 
of  the  other  lines. 

Senator  Gorman.  I  understand  that  you  go  through  with  the  form 
of  it. 

Mr.  Van  Horne.  We  do  not  take  any  more  trouble  than  we  can  help. 

Sen.ator  Gorman.  As  I  supposed,  but  if  tlieCanadian  Pacitic  governs 
the  policy  that  controls  the  tratlic  of  that  bridge,  is  ni>t  your  resolution 
or  determination  absolute! 

Mr.  Van  Hokne.  So  far  as  my  detemination  as  the  presiilent  of  the 
Canadian  Pacific  is  concerned,  I  can  say  it  is  absolutely  one-half. 

Senator  Gorman,  lint  you  can  step  «)ver  into  the  adjoining  office  and 
control  a  road  that  gives  you  three-fourths  of  it. 

Mr.  V^AN  lIoKNE.  If  it  were  anything  within  reason  I  could  safely 
count  on  controlling  it,  I  think.  If  I  were  to  go  to  our  friends  who  are 
interested  in  those  roads  and  satisfy  tlu-m  that  my  position  was  right 
in  the  matter  I  could  contml  it  witliout  any  doubt. 

Senator  Keagan.  1  believe  1  understood  you  to  say  that  your  roa»l 
was  a  member  of  the  Transcontinental  Trathc  Association. 

Mr.  Van  IIorne.  Acs,  sir. 

Senator  Keagan.  What  other  roads  are  members  of  that  association  ? 

Mr.  Van  Uorne.  I  do  not  know  that  1  <an  nanu'  all  of  them,  as  1 
am  not  familiar  with  the  everyday  details  of  the  association.  The 
chief  ])artiesto  it  are  the  Central  Pacific,  the  Union  I'acitic,  I  believe; 
the  Southern  Pacific  1  know;  and  the  Canadian  Pacific.  There  are 
some  other  roads  representing  jmrtions  of  transcontinental  lines. 

Senatcu'  Reagan.  What  arrangement  is  ma«le,  can  you  state  to  us, 
for  the  division  of  tratlic  among  tiiose  roads? 

Mr.  Van  IIohne.  I  do  not  think  there  is  anv  arrangement  for  the 
division  of  trallic.  It  is  a  good  deal  like  the  Trunk  Line  Association 
which  Mr.  Roberts  described  to  you  this  morning. 

Senator  Keagan.  I  believe  that  ditl'crentials  are  allowed  as  between 
these  roads  ? 

Mr.  Van  Horne.  Yes;  but  I  do  not  know  as  to  what  extent.  I  do 
not  know  how  they  are  arranged.  In  some  particidar  wkses  we  get  dif- 
ferentials. 


THE    UNITED    STATES    AND    CANADA.  249 

Senator  Reagan.  Do  you  know  what  the  general  average  of  differ- 
entials  in  favor  of  yonr  road  is  as  against  the  others  ? 

Mr.  Van  Horne.  No.  I  only  know  that  iu  proportion  to  the  dis- 
tance the  differentials  are  quite  small. 

Senator  Reagan.  Is  it  as  much  as  20  per  cent.  ? 

Mr.  Van  Horne.  Oh,  no. 

Senator  Reagan.  Is  it  not  as  much  as  25  per  cent.  ? 

Mr.  Van  Horne.  No,  sir  ;  it  is  not. 

Senator  Reagan.  Will  you  state  the  basis  upon  which  these  differen- 
tials are  allowed  and  tbe  reason  for  it  ? 

Mr.  Van  Horne.  Just  the  same  reason  as  prevailed  for  the  differen- 
tial allowed  by  the  Trunk  Line  Association  to  the  Erie  road  and  for  the 
dift'erontials  which  have  been  allowed  among  the  other  trunk-lines  in 
times  past.     It  is  an  old  precedent. 

Senator  Reagan.  That  is  a  good  answer,  but  we  do  not  understand  it. 

Mr.  Van  Horne.  I  was  going  to  explain  it  further.  It  is  for  the 
purpose,  really,  of  preserving  i>eace.  A  railway  that  is  under  a  disad- 
vantage in  point  of  time  or  capacity  is  not  able  to  get  any  i^ortion  of  the 
traffic,  but  as  they  are  bound  to  make  the  best  use  they  can  of  their 
property  and  to  take  advantage  of  every  opportunity  to  get  some  earn- 
irigs,  it  has  been  found  best  in  many  cases  to  allow  to  roads  under  such 
disadvantage  a  diflereutial  that  will  enable  them  to  pick  up  about  their 
proper  proportion  of  the  traffic. 

directors   of   the   CANADIAN  PACIFIC  LINES. 

Senator  Gorman.  Can  you  furnish  the  committee — not  now,  but  you 
can  insert  it  in  your  statement — the  directors  for  188S-'89,  of  all  the 
lines  that  you  are  interested  in  by  stock,  lease,  or  otherwise,  or  that  you 
control,  including  the  road  through  Maine? 

Mr.  Van  Horne.  Do  you  mean  of  all  the  roads  in  the  United  States 
in  which  the  Canadian  Pacific  Railway  Company  as  a  company  has  any 
interest"? 

Senator  Gorman.  Yes;  either  by  the  ownershi])  of  stock,  lease,  or 
otherwise. 

Mr.  Van  Horne.  All  right,  sir,  I  will  do  so. 

The  statement  is  as  follows  : 

The  directors  of  tbe  luternatioual  Railway  of  Maine  (leased  to  the  Canadiau 
Pacific  Railway  Company)  are — 

Mr.  W.  C.  Van  Horne,  President,  Montreal. 

Mr.  T.  G.  Shanghnessy,  Vice  President,  Montreal. 

Sir  George  Stephen,  Bart.,  Montreal, 

Sir  Donald  A.  Smith,  K.  C.  M.  G.,  Montreal. 

Mr.  George  Olds,  Montreal. 

Mr.  E.  R.  Burpee,  Bangor,  Maine. 

Mr.  Charles  F.  W^oodard,  Bangor,  Maiiie. 

The  namesof  the  directors  of  the  Minneapolis,  St.  Panl,  and  SanltSte.  Marie  Rail- 
way and  the  Duliith,  South  Shore  and  Atlantic  Railway,  in  which  the  Canadian 
Pacific  is  not  interested  as  a  company,  are  also  given  for  the  information  of  the  com- 
mittee. 

Minneapolis,  St.  Panl  and  Sanlt  Ste.  Marie  Railway: 

Hon.  W.  D.  Washburn,  Minneapolis,  Minnesota. 

Thomas  Lowry,  Minneapolis,  Minnesota. 

R.  B.  Laugdon,  Minneapolis,  Minnesota. 

Jno.  Martin,  Minneapolis,  Minnesota. 

C.  H.  Pf  ttit,  Minneapolis,  Minnesota. 

H.  E.  Fletcher,  Minneapolis,  Minnesota. 


250  TKANSPORTATION    INTERESTS    OF 

Miuneapolis,  St.  Paul  and  Sault  Sto.  Marie  Railway-Coiitiiiued. 

O.  C.  Merriaiii,  Miiiueapoli.s,  Mitiin-sulii. 

Hon.  J.  S.  I'lllsbmy,  Miiineiii>ulis.  Minm-Hota. 

\V.  Grfgory,  MiiiiK'apolis.  Aliimcsota. 

Hon.  M    B.  Kooii,  Miiinca|M>lis,  Minnesota. 

A.  H.  Linton,  Minneapolis,  Minnt-sota. 

H.  C.  Siille,  MiniitapoliH.  Minmsota. 

J.  C.  Oswald,  Minneapolis,  Minnesota. 

President,  Hon.  W.  D.  Waslilmrn. 

Vice-President,  Tlionias  J^owry. 
Duluth,  South  Shore  and  Atlantic  Railway. 

Plon.  .James  McMillan,  ]>etroit,  Michi^.in. 

Sir  Georjje  Stephen.  Hart.,  Montreal,  Canada. 

W.  C.  Van  Home,  Montreal,  Cana<la. 

Sir  Donald  A.  Smith,  K.  V.  M.  O.,  Moutreal,  Canada. 

Geor<;e  I.  .Seney,  New  York. 

Calvin  S.  Hrice,  New  York. 

John  (i.  Moore,  New  York. 

John  W.  Sterliufi,  New  York. 

Sam'l  Thomas,  New  York. 

Richard  J.  Cross;  New  York. 

Thomas  W.  Pearsall,  New  York. 

President,  Hon.  J.imes  McMillan. 

1st  Vne-President,  ('alvin  i^.  Hrice. 

2nd  Vice  President,  \V.  C.  Van  Home. 
The  following  are  the  directors  of  tin-  Canadian  Paeilic  Railway  Coinpanj-; 

Sir  (ieorg«!  .Steidien.  IJart.,  Montreal. 

Mr.  Wm.  C.  Van  Ilorne,  Montreal. 

Sir  Donald  A.  Smith.  K.  C.  M.  (J..  M.  P.,  Montreal. 

Mr.  Richard  H.  Anyus.  M<mtreal. 

Mr.  iMlnnmd  15.  Osier,  Toronto. 

Mr.  Sandford  Flemin-,',  C.  H.,  C.  M.  Ct..  Ottawa. 

Mr.  R.  V.  Martinsen,  Amsterdam  and  New  York. 

Hon.  W.  J>.  Scott,  Erie.  Pa. 

Mr.  Georjfe  R.  Harris.  Hostoii. 

Hon.  J.  J.  C.  Aidx.tt,  Q.  C,  Montreal. 

Hon.  George  A.  Kirkjiatrick.  .M.  P.,  Kin;;stun. 

Mr.  Richiird  J.  Cross.  New  Y-rk. 

Mr.  Wilmot  D.  Matthews,  Toronto. 

Hon.  Donald  A.  Maclnnes,  Hamilton. 

Mr.  Thomas  Skinner,  I.onrion. 

President,  Mr.  W.  C.  Van  Home. 

SUBSIDIES   TO   CANADIAN    AND    AMERICAN    LINES    COMPARED. 

Mr.  Van  Horne.  J  would  like,  if  you  will  ix-nnit  nie,  Mr.  Cliairman, 
to  niake  one  or  t\vo  points  clear  that  .si-ein  to  he  very  Kt*>'«'iiiH.v  inis- 
uuderstood,  especially  about  the  matter  of  .sul>.si«lii'.s  to  the  Canadian 
I'acific  llailway  in  ('anada. 

The  Chairman.  We  will  be  i»lea.sed  to  hear  you. 

Mr.  Van  IIorne.  The  amounts  tlmt  I  liave  .spoken  of  here  in  the 
way  of  .subsidies  are  ajiplicable  to  the  Canadian  Paeilic  line  from  Lake 
:Nipissing  west  to  the  Paeilic  Ocean.  They  iiave  no  relation  to  any  rail- 
way;  tliey  were  not  given  to  promote  the"  bnihling  of  anv  railway  that 
came  in  competition  with  eastern  trunk-lines,  and  they  shonhl  oiily  be 
considered  in  connection  with  the  line  in  competition  wi'th  the  Aniericau 
Pacific  lines. 

These  subsidies  amounted,  as  I  have  said,  to  thirty  five  million.s  in 
cash  and  eighteen  million  acres  of  land  for  a  line  coiiimeiicing  at  Lake 
Nipissing  and  running  to  the  Pacific  Ocean.  The  Nort  hern  Pacific,  for 
a  railway  only  half  way  across,  got  fortv-six  nidlion  acres  of  land  with 
an  infinitely  easier  line  to  construct.  "The  ['vUm  I'acific  was  a  .still 
easier  line  to  con.struct  than  the  Northern  Pacific;  .so  that  it  will  be 
found  that  the  subsidies  given  to  our  railway  are  very  much  less  in  pro- 


THE  UNITED  STATES  AND  CANADA.  251 

portion  to  what  they  had  to  do  than  those  given  by  the  United  States 
to  the  Northern  Pacific,  and,  I  think  I  am  safe  in  saying,  to  the  Union 
Pacific  and  the  Central  Pacific. 

The  Canadian  Pacific  in  Ontario  has  received  no  Dominion  subsidies 
whatever  for  its  lines,  and  I  do  not  think  the  Grand  Trunk  lines  in  On- 
tario have  received  any  Dominion  subsidies  or  Provincial  subsidies 
whatever.  These  are  the  lines  that  are  in  competition  with  the  Amer- 
ican trunk-lines. 

It  is  true,  some  small  local  lines  have  been  subsidized  by  the  Domin- 
ion Government  to  the  extent  of  two  or  three  tliousand  dollars  a  mile, 
and  that  some  portions  of  these  little  branch  lines  have  come  to  form 
part  of  the  Grand  Trunk  or  Canadian  Pacific  through  lines,  by  purchase 
or  otherwise  ;  but  as  far  as  the  Canadian  Pacific  Railway  is  concerned, 
no  subsidy  has  been  given  it  in  any  shape  or  form  aside  from  the  sub- 
ventions as  provided  in  the  original  contract  with  the  government  in 
1880. 

The  idea  seems  abroad,  and  has  been  thoroughly  circulated  in  the 
newspapers  on  this  side  of  the  line,  that  the  Canadian  Pacific  is  a  sort 
of  l^ampered  pet  of  the  Dominion  Government,  and  that  it  is  in  receipt 
of  favors  every  daj-.  The  Canadian  Pacific  Company  gets  no  assistance 
from  the  Dominion  Government  except  to  the  extent  of  the  ordinary- 
compensation  for  carrying  the  mails  just  as  the  roads  do  here  in  thfs 
country,  except  that  we  do  not  get  so  much. 

Mr.  Roberts,  in  his  testimony,  referred  to  the  advantages  enjoyed  by 
the  Canadian  Pacific  in  the  way  of  getting  in  materials  free  of  duty  from 
Great  Britain,  but  the  same  materials  that  come  in  from  England  free 
of  duty  come  in  from  the  United  States  free  of  duty.  Canada  exacts 
the  same  duty  against  Great  Britain  that  she  does  against  the  United 
States,  and  the  Canadian  Pacific  has  been  able  at  times  to  get  Amer- 
ican steel  rails  in  just  as  readily  and  cheaply  ils  English  rails,  and  there 
was  no  discrimination  whatever  in  duties  against  them. 

A  very  large  proportion  of  the  rolling  stock  of  the  Canadian  Pacific 
is  of  American  build.  I  think  1  am  safe  in  saying  that  one  half  of  our 
rolling  stock  was  built  in  the  United  States,  and  a  very  large  quantity 
of  the  rails  used  in  the  construction  of  our  road  were  made  in  the  United 
States — not  a  very  large  proportion,  but  a  very  considerable  propor- 
tion. Aside  from  the  rails,  ten  times  the  amount  of  materials  and  ap- 
pliances came  from  the  United  States  that  came  from  Great  Britain. 

Now,  in  regard  to  these  steam-ship  subsidies,  only  the  Pacific  steam- 
ship subsidies  are  to  be  given  to  the  Canadian  Pacific  Railway  Com- 
pany. These  subsidies  are  not  given  by  the  Dominion  Government,  but 
by  the  Imperial  Government,  and  the^'  have  no  relation  whatever  to 
any  competition  with  United  States  lines,  and  there  is  no  thought  of 
such  a  thing  in  Canada. 

The  relations  between  the  Canadian  Pacific  Railway  Company  and 
the  Dominion  Government  are  no  closer  than  those  between  the  Penn- 
sylvania Railroad  Company  and  the  Government  at  Washington — not 
so  close  really.  In  fact,  there  has  been  a  coolness  between  the  Cana- 
dian Pacific  Company  and  the  Dominion  Government  for  a  number  of 
years  back. 

COST   OF   OPERATION   OF   THE   CANADIAN  PACIFIC. 

Senator  Gorman.  I  would  like  to  know  something  about  the  cost  of 
the  operation  of  your  road.  It  was  stated  this  morning — I  do  not  know 
whether  you  heard  it  or  not — that  you  could  get  labor  for  much  less  in 


252  TRANSPORTATION   INTERESTS   OP 

Canada,  and  that  you  could  get  men  to  operate  your  trains  and  improve 
your  track  and  all  tliat  sort  of  tliinj:  cheaper  than  the  same  servict^ 
could  be  had  in  the  United  States.  Can  you  tell  the  committee  how 
much  difference  there  is,  as  a  matter  of  fact  ? 

Mr.  Van  Horne.  There  is  very  little  ditlereiice  in  the  cost  of  lahor 
between  the  two  countries.  The  dilferenee  lias  been  {jreatly  redur«'d  of 
late.  So  far  as  tra(^kmen  arr  concerned,  the  wag«'s  pai<l  here  and  in 
Canada  are  practically  the  sann'.  They  ai*-  fully  as  hiiili  in  Canada  as 
in  the  States,  and  jjossibly  a  trith*  hiylH'i'.  1  tliink  cn^intM'rs,  braUciiMMi, 
and  conductors  get  a  little  less  than  in  the  States;  prohahly  If)  pt-r 
cent.  less.  Mechanics,  such  as  machinists,  blacksmiths,  boiler  makers, 
etc.,  get  i)erhai)s  10  per  cent,  less  than  in  the  States,  whih'  carpenters, 
brick-layers,  and  stonemasons  get  probably  15  or  20  per  cent,  more 
than  they  do  in  the  States. 

Senator  (Iokman.  Why  is  that! 

Mr.  Van  IIokne.  Very  large  building  operations  are  going  on  all 
through  Canada ;  tlii?  country  is  very  prosperous.  There  is  a  great 
deal  of  building  going  on,  and  the  wages  of  men  engaged  in  building 
operations  are  very  liberal. 

Senator  Gorman.  How  about  the  cost  of  material  ,'  Vou  buy  all  your 
steel  material  for  rails  from  England,  do  you  not  f 

Mr.  Van  IIoune.  We  have  been  buying  aliiM»st  exclusively  from  Eng- 
land or  from  Germany.  At  tin*  jiresent  time  Eiijilish  rails  are  laid 
down  in  Montreal  at  $25  a  ton,  while  Ameneaii  rails  «'ost  $J<)  a  ton. 
Five  years  ago  we  bought  large  «piantilies  of  Am»'ri<'an  rails. 

Senator  Gorman.   What  duty  do  yon  pay  on  steel  rails  T 

Mr.  Van  IIohnk.  ^Ve  pay  no  <liity  on  steel  rails,  whether  they  come 
from  England  or  the  United  States. 

Senator  Gorman.  What  is  the  difference  in  the  cost  «>f  engines,  be- 
tween Canada  and  this  country  f 

Mr.  Van  Horne.  Locomotives  are  a  little  more  expensive  in  (Canada 
to  buy  from  the  manufa(ttiirers  than  they  are  in  the  Unite«l  States.  I 
think  they  cost  about  15  i)er  cent,  more  in  Canada.  In  our  own  shops 
we  make  them  lor  a  little  less  than  we  can  buy  them.  We  save  a 
portion  of  the  manufacturer's  prolit.  We  have  extensive  shops  of  our 
own. 

Senator  Gorman.  There  is  an  imi)ression  prevalent,  and  I  have  se«'n 
it  published  in  the  newspapers,  that  owing  to  the  l(K-)tion  of  your  road, 
it  beiug  so  far  north,  that  there  are  three  or  four  mouths  in  the  year 
when,  on  account  of  climatic  iutluencts.  you  can  not  begin  to  <'ompete 
with  the  Northern  Pacilic  or  the  Union  I'aeilie.  What  is  the  fact  about 
that! 

Mr.  Van  Horne.  I  think  we  can  run  with  absolute  certainty  every 
day  in  the  year. 

The  Chairman.  Are  your  trains  never  snow  bound  ? 

Mr.  Van  Horne.  No,  sir.  We  may  sometimes  lose  an  hour  or  two, 
but  during  this  past  winter  I  do  not  think  there  has  been  an  hour  lost 
through  stress  of  weather  from  the  begiiiiiiiig  of  winter  to  the  end. 

Senator  Keagan.  You  have  snow-sheds  in  the  ii.omitains,  have  you 
not  I  '  ' 

Mr.  Van  Horne.  Yes,  sir;  but  thev  are  not  snow  sheds  in  the  ordi- 
nary sense.  They  are  practically  tun'nels  made  of  re<l  cedar.  These 
snow-sheds  or  tunnels  are  very  expensive. 

Senator  Gorman.  So  that  you  have  reallv  no  disadvantages  in  com- 
peting with  the  American  lines  so  lUr  as  that  is  c(»n.'enied  f 

Mr.  Van  Horne.  I  think  we  are  in  a  better  condition  as  far  aa  that 
goes  than  some  of  your  roads. 


THE    UNITED    STATES    AND    CANADA.  253 

The  Chairman.  How  many  miles  of  that  kind  of  shedding  have  you  ? 

Mr.  Van  Hoene.  We  have  11  miles.  The  cost  of  this  sheddiug  aud 
the  works  couuected  therewith  was  about  $3,300,000. 

Seuator  Gorman.  How  do  your  grades  compare  with  those  of  the 
Isfortheru  Pacific  I 

Mr.  Van  Horne.  All  onr  grades  above  1  foot  to  the  hundred  are  con- 
centrated on  a  section  of  line  of  120  miles.  We  have  one  grade  of  4 
miles  heavier  than  any  on  the  Northern  Pacific  ;  about  as  heavy  as  the 
temporary  grades  of  the  Northern  Pacific  before  their  tunnels  were 
built. 

Senator  Gorman.  Then,  taking  it  altogether,  you  can  pull  a  greater 
number  of  tons  through  to  the  Pacific  with  the  same  power  than  can 
the  Northern  Pacific  ? 

Mr.  Van  Horne.  I  think  we  can  carry  traflBc  just  as  cheaply  as  any 
of  the  roads  can,  possibly  a  little  cheaper  than  some  of  them. 

Senator  Eeagan.  What  is  your  maximum  elevation  above  the  sea- 
level  I 

Mr.  Van  Horne.  Five  thousand  two  hundred  and  ninety-one  feet. 

Senator  Gorman.  Now  give  us  your  mileage  from  Puget  Sound  to  your 
best  eastern  shipping  port  via  Chicago  as  comi)ared  with  the  mileage 
of  the  Northern  Pacific  from  the  Pacific  coast  to  its  eastern  port. 

Mr.  Van  Horne.  I  think  we  are  shorter  from  New  l^ork  to  Vancouver 
than  any  of  the  lines  from  here  by  way  of  Chicago  to  Puget  Sound. 
Our  distance  must  be  about  the  same  as  the  Northern  Pacific  ;  that  is, 
our  distance  to  Vancouver  is  about  the  same  as  that  of  the  Northern 
Pacific  to  Tacoma.  We  are  at  a  disadvantage  in  competing  with  them 
at  Seattle  in  having  to  carry  our  tratiic  up  to  our  Pacific  terminus  by 
water. 

Seuator  Gorman.  So  that  your  conditions  are  such  that  you  can 
compete  today  on  this  traffic  with  any  of  the  American  lines'? 

Mr.  Van  Horne.  That  is  siuiply  taking  it  from  the  Pacific  coast  to 
a  point  on  the  Atlantic  coast.  Our  disadvantage  becomes  so  great  at 
San  Francisco  that  we  do  not  care  much  about  the  business. 

Senator  Gorman.  You  have  no  line  to  San  Francisco,  have  you? 

Mr.  Van  Horne.  No,  sir ;  only  by  boat. 

Senator  Gorman.  I  am  not  speaking  of  the  through  trade. 

Mr.  Van  Horne.  We  have  no  rail  connections  on  tlie  Pacific  coast. 

Senator  Gorman.  I  have  not  reference  to  the  through  trade;  but 
better  grades,  cheaper  rails,  somewhat  less  cost  of  labor  and  operation 
are  all  in  your  favor. 

Mr.  Van  Horne.  No,  I  think,  so  far  as  cost  of  operation  is  concerned, 
there  is  nothing  in  our  favor.  The  slight  ditterence  iu  some  classes  of 
labor  is  more  than  covered  by  the  additional  cost  of  fuel.  A  very  large 
portion  of  our  coal  comes  from  Ohio  and  Pennsylvania,  and  of  course  it 
costs  us  a  great  deal  more  for  coal  than  it  costs  the  American  railway 
lines.  That  would  put  us  at  a  considerable  disadvantage,  but  1  think 
our  advantage  in  the  way  of  grades  equalizes  it. 

Senator  Gorman.  You  have  coal  on  the  sound,  have  you  not  ? 

Mr.  Van  Horne.  We  have  coal  of  our  own  after  we  leave  Winnipeg 
near  the  Rocky  Mountains.    We  have  coal  on  the  Pacific  coast. 

Senator  Gorman.  You  have  coal  where  you  reach  the  heaviest  grades. 

Mr.  Van  Horne.  Yes,  very  near  to  the  heaviest  grades. 

Senator  Gorman.  In  that  respect  you  have  an  advantage  over  the 
Northern  Pacific.  . 

Mr.  Van  Horne.  No,  I  think  their  coal  comes  in  very  close  to  their 
heavier  grades, 


254  TRANSPORTATION    INTERESTS    OF 

KATES  ON  THE   CANADIAN  PACIFIC. 

Mr.  Van  Home  subsequently  submitted  the  following:  letter  from 
George  Olds,  geueral  traffic  manager  of  the  Canadian  racitic  llaihvay 
Company : 

TuK  Canadian  Pacikic  Railway  Compaxv, 

Office  ok  Gkxki:ai.  Tkakkh;  Maxaisku, 

MoHlrcal,  .htiii  22,  If'H'.). 

Dear  Sir:  In  giving  yonr  evidence  b«*forc  tlic  Seiiati^  Coiiimitte<'  in  Now  York,  I 
assume  yon  bad  iu  miud  the  t.-vriff  of  rates  imblished  in  my  circular  No.  4G,  of  Octo- 
ber 29,  188H.  .  ,  .        . 

This  tariU"  was  made  up  from  that  of  the  TranscoMtin«<ntal  AHsociahon  No.  M,  bearing 
date  September  1,  ItitiS,  but  wliicli  was  not  in  full  I'Ib-ii  until  n«'ar  themd  of  St-pt^MU- 
ber.  At  that  timet  considered  tiie  tran.-^conlinmtal  rates  aw  witiNfactorv  loourcompniiy 
on  any  interstate  or  domestic  tratli<:,  ami,  as  my. circular  indicatcn,  tijc  rates  were  not 
exceeded  ou  any  sliort-haul  doiuestic  tralbc. 

I  fouud  bitcr  tiiat  we  could  not  tnakt-  tlic  rates  <ui  our  douiustic  or  Canadian  busi- 
ness coulbrm  iu  all  cases  to  tiie  frc«iuent  chan;^;)-^  iu  tin-  interstate  or  traux-oiitineiital 
rates.  Ou  the  1st  of  January  the  transtoutiu««utal  taritfs  wt-re  n-vised,  and  while 
there  was  no  material  change  in  the  hx«'<l  cbiMs  rat«'s  Kov4>rn«-d  by  thn  ollicial  and 
Western  States  cla.ssilications,  yet  the  lar^:*-  list  <>f  <(»niuii>dity  rate8  isHued  by  the 
American  trausccmtiuental  Inus  January  1.  and  the  daily  or  niorr  freiiucut  <-han>;es 
aud  supplemeutary  tariHs  and  commodity  rate«  made  it  imiuKsible  and  <|uite  unni'<;- 
essary  for  us  to  follow  these  frequent  chaune«  in  respect  to  the  rates  on  our  l«>cal  (»r 
dom'  stic  business. 

One  or  two  instances  will  suflice  to  make  this  miu««  clear  to  you.  Sugar  is  rated  in 
the  transcontinental  tantf  at  *1.20  por  W)  poundH  fr«>ui  Ni-w  York  to  I'acilic  coast 
points.  We  soon  found  that  we  could  not  sl>ip  sugar  from  .Moutn-al  Kdinrrit-M  to  our 
Pacific  coast  ])oiuts  owing  to  the  low  priie  of  sii;;ar  at  San  Francisco  and  the  low 
freight  (15  cents  j)cr  100  jioiinds)  from  San  Erancisiii  to  Vam miver  aud  Victoria,  Brit- 
ish Columbia.  This  competition  fon  .d  us  to  r«'dui;«'  tin-  rat«  on  Hugar  from  Montreal 
to  Victoria  to  .$1  ]»er  100  pounds;  hut  because  we  were  oldi^ed  to  so  reduce  rates  to 
coast  points  I  |did  not  consider  it  necessary  to  make  Mimilar  reduetious  on  shipments 
to  points  in  the  interior  of  British  Columlda,  mucIi  as  Donahl,  K.indoopH,  etc. ;  iht-so 
remarks  ajjply  with  ecjual  force  to  nails  ,ind  all  staple  nianiifaetun's  of  iron. 

In  dealing  with  tlie  business  for  these  points  we  lollovv  the  practice  now  iu  force 
on  the  Northern  I'acilic  Railway,  namely,  of  adding  to  the  special  or  reduced  rate  to 
the  coast  the  local  rate  eastward,  say  from  Vancouver  to  Doii.ild  and  KaniliKi|>.s. 

To  this  extent — very  trilling  when  the  limited  volume  of  our  local  traflic  to  interior 
points  is  considered — we  havc^  departed  fnuii  th»'  strict  ruling  of  tin-  interstate  eoui- 
meice  law,  and  in  doing  this  we  have  Ibllowed  the  Norlheni  r.icilic  precedent,  which 
I  assume  is  sanctioned  l>y  the  Commissioners. 

Another  cause  of  dislurbaiue.  aud  one  which  has  caused  a  departure  from  the  de- 
sign of  my  circular  No.  4G  iu  respect  to  coinpli.ince  with  flu*  priii<i|de  of  the  long  aud 
short  haul  clause,  was  that  devolopeil  by  tin'  Nortlnrn  Pacilie  line  of  cutting  the 
rates  on  trallic  between  j»oints  iu  easti-rn  Canada  and  liriiish  Ciduinliia  cojist  pointx. 
The  Northern  Pacihc  feels  iVce  to  cut  such  rates  iu  competilioii  with  our  line  because 
this  tratricdoes  not  come  under  the  jurisdiction  of  the  interstate  i«)mineree  law.  That 
is  to  say,  freight  shipjied  from  a  point  in  Canada  when  carried  to  its  destination  in 
part  over  lines  in  the  United  States  is  not  considered  subject  to  the  same  laws  as  in- 
terstate trartic. 

So  far  as  States  traffic  is  concerned,  whether  ''States  to  St.ites"  traflic  or  trallic 
betwctn  Canada  and  the  Stat<-s,  we  have  been  govein^'il  by  the  interstate  commerce^ 
law.  We  have  not  attempted  to  discriminate  bet  ween  imlividuals  or  localities;  nor* 
have  we  paid  rebates  or  anything  equivalent  thereto  iu  any  shape  «ir  form  ;  nor  have 
we  assisted  our  American  conneclions  iu  any  way  to  evade  the  law. 

We  have  buen  unable,  as  I  have  before  stated,  and  lor  the  nasniis  stated,  to  bring 
our  domestic  traffic  strictly  within  tin-  hmg  and  short  haul  luimiple  ;  but  I  can  safely 
assure  you  that  both  the  letter  and  spirit  of  the  interstate  coiiniierco  lavs-  hiis  b«'eu 
far  better  observed  by  the  Canadian  Pacilie  than  by  any  of  its  competitors  in  the 
United  States.  The  reiM)rts  to  the  contrary  originate  witii  rival  lines  or  interostod 
parties  and  their  jmrpose  is  obvions. 

Tlie  laws  of  Canada  prohibit  pooling,  also  discrimiuatiins  as  to  lo-'.ililies  and  in- 
diyidUfils;  they  do  not,  however,  luohibit  c;irriers  from  eharginji  less  for  a  lonj  than 
tor  a  short  haul,  the  Canadian  lines  beiinr  U-ft  compnr.itively  tree  from  the  long  and 
short  haul  restriction,  owing  to  our  exti  nsive  lakotmast  lines  and  liie  ooni|>elition  the 
Wiiter  routes  insuro  to  shippers  <lniii)g  the  season  f^t'  navigation,  but  o<t|  dc\iatiou4 


THE    UNITED    STATES    AND    CANADA.  255 

from  the  long  and  sliort  haul  principle  in  this  domestic  traffic  do  not  in  the  slightest 
degree  aftect  our  American  competitors. 

The  full  opening  of  the  lines  between  Montreal  and  St.  Paul  and  Dulnth,  via 
Sault  Ste.  Marie,  for  all  traffic  may  require  us  to  malce  our  rates  (m  local  traffic  be- 
tween points  in  eastern  Ontario,  the  Province  of  Quebec,  and  the  Ottawa  Valley  and 
Sault  Ste.  Marie,  conform  to  the  long  and  short  haul  principle  of  the  interstate"  coui- 
merce  law.  As  we  have  but  recently  opened  this  line  for  through  traffic  our  exislKug 
local  tarifis  may  be  considered  temporary.  The  traffic  of  this  part  of  our  systeui^ 
during  the  season  of  navigation  is  exposed  to  lake  competition;  but  we  will  have  no 
greater  difficulty  in  conforming  strictly  to  all  the  provisions  of  the  interstate  com- 
merce law  than  will  our  American  competitors.  We  should  not,  however,  be  expected 
to  conform  to  that  law  any  more  strictly  than  they  do. 

With  regard  to  the  products  of  the  country  we  are  governed  in  Ontario  generally 
by  the  rates  from  Detroit  to  the  Atlantic  sea-board,  and  we  find  that  the  Detroit  rates 
are  as  high  as  we  can  get  on  domestic  produce  shipped  from  any  Ontario  poiut  east 
of  the  Detroit  River  and  the  Georgian  Bay.  The  necessity  which  compels  the  Cana- 
dian farmer  to  seek  foreign  markets  in  common  with  his  American  neighbor  forces  ua 
to  conform  to  the  rates  offered  by  the  American  lines. 
Yours,  truly, 

Geo.  Olds, 
General  Traffic  Manager. 

W.  C.  Van  Hokne,  Esq., 

President. 

Mr.  Vau  Home  also  submittetl  the  following  tariff  notice : 

[Circular  No.  46.] 

Canadian  Pacific  Railway, 
Office  of  General  Tkaffic  Manager. 

notice  to  shippers  and  connecting  lines. 

On  and  after  this  date,  the  maximum  rates  charged  by  this  company  on  freight 
from  New  York,  New  York  points,  Boston,  Boston  points,  Moutreal,  and  points  west 
in  the  province  of  Quebec,  and  from  all  points  in  the  province  of  Ontario,  destined  to 
points  in  British  Columbia,  east  of  Vancouver  and  New  Westmiusti^r,  and  delivered 
to  this  company  at  connecting  points  in  Eastern  Canada,  at  Montreal  Station,  and 
stations  west  in  the  province  of  Quebec,  and  at  all  points  in  the  province  of  Ontario, 
w^ill  be  the  through  rates  from  the  Atlantic  sea-board  points,  as  pertrans-coutiuental 
association  west  bound  tariff  No.  8,  dated  September  1,  1888,  and  governed  by  the 
Canadian  joint  freight  classification. 

[Classes  iu  cents  per  100  poiiuds.] 

4lime8l 16.001 

Stimesl 12.00; 

2timesl 8-00 

land  1-2 6.00 

1 4  00 

2 3.  .10 

3 3.00| 

Of  the  foregoing  maximum  rates,  American  and  Canadian  lines  in  the  provinces  of 
Quebec  and  Ontario  will  be  entitled  to  existing  tariff  or  agreed  arbitrary  rates  to 
points  of  connection  with  this  company. 

Agents  of  this  company  iu  Canada  will  not  apply  these  rates  in  cases  where  the 
existing  local  tariff'  from  their  stations  prescribes  lower  rates. 

^  Geo.  Olds, 

General  Traffic  Manager. 
Montreal,  Odoher  29,  1888. 

STATEMENT  OF  JOHN  NEWELL. 

Mr.  John  Newell,  president  of  the  Lake  Shore  and  Michigan  South- 
ern "Railway,  appeared. 

The  Chairman.  What  is  your  business  relation  now,  Mr.  ^ewefl? 

Mr.  Newell.  I  am  president  and  general  manager  ot  the  IvaUe  bhore 
^ud  Michigan  Southern  Bailwa;^, 


4 

2.50 

2.30 

6                 

2.(10 

7                   .           

l.XO 

g                      .           

, 1.60 

9 , 

1.40 

10 

1.20 

256  TRANSPORTATION    INTERESTS    OF 

The  Chairman.  You  have  seen  the  resolution  undrr  wiiicli  tlio  com- 
mittee have  been  conducting  tbis  examination,  aiul  have  heard  some  of 
the  statements  which  have  been  made.  ^A^)uid  you  prefer  to  go  on  and 
make  your  statement  in  your  own  way,  or  be  examined  ! 

Mr.  Newell.  Mr.  Chairman,  if  you  will  ask  the  questions  upon  which 
you  want  light,  I  will  endeavor  to  give  it  to  you. 

The  Chairman.  Very  well;  we  will  proceeil  in  that  way.  \\  hat  are 
the  terminals  of  the  Lake  Shore  and  Michigan  Southern  Railway  ! 

Mr.  Newell.  Chicago  and  Buffalo. 

The  Chairman.  Does  that  include  all  your  lines  ? 

Mr.  Newell.  The  Lake  Slu)reand  Michigan  Southern  Railway  com- 
prises four  or  five  roads  that  have  been  consolidated.  It  has  two  roiwls 
between  Cleveland  and  Elkhart. 

The  Chairman.  You  say  the  terminals  are  Chicago  and  BuflTalo  ? 

Mr.  Newell.  Yes,  sir. 

The  Chairman.  Have  you  any  business  connections  with  the  Crand 
Trunk  Railway  of  Canada! 

Mr.  Newell.  We  have  at  Detroit  a  connection  with  them,  and  we  do 
a  small  amount  of  business  with  them  at  that  point. 

COMPLAINTS  against   THE   GRAND   TRUNK. 

The  Chairman.  As  manag«'r  and  jtrrsident  of  the  Lak*'  Shore  and 
Michigan  Southern  liailway  do  y(»u  n-alizc  that  your  road  lias  sulfcrrd 
or  does  suffer  from  the  operation  of  the  (Irand  Trunk  line  of  Canada! 

Mr.  Newell.  For  the  period  sine*'  thr  Ciand  '1  lunk  has  lu-cn  in  ojn'r- 
ation,  they  have  been  a  constant  and  jM-rsistcnt  biddrr  for  trallic.  They 
have  gradually  increased  the  tonnage  of  their  line  from  Chicago;  so 
that  1  think  they  now  come  tirst  or  secon<l  on  the  list  of  carrying  roads 
from  Chicago  to  all  points,  but  mainly  to  the  seaports  of  Canada  and 
the  United  States — Montreal,  Portland,  Host4)n,  an«l  New  Y<Mk. 

The  Chairman.  So  that  they  are  becoming  an  ecpial  competitor  with 
any  other  road  ? 

Mr.  Newell.  Yes,  sir;  I  think  so,  taking  all  classes  of  traffic  to- 
gether. 

The  Chairman.  "NVhat  is  your  exjilanation  of  their  so  (piiekly  becom- 
ing a  competitor  of  the  American  roads  to  the  extent  they  ha\e? 

Mr.  Neavell.  I  think  it  is  due  to  their  persistent  and  constant  efforts 
to  secure  traffic  by  any  and  all  possilde  nu'ans. 

The  Chairman.  Do  you  mean  by  the  jdirase  "any  and  all  jmssible 
means"  violations  of  contracts  or  association  agre<Mnents? 

Mr.  Newell.  1  am  inclined  to  think  that  a  large  portion  of  their  suc- 
cess is  due  to  their  violation  of  contracts  and  compacts  which  they  en- 
ter into  for  the  maintenance  of  rates;  not  that  they  are  accustomed  to 
coming  into  the  field  openly  and  making  low  rates  publicly,  but,  as  a 
rule,  in  all  negotiations  they  are  fonn<l  advocating  high  rates,  and  after 
the  rates  have  been  established  making  low  on»'s  privately  where  they 
can  secure  large  shipments  by  doing  so. 

The  Chairman.  It  has  been  stated  several  times  that  there  is  a  trunk 
line  association  here,  of  which  Mr.  Roberts,  1  believe,  said  he  was  presi- 
dent, and  that  certain  trunk  lines  form  the  association.  Is  your  road 
in  that  association  ? 

Mr.  Newell.  No,  sir;  probably  not  in  the  one  mentioned  by  Mr. 
Roberts.  There  is  a  secondary  association,  embracing  all  the  lines  from 
Toronto,  Suspension  Bridge,  Buffalo,  Erie,  rittsbnrgh,  Parkersburgh, 
and  one  or  two  other  points  west  to  Chicago  and  St.  Louis,  lying  north 


THE  UNITED  STATES  AND  CANADA.  257 

of  the  Oliio  River  aud  south  of  the  lakes.    This  compauy  is  a  member 
of  that  association. 

The  Chairman.  Who  has  charge  of  that  association  1 

Mr.  Newell.  Mr.  Bhiuchard,  at  Chicago.  Our  road  is  in  that  asso- 
ciation, aud  so  is  the  Cliicago  aud  Grand  Trunk.  The  Grand  Truuk  is 
in  it  for  a  portion  of  its  road  ;  that  portion  extending  from  Port  Hurou 
to  Toronto. 

The  Chairman.  Now,  you  say  in  the  first  place,  that  the  Grand  Trunk 
makes  agreemeuts  in  the  association.  They  press  for  high  rates,  you 
say,  and  when  they  get  them  agreed  to  and  established,  then  they  cut 
and  slash  rates  and  carry  freight  at  lower  rates  than  the  rates  agreed 
upou  by  the  association. 

Mr.  Newell.  1  think  that  has  been  the  practice  of  the  Grand  Trunk 
for  the  last  fifteen  years. 

The  Chairman.  Have  you  any  actual  evidence  of  it  beyond  the  fact 
that  they  seem  to  get  more  business  than  they  ought  to  get! 

Mr.  Newell.  1  think  there  is  no  question  that  evidence  of  that  char- 
acter can  be  obtained  covering  the  entire  period  since  the  opening  of 
the  line  to  Chicago.  I  have  not  the  evidence  with  me,  but  I  have  no 
doubt  that  documentary  evidence  can  be  procured  to  show  it. 

The  Chairman.  Will  you  undertake  to  furnish  documentary  evidence 
to  that  effect ! 

Mr.  Newell.  I  will. 

Senator  Blair.  Has  the  Grand  Trunk  been  carrying  freight  at  rates 
lower  than  those  agreed  upon  in  your  association  since  the  enactment 
of  the  interstate  commerce  act  as  well  as  before? 

Mr.  Newell.  Yes,  sir. 

The  Chairman.  It  has  been  stated  here  over  and  over  again,  and  I 
suppose  you  heard  it  stated  by  Mr.  Van  Home ;  it  was  stated  yesterday 
by  Mr,  Hickson,  that  the  Canadian  Pacific  and  the  Grand  Trunk  scru- 
pulously observed  the  rates  established  by  the  association,  and  also  ob- 
served the  interstate  commerce  law,  as  it  has  been  interpreted,  in  all 
business  in  any  way  connected  with  the  United  States  either  in  going 
out  into  Canada,  or  going  put  into  Canada  aud  back  into  the  Unite<l 
States,  or  coming  from  Canada  into  the  United  States.  Now,  if  that  is 
not  the  fact,  the  committee  would  be  very  glad  to  have  the  evidence  of 
it  in  su(;h  form  as  that  it  can  not  be  contradicted. 

Mr.  Newell.  Well,  I  do  not  know  as  respects  the  Canadian  Pacific 
whether  it  is  the  fact  or  not.  My  observation  has  not  extended  to  that 
railway,  because  our  competition  has  not  been  with  the  Canadian  Pa- 
cific. 

The  Chairman.  And  you  have  reference  more  particularly  to  traflic 
going  out  of  Chicago  ? 

Mr.  Newell.  Yes,  sir ;  to  traffic  out  of  Chicago  and  other  points. 

The  Chairman.  What  other  points  f 

Mr.  Newell.  Toledo,  and  points  in  Michigan  and  Indiana. 

The  Chairman.  What  is  the  amount  of  the  traffic  on  your  road  ? 

Mr.  Newell.  I  do  not  remember  our  Chicago  tonnage,  sir. 

The  Chairman.  Is  your  traffic  from  Chicago  as  great  as  that  of  Mic 
Grand  Trunk  on  the  line  leading  from  Chicago  to  Detroit^ 

Mr.  Newell.  Our  traffic  in  the  aggregate  is.  Our  export  trallic  at 
this  time  is  very  much  less.  For  the  last  two  or  three  years,  at  least 
the  last  year,  it  has  been  about  the  same  as  that  of  the  Grand  Truuk 
line.  For  the  last  three  months,  perhaps,  it  has  been  only  one-quarter 
as  large  as  that  of  the  Grand  Truuk  ;  not  more. 

The  Chairman.  How  about  your  foreign  trade? 
6543 17 


258  TRANSPORTATION  INTERESTS  OF 

Mr.  Newell.  That  is  the  ficiglit  last  ivfenetl  to. 
The  Chairman.  To  where  <h)  you  take  it  on  your  line? 
Mr.  Newell.  To  lioston  and  New  York. 
The  Chairman.  AVhat  is  your  line  to  r.oston  ? 

Mr.  Newell.  From  J5nflaIo  to  Albany  l)y  the  New  York  Central,  and 
from  Albany  to  Do.ston  by  the  IJostoii  an»l  Albany. 

THE  EXPORT   TRAFPIO. 

The  Chairman.  I  should  be  very  niueh  obliged  if  you  roiihl  furnish 
to  the  eonnnittee  the  doeunients  that  will  show  ronelusively  the  stato- 
nients  that  you  make,  or  whiitev«'r  the  facts  are.  We  have  been  hear- 
ing- the  other  view  ot  the  case  for  two  or  ihre«»  days. 

Mr.  Newell.  I  will  state  one  Ihini;  that  I  recollect,  and  I  reeollcit 
that  very  distinctly.  In  March  last  we  were  in  attcudaiM-c  upon  the 
Interstate  Commerco  Conunis.'^ion  in  Washington  wiih  relcreu»e  to  the 
l)ublishinf;-  of  rat<'S  ui)on  export  business.  In  the  b(';:iiinin;,'  ot  March 
the  l)est  possible  rate  that  our  roa«l  eonld  secure  from  Hosfon  to  Liver- 
])o()l  by  steamer  was  4!>  cents,  and  the  (liand  Trunk  at  the  same  time  was 
taking  business  at  44  cents,  and  shipped  it  by  the  same  steamers  from 
Jioston,  from  which  we  got  our  rate.  Wo  were  advi.MMl  at  that  time 
that  it  was  necessary  to  charge  the  full  inland  rale  lo  the  point  of  ship- 
ment, adding  to  that  the  rate  we  could  obtain  from  tiie  steam  ship  line, 
and  the  two  sums  made  «)ur  rate  5  cents  more  on  juovision.s  to  Liver- 
]»ool  than  the  (irand  Truid<  rate,  shi[)mentH  tiiun  both  roads  being 
canied  in  the  same  sidps. 

The  Chairman.  Did  you  have  a  case  before  the  Intorstute  Couinierce 
Commission  ? 

J\lr.  Newell.  Yes,  sir;  we  did. 

The  Chairman.  Was  that  before  the  annntnicement  of  the  Comnd.s- 
sioii  that  the  inland  rale  should  be  stale<l  sei»aratelv  frouj  the  ocean 
rate  ! 

INIr.  Newell.  Yes,  sir. 

The  CiiAiiiMAN.  Do  you  know  whether  the  (irand  Trunk  is  observing 
that  provision  now  ? 

Mr.  Newell.  1  can  not  tell  yon,  as  a  matter  of  fa<'t,  whether  they 
are  observing  it  or  not.  They  were  for  a  short  time  after  the  result  of 
that  hearing  was  announced,  but  wlu'ther  they  continue  to  observe  it 
up  to  this  time  1  do  not  know.  1  have  been  away  from  Chicago  for  a 
time,  and  have  no  knowledge  of  what  is  existing  at  this  time. 

The  Chairman,  if  you  make  a  .siiipmcnt  from  Chi<'ago  for  export 
from  Boston,  for  instance,  you  have  a  publishe«l  rate  from  Chicag«>  to 
Boston  ? 

Mr.  Newell.  Yes;  a  tariff  to  the  difl'erent  points  through  winch  the 
ex])orts  are  made. 

The  Chairman.  Then  you  secure  a  rate  from  the  steamer  that  is  to 
take  the  goods  when  you  get  ready  to  make  a  shipment  abroad,  I  sup 
l)oso  f 

Mr.  Newell,  The  steam-shij)  rates  are  (d)tainpd  in  advance  gener- 
ally of  the  date  of  shipment.  For  instance,  if  we  want  to  take  grain 
to-day  (romChieago  to  Boston  for  export,  we  get  the  rate  from  tin-  ship 
to  sail  in  a  week  or  ten  days,  an«l  add  that  rate  to  our  local  rate,  ami 
we  announce  the  through  rate  to  the  shipper  or  ptiblic.  Our  n'gular 
inland  rate  is  the  established  rate  that  we  i)ublish  under  the  interstate 
act,  and  we  add  to  that  whatever  ocean  rate  we  are  able  to  obtain. 

The  Chairman.  And  you  do  not  vary  the  inland  rate  except  an  tlu^ 
law  indicates  1 


THE    UNITED    STATES    AND    CANADA.  259 

Mr.  Newell.  We  do  not  vary  it  except  by  notice  of  ten  days  or  no- 
tice of  three  days,  as  the  case  may  be,  of  a  reduction  or  advance.  But, 
as  I  said  before,  that  practice  has  lost  us  the  export  trade  this  spring. 

The  Chairman.  How  soon  could  you  furnish  us  the  evidence  yoii 
speak  of? 

Mr.  Newell.  I  suppose  it  would  take  a  month  to  collect  the  whole. 
I  could  set  parties  to  work  and  send  it  to  you  as  it  is  obtained,  or  wait 
and  send  it  all  together. 

The  Chairman.  I  would  rather  you  would  wait  until  you  complete 
it,  and  then  send  it  to  us  all  together. 

Mr.  Newell.  Perhaps  it  will  take  a  month  to  get  a  satisfactory 
statement. 

The  Chairman.  You  say  you  know  that  this  evidence  can  be  fur- 
nished. 

Mr.  Newell.  I  am  quite  certain  it  can.  We  have  on  record  the  dis- 
cussions of  the  meetings  of  the  various  associations  of  which  the  Grand 
Trunk  has  been  a  member  during  these  many  years,  which  will,  no 
doubt,  furnish  the  facts. 

THE   GRAND  TRUNK  DIFFERENTIALS. 

The  Chairman.  Have  you  any  differential  from  any  of  the  other 
roads  ? 

Mr.  Newell.  No,  sir. 

The  Chairman.  You  carry  at  the  same  rates  as  the  Pennsylvania, 
do  you  ! 

Mr.  Newell.  Y'^es,  sir. 

The  Chairman.  The  Canadian  Grand  Trunk  has  a  differential,  has  it 
not  ? 

Mr.  Newell.  They  have  no  differential  on  east-bound  traffic  from 
Chicago  that  I  know  of  except  one  which  they  take  on  dressed  beef. 
Through  the  operations  of  a  contract  they  made  a  year  or  two  ago  they 
are  restricted  to  a  maximum  i:>rice  for  the  carriage  of  dressed  beef  to 
Boston  as  well  as  New  York,  and  a  part  of  that  agreement,  we  under- 
stand, was  that  they  should  carry  this  beef  to  Boston  for  5  cents  a  hun- 
dred less  than  any  other  line  should  carry  it.  Last  winter  we  wanted 
to  make  an  advance  on  dressed  beef  and  this  differential  was  then  made. 
That  is  the  only  east-bound  differential  they  have  to  my  knowledge. 

The  Chairman.  Do  they  carry  all  the  dressed  beef  now  on  account 
of  that  differential,  or  do  you  get  your  share  of  it  ? 

]\Ir.  Newell.  We  carry  a  little  of  it,  but  they  carry  most  of  it.  Some 
of  the  largest  shippers  say  there  is  no  difference  in  the  route.  The 
largest  shippers  say  that  they  would  not  give  us  a  cent  more  a  hundred 
for  carrying  their  beef  than  they  would  give  the  Grand  Trunk.  Those 
are  the  views  the  shippers  express. 

The  Chairman.  What  is  the  difference  in  the  length  of  your  line 
from  Chicago  to  JSew  York  in  comparison  with  that  of  the  Grand 
Trunk  ? 

Mr.  Newell.  The  Grand  Trunk  has  as  short  a  line  to  New  York  as 
ours.  To  Boston  their  line  is  over  a  hundred  miles  longer  than  ours. 
They  could  get  along  without  the  differential  to  New  York.  When 
they  get  to  Concord  and  points  north  of  that  their  distance  is  as  short, 
if  not  shorter,  than  ours,  and  they  enjoy  the  bulk  of  the  business  of  New 
England. 

The  Chairman.  1  believe  Mr.  Roberts  said  that  his  line  was  a  little 
shorter  than  any  other  line  to  New  York. 


2G0  TRANSPOKTATION    INTERESTS    OF 

Mr.  Newell.  TLati«  true. 

The  Chairman.  How  jiuicli  shorter  tbiiu  yours  ? 

JMr.  Newell.  Sixty  niilos. 

The  Chairman.  IIow  loii^  is  your  line? 

Mr.  Newell.  Niue  hundred  and  sixty  miles. 

remedies  suggested. 

The  Chairman.  What  have  you  to  suj^jrest  as  to  the  means  of  pre- 
venting this  cutting;  of  rates  after  an  aj;reement  is  entered  into,  or  |)re- 
venting  the  taking  of  an  advantage  of  you  gentlemen  hy  the  Canada 
Grand  Trunk  ? 

Mr.  Newell.  There  have  been  suggestions  nuuh'and  plans  proposed 
and  adopted  and  intended  to  be  earrie<l  out  for  the  last  lilteen  yeais,  but 
8o  far  there  has  been  no  cure  found  for  this  evil.  1  am  umler  the  impres- 
sion that  this  interstate-connnerw^  aet  if  rigidly  enf«)rced  would  allord 
as  great  relief  from  the  operations  of  aben  lines  like  the  (Jrand  Trunk 
Kailway,  a^any  otlier  means  that  couhl  be  adopted.  I  think  that  inuler 
the  provisions  of  the  act  strictly  observed  it  would  regulate  railway 
traffic  and  rates  better  than  any  other  arrangement,  excei)t  perhaps  the 
pooling  arrangement  sanctione<l  by  the  law. 

The  Chairman.  Is  your  rate  from  Chicago  to  Boston  greater  than 
the  rate  of  the  Grand  Truidv  f 

Mr.  Newell.  It  is  on  dressed  beef,  but  not  that  we  know  of  on  any 
other  article.  1  suspect  it  is  greater  on  s«'\  eral  articles  than  that  of  the 
Grand  Trunk  to  day,  but  we  do  not  know  the  fa<'t. 

The  Chairman.  How  is  it  that  you  ilo  not  know  the  fa<-t  ? 

Mr.  Newell.  Well,  the  (hand  Trunk's  chief  ollicers  are  in  Canada. 
They  perhaps  can  give  rebates  from  Canadian  soil  which  are  not  known 
to  the  American  agents.  Their  American  agents  may  have  no  part 
or  agency  in  the  manipulation  of  their  affairs,  ami  they  may  give  re- 
bates in  Canada  which  we  may  know  n«>lliing  al>ont,  or  which  we  can 
not  detect  by  any  means;  as  1  understanil,  it  is  entirely  practij-able  for 
them  to  do  that. 

The  Chairman.  If  they  were  to  allow  the  Interstate  Commerce  Com- 
missioners to  go  to  Canada  and  examine  their  books,  I  supimse  we  could 
then  find  out  ? 

Mr.  Newell.  If  the  business  of  the  Canadian  lines  wrre  thrown  open 
to  the  operations  of  this  law,  antl  by  any  nu-ans  the  penalties  couhl  be 
ai)plied  in  Canada,  I  believe  we  would  have  no  further  trouble  from  the 
Grand  Trunk  Kail  way. 

The  Chairman.  It  can  be  api)lied  to  the  United  States  if  wo  catch 
anybody  who  represents  that  road  committing  the  crime. 

Mr.  Newell.  Whether  you  can  compel  the  Gran«l  Trunk  to  bring 
its  books  out  of  Canada  I  do  not  km)w,  but  I  iujagiiu'  that  it  would  be 
hard  to  get  the  Canadian  railways  to  submit  their  allairs  for  examina- 
tion on  this  side  of  the  line. 

The  Chairman.  Suppose  the  United  States  said  to  the  (Canadian 
Government  that  their  roads  coulil  do  business  hero,  |»rovided  the  law 
should  operate  as  to  all  busniess  pertaining  in  any  way  to  the  Unit^nl 
States,  and  that  our  commissioners  should  have  the  right  to  examine 
their  books,  would  they  consent  to  it  t 

Mr.  Newell.  1  am  not  inforuKMl  as  to  their  views  on  the  subject.  I  am 
under  the  impression  tliat  tlie  Grand  Trunk  Hailway  would  fully  observe 

all  the  requirements  of  the  interstate  ci nerce  lu-t,   if  that'w«'re  the 

alternative  of  their  doing  business  on  our  side  of  the  line.     1  think  it 


THE  UNITED  STATES  AND  CANADA.  261 

ought  to  be.  T  think  they  ought  not  to  be  permitted  here  to  do  business 
unless  they  submit  their  traffic  to  the  same  rules  and  restrictions  in 
every  respect  as  the  American  railroads.  If  they  do  that  T  see  not  the 
slightest  obiection  to  their  being  allowed  here,'notwithstanding  their 
advantages  in  cheaper  labor,  etc.,  which  are  considerable.  Yet,  not- 
withstanding such  advantages,  if  they  are  on  equal  terms  with  our  roads 
there  would  be  no  attempt  to  shut  out  the  Canadian  railroads  from  par- 
ticipation in  our  traffic. 

REBATES    BY  OWNERSHIP  IN  CARS. 

The  Chairman.  Whatever  violations  of  your  association  agreements, 
or  of  the  interstate-commerce  law,  these  foreign  roads  have  committed, 
have  been  carried  on  by  a  system  of  rebates  or  something  of  that  kind, 
have  they  not  ? 

Mr.  Newell.  As  a  rule  they  have  had  rebates  by  ownership  in  cars. 
That  is  a  favorite  method  of  the  Grand  Trunk  in  making  discrimina- 
tions. For  instance  the  dairy  business  from  Chicago  to  Boston  is  very 
large.  The  bulk  of  that  trade  has  for  years  been  carried  by  the  Grand 
Trunk  Kaihvay.  The  origin  of  their  increase  in  that  traffic  was  the  for- 
mation in  Boston  by  the  agents  of  the  Grand  Trunk,  or  agents  of  the 
Central  Vermont,  which  is  exactly  the  same  thing,  of  a  line  of  refrigera- 
tor cars.  In  organizing  this  corporation  the  Boston  merchants  and  deal- 
ers in  butter,  cheese,  and  eggs  were  invited  to  become  shareholders  and 
did  so,  and  it  paid  liberally  for  the  service  of  these  cars,  and  they  are 
now  under  contract  to  continue  that  mileage  at  the  rate  of  a  cent  a 
mile.  The  shippers  by  that  line  who  are  shareholders  in  the  organiza- 
tion while  shipping  at  the  same  rates  have  an  advantage  over  their 
neighbor,  who  has  no  interest  in  a  similar  line  running  over  an  Ameri- 
can road,  for  the  reason  that  he  receives  a  large  profit  from  the  use  of 
those  cars.  That  is  the  present  situation  in  respect  to  the  butter  and 
egg  trade. 

The  Chairman.  If  any  rebates  are  paid  by  a  rail  road  either  in  Canada 
or  the  United  States,  would  not  the  books  of  accounts  or  receipts  or 
payments  show  it  ? 

Mr.  Newell.  They  ought  to,  but  whether  they  would  is  another  ques- 
tion. I  do  not  know  that  it  is  necessary  for  all  railroads  to  keep  ac- 
counts in  regard  to  their  rebates. 

The  Chairman.  All  our  American  roads  have  for  years  been  giving 
rebates,  have  they  not,  and  would  not  the  books  show  if? 

Mr.  Newell.  I  could  point  out,  I  think,  lines  that  have  paid  rebates 
that  you  could  not  discover  from  their  books. 

The  Chairman.  So  that  whatever  is  paid  out  in  violation  of  law  or  in 
violation  of  any  agreement  would  be  difficult  to  trace  for  the  purpose 
of  convicting  anybody,  would  it  ^ 

Mr.  Newell.  It  would  if  it  were  the  intention  of  the  railway  to  avoid 
disclosure.  I  think  their  books  could  be  so  manipulated  that  there 
would  be  no  record  of  it  or  means  of  showing  it. 

APPLICATION  OF  THE  INTERSTATE  LAW  IN  CANADA. 

Senator  Blair.  I  want  to  have  you  elucidate  a  little.  Your  theory 
is  the  same  as  that  of  every  gentleman  who  has  testified  here,  that  if 
the  interstate  commerce  law  were  applied  in  Canada,  and  lived  up  to 
by  the  Canadian  roads  as  that  law  is  enforced  or  expected  to  be  en- 
forced  in  this  country,  then  you  can  compete  on  even  terms  with  them 
and  get  along.     Now  I  do  not  see  myself  how  that  meets  your  real  dif- 


262  TRANSPORTATION   INTERESTS    OF 

ficulty.  The  interstate  comnierco  act  makes  no  provision  witli  refer- 
ence to  the  rate  of  a  tariff.  The  Grand  Trnnk  Railway  can  conform  to 
the  interstate  commerce  hxw  and  yet  make  its  tariff  npon  everything  50 
per  cent,  less  than  the  tariff  of  any  American  road,  and  it  seems  to  me 
that  it  would  make  that  tarifl"  sufficiently  less  than  that  of  the  Ameri- 
can roads  to  take  the  business  upon  our  soil  and  then  exercise  its  uncpies- 
tioned  power  to  nuike  upon  local  trallic  in  Canada  the  loss  on  American 
traffic.    Now  those  are  the  difficulties. 

Mr.  Newell.  As  I  understand  it,  if  they  come  strictly  under  the 
operations  of  the  interstate  commerce  law,  come  under  its  rules  in  re- 
spect to  the  long  and  short  haul,  they  would  be  upon  the  same  footing 
as  we  are  ;  otherwise  they  do  not  come  under  the  provisions  of  tlie  law. 

Senator  Blair.  Do  you  understand  that  tliey  are  under  the  necessity 
of  making  any  sort  of  adjustment  of  their  local  rates  in  Canada  in  order 
to  conform  to  the  interstate  commerce  law  t 

Mr.  Newell.  I  do  not  understand  that  the  law  can  be  enforcetl  in 
Canada,  or  that  they  could  be  reijuired  to  come  under  its  provisions 
iibsolutely;  but  I  say  that  if  they  should  come  strictly  and  absolutely 
under  the  same  rules  as  we  do  in  respect  to  the  h)ng  and  short  haul  and 
also  with  resi)ect  to  the  local  trallic  it  would  br  all  right.  If  they  do 
not,  and  get  traffic  enough  in  Canada  to  earn  tlu'  anionnt  of  money 
that  their  share-holders  want  on  thrir  slock  and  tiicn  they  come  into  our 
territory  to  secure  additional  business,  tliey  d«>  that  additioiud  business 
less  than  we  do  our  entire  business,  because  our  fixed  charges  have  to 
be  applied  over  the  whole  traffic,  and  therefore  to  get  the  lix«'d  charges 
and  something  beyond  that,  we  hav*'  g(»t  to  get  the  higln-r  rate  than 
that  which  would  apply  to  through  trallic  alone.  If  we  had  an  oppor- 
tunity, as  we  had  in  the  jtast,  to  make  the  rat«'  from  Chicago  1.")  cents 
a  hunilred  on  grain  to  New  York,  and  then  at  the  sanje  time  charge  U.j 
cents  from  northern  Indiana  and  southern  Michigan  to  New  York,  iXw 
Grand  Truidc  could  not  make  any  gain  over  us,  because  we  conhl  meet 
them  on  the  same  basis.  But  under  the  o|»er.ition  of  this  law  they 
charge  in  Canada  higher  rat«'s  ami  come  into  our  territory  and  make 
only  a  small  i)rofit,  and  make  at  the  same  time  a  record  with  reference 
to  the  division  of  trallic. 

Senator  Blair.  The  short  haul  is  regulat«'d  in  this  ('«)untry  by  the 
interstate  commerce  law  as  much  as  is  tlie  ling  haul.  In  Canada  the 
short  haul  is  wholly  local.  Tiie  interstate  commerce  act  do»'s  not  ap- 
ply to  the  local  trallic  within  a  State,  no  more  than  it  is  un«l«'isioo<l  to 
apply  to  the  local  traffic  in  Canada.  Therefore  the  local  traffic  in 
(Canada,  even  if  the  Canadian  roa<ls  a;:reed  lo  comjily  with  the  re«iuire- 
ments  of  the  act,  would  not  be  under  the  interstate  commerce  law  by 
our  own  construction,  and  we  do  not  ask  them  to  jdace  their  local  trallic 
under  the  interstate  commerce  act,  but  say  to  them,  "  regulate  your 
long  traflic,  or  trallic  you  get  from  our  country,  by  the  interstate  com- 
merce law."  Now,  does  not  that  leave  them  at  liberty  to  increase  their 
local  tariffs  to  make  u])  for  the  diminution  of  the  through  rates,  which 
will  take  every  panicle  of  American  business  over  the  Grand  Trunk  ? 

So  it  seems  to  me  that  you  will,  after  all,  ( le  out  with  the  same  ditli- 

culty  that  you  now  complain  of. 

Mr.  Newell.  My  point  is  this :  not  that  you  shall  say  the  Canadian 
local  trallic  shall  be  controlled  by  the  piovisions  of  the  intersUite  con«- 
merce  act;  that,  1  nmlerstand,  we  can  not  say.  But  my  point  is 
whether  it  is  not  within  the  province  of  the  Gov«'rnment  of  this  country 
to  say  to  the  Canadians  that  if  they  come  into  this  <'onntry  to  transact 
what  may  be  termed  interstate  trallic,  or  international"  trallic,  they 


THE    UNITED    STATES    AND    CANADA.  263 

must,  before  tLey  commence  to  take  hold  of  that  traffic,  put  their  whole 
traffic  imder  the  same  regulatious  as  the  American  roads  are  under 
that  compete  with  them.  I  wonld  ask  them  not  only  to  accept  the  i)ro- 
visious  of  the  interstate  commerce  act  with  regard  to  traffic  that  is  in- 
terstate or  international,  but  I  would  also  ask  them  to  apply  it  to  their 
local  traffic  as  well,  so  that  they  would,  in  all  respects,  be  under  the 
same  general  rules  as  our  roads  are  under.  You  have  not  a  railroad 
running  east  and  west  to  or  from  here  that  does  not  go  through  one  or 
more  States,  except  the  New  York  Central. 

Senator  Keagan.  Do  you  understand  that  the  commerce  going  over 
the  New  York  Central  is  interstate  commerce? 

Mr.  Newell.  No,  sir;  I  understand  that  the  freight  going  over  the 
New  York  Central  road  which  originates  in  the  State  of  New  Yoik  and 
ends  in  the  State  of  New  York  is  local  traffic.  Anything  originating 
in  another  State  and  going  over  the  New  York  Central  road  is  inter- 
state traffic.  The  Erie  Kailroad  has  been  decided  to  be  an  interstate 
roa<l,  because  part  of  its  line  lies  in  the  State  of  Pennsylvania. 

Senator  Blair.  We  hold  that  the  interstate  commeice  law,  being  a 
national  law,  does  not  api)ly  to  strictly  State  traffic.  In  practice  the 
interstate  commerce  law  governs  our  State  traffic  because  the  short  haul 
is  an  interstate  haul  as  a  rule,  because  it  extends  across  the  lines  of 
States,  and  therefore  in  regulating  that  short  haul  where  it  is  an  inter- 
state short  haul,  you  necessarily  lay  down  a  rule  that  controls  the  short 
haul  wholly  within  a  State,  so  that  our  interstate  law  in  this  country 
really  applies  to  a  short  haul  within  a  State  as  w^ell  as  any  other  short 
haul.  But  when  you  come  to  Canada,  it  is  held  here  that  all  Canadian 
traffic  is  local  traffic,  and  that  upon  any  traffic  that  is  Canadian  traffic 
proper  they  may  regulate  their  fares  and  freight  as  they  see  tit. 

Now,  you  railroad  gentlemen  conie  here  and  say,  "Compel  them  to 
apply  the  interstate  commence  law  to  this  longe]-  traffic,  and  we  are  sat- 
isfied." But  in  doing  that  you  leave  them  entirely  at  liberty,  ui)ou  your 
own  construction  of  the  interstate  commerce  law  as  we  apply  it  here,  to 
make  the  charge  on  traffic  within  their  own  territory"  whatever  may  be 
necessary  to  enable  them  to  make  up  the  loss  on  the  carriage  of  Amer- 
ican traffic. 

Mr.  Newell.  I  would  go  this  far  in  the  construction  of  such  an  act. 
I  wouhl  make  that  act  reach  far  enough  to  require  the  Canadian  rail- 
ways to  place  themselves  upon  the  same  basis  precisely  in  respect  to 
all  traffic  as  are  the  American  railways  connecting  with  the  same  points. 

Senator  Blair.  And  exclude  them  from  all  American  traffic? 

Mr.  Newell.  Yes  ;  unless  they  are  placed  on  the  same  footing  as  to 
that  traffic  as  these  roads  are.  I  will  state  a  case  that  I  think  ought  to 
be  controlled  by  the  interstate  commerce  law.  The  Canadian  railways 
are  making  a  less  rate  from  Toronto  to  Boston  than  from  i)oints  east  of 
Toronto  and  within  Canadian  territory  to  Boston.  Their  taritts  show 
you  that  to-day.  Whether  they  are  controlled  by  the  interstate  com- 
merce act  as  to  through  freight  originating  in  Canada  1  am  not  sure; 
but  if  they  are  they  are  violating  the  law  in  that  respect  to-day. 

subsidized  steam-ship  lines. 

Senator  Gorman.  If  it  be  true,  as  is  alleged,  that  the  English  peoide, 
with  a  view  to  building  up  a  great  military  road,  or  two  great  military 
roads,  the  Grand  Trunk  and  the  Canadian  Pacitic,  and  at  the  same  time 
with  a  view  to  using  them  for  commercinJ  purposes,  are  siibsidi/Jng 
lines  of  steam-ships  running  to  Ilalifax  and  St.  John,  how  can  we  meet 


264  TRANSPORTATION  INTERESTS  OF 

it?  How  can  our  trniisportatiou  interests  meet  it  here  witli  the  facili- 
ties that  jou  have  now  for  ocean  transportation,  eliminating;  all  these 
otiier  questions,  such  as  the  re^'nlati/i,tr  of  it  l\v  the  plan  you  sujrjxest  t 
Does  the  subsidizinj;-  of  these  ocean  lines,  in  connection  with  these  sub- 
sidized railways,  threaten  us? 

Mr.  Xewell.  It  might.  I  think  so  far  as  the  Canadian  Pacific  is 
concerned  that  their  develojunent  has  not  readied  a  sta^^e  yet  that 
would  justify  any  particular  apprehension.  It  may  reach  it.  Today  I 
do  not  see  that  the  possible  ])ayment  of  Iar<,fe  subsidies  to  their  sti'aniers 
is  going  to  place  them  in  position  to  take  all  the  trallic.  The  fact  is 
that  the  tonnage  distribu^^ed  throughout  our  country  from  (ireat  Uritain 
is  so  much  greater  in  value  than  any  tonnage  that  is  sent  to  St.  .John  or 
to  Halifax,  or  sent  across  to  China  and  like  i>laces,  that  the  Ktiglish 
l)eoj/le  who  build  and  own  steam-ship  lines  will  always  be  found  (piite 
as  ready  to  run  stea.ners  to  ourjjorts  as  to  other  foreign  iK)rLs.  That  is 
the  case  now,  but  later  developments  may  show  that  some  action  is  nec- 
essary in  this  regard. 

Sen  itor  (tOUAIAN.  As  you  are  familiar  with  the  subject,  I  ask  is  it  or 
no*;  your  opinion  that  this  movement  on  tin*  jtart  of  the  < 'anadians  and 
the  llritisli  (iovernment  to  (Icvelop  that  line  has  progressed  far  enough 
for  us  to  take  a(!tion  by  negoti.ition  or  legislation  to  prevent  tliose  ad- 
vantages which  it  is  contemplated  will  be  aftorded  these  foreign  corpo- 
ra tionsf 

Mr.  Newei.L.  As  I  understand  the  law,  it  requires  the  ('ajiadian 
]*acit1c  in  carrying  any  freight  out  of  this  territory  to  send  to  Halifax 
or  St.  John  for  exi)ort  to  act  in  cdnformity  to  its  provisions.  That  sort 
of  trallic  is  controlled  absolutely  by  the  interstate  eommeree  law  My 
own  judgment  is  that  if  the  jnovisions  of  tlu'  interstate  commerce  law 
were  made  operative  it  would  be  a  sulVn  ient  safeguard  for  the  present, 
but  they  niigiit  devel(»p  subsidies  to  an  extent  tiiat  wouM  ailmit  of  these 
steamers  carrving  freight  at  a  very  low  late  and  iien-after  re(|uir«'  some 
]>ossd)Ie  action  on  our  ]»art. 

Senator  (Jninr.VN.  Hut  lookii.g  into  the  case  as  it  is.  do  you  think  it 
is  of  suflicient  importance  for  the  American  i>eople  to  sultmit  such  a 
])roposition  as  the  one  you  have  indicated,  tiiat  is—  to  say  to  them,  "  Un- 
less you  put  yourself  under  the  same  combtions  as  our  railroads  are 
under  we  will  close  your  tnule  ami  prevent  your  cars  from  pa.ssingover 
the  border?" 

Mr.  Newell.  I  think  it  is.  These  lines  are  drawing  millions  of  dol- 
lars of  revenue  from  the  American  roads.  They  are  to  <lay  placing  the 
American  lines  where  it  is  dillicult  to  get  a  fair  revenue  on  the  capital 
invested  in  them.  The  tlrain  that  is  ma<le  ujton  our  trallic  by  the  Cana- 
dian lines  is  disastrous  to  us,  an<l  it  <»ught  to  be  stojvped.  I  would  not 
stop  it  by  putting  the  northwesteiii  ])eoi)h'  in  a  position  to  say  that  the 
rates  were  controlled  by  a  monopoly,  but  I  wouhl  jmt  it  on  the  basis 
that  the  Canadian  road  should  do  the  busiiu'ss  on  the  same  basis  as  we 
doit.  If  you  do  that  they  can  not  hurt  us.  We  can  do  business  cheaper 
than  they  can. 

Senator  (iORMAN.  Would  you  go  so  far.  if  you  were  conducting?  a 
negotiation,  as  to  say  that  any  arrangement  between  this  Government 
and  the  Canadian  Government,  involving  the  withdrawal  of  aid  to  these 
enterprises  in  the  way  of  subsidizing  steam  ship  lines  (ui  either  end  of 
the  railroad  route,  either  on  the  I'acitic  or  on  the  Atlantic,  would  be  a 
condition  of  their  enjoying  our  trade* 

Mr.  Newell.  I  do  not  think  I  would  do  that  to-dny,  because,  as  I 
said  before,  1  do  not  think  that  the  trade  the  Camulian  Pacitic  controls 


THE   UNITED    STATES   AND    CANADA.  265 

on  both  ends  is  so  great  that  it  ought  to  be  interfered  with  in  regard  to 
cheap  carriage.  In  other  words,  the  subsidy  they  receive  will  not  admit 
of  tonnage  enough  being  controlled  by  them  to  seriously  draw  shipping 
from  i*s.  The  amount  taken  to  Halifax  for  export  is  a  small  amount 
compared  with  the  tonnage  taken  to  Portland,  Boston,  New  York,  Phil- 
adelphia, and  Baltimore.  We  are  nearer  the  sea-board  than  the  Cana- 
dians, except  in  summer.  During  the  greater  portion  of  the  year  we 
can  compete  for  traffic  safely  with  them  on  equal  terms. 

Senator  Gorman.  Then  you  think  it  is  sufficient  to  deal  with  the  rail- 
way problem  alone? 

Mr.  Newell.  Yes,  but  the  other  question  may  come  upon  us  before 
we  know  it. 

THE   CANADIAN  WATER-WAYS. 

Senator  Gorman.  Tell  us  something  with  regard  to  the  facts  con- 
nected with  the  lake  steamers  and  the  carriage  through  the  Canadian 
canals.     How  far  has  that  developed,  and  is  it  at  all  threatening? 

Mr.  Newell.  My  judgment  in  respect  to  that  is,  that  the  Erie  Canal, 
together  with  the  boats  running  to  Buffalo,  which  are  the  larger  car- 
riers— larger  than  any  that  can  run  through  any  Canadian  canal — will 
take  care  of  all  that  competition.  We  have  nothing  to  fear  from  the  Can- 
adian canals  in  that  respect.  The  only  difficulty  about  the  Canadian 
canals  is  this,  that  in  reaching  Oswego  and  Ogdensburg  the  discrimina- 
tions that  at  times  exist  on  Canadian  canals  are  a  serious  drawback 
upon  our  lake  marine. 

Senator  Gorman.  Can  you  tell  us  the  facts  in  regard  to  these  dis- 
criminations "? 

Mr.  Newell.  I  can  not ;  I  have  not  sufficient  familiarity  with  the 
figures  to  give  you  the  facts,  but  that  can  easily  be  ascertained  from 
the  parties  interested  in  that  trade. 

Senator  Gorman.  Who  is  familiar  with  that  subject"? 

Mr.  Newell.  I  should  say  that  any  of  the  Buffalo  vessel-owners  are. 
Very  likely  you  could  obtain  it  here  in  New  York  from  the  officers  of  the 
lake  lines  connecting  with  the  railroad  lines.  The  Delaware,  Lacka- 
wanna and  Western,  and  the  Pennsylvania  and  the  New  York  Central 
have  lake  connections.  1  think  application  to  Mr.  Depew  or  Mr. 
Koberts  or  Mr.  King  would  produce  them  in  a  short  time.  They  could 
obtain  the  figures  through  their  men  engaged  in  the  lake  business. 

Senator  Gorman.  Now,  coming  back  to  this  railroad  problem,  would 
you  couple  with  the  requirements  that  you  have  intimated  the  further 
condition  that  the  Canadian  Government  permit  our  vessels  engaged  in 
the  fishery  business  to  go  into  Halifax  or  any  other  Canadian  port  and 
unload  their  cargoes,  or  put  the  cargoes  on  cars  and  run  them  through 
that  territory  into  our  territory. 

Mr.  Newell.  I  am  not  sufficiently  versed  on  that  to  give  an  opinion. 

Senator  Gorman.  Would  that  not  be  a  good  thing  as  a  matter  of 
trade  ? 

Mr.  Newell.  I  think  it  would  be  if  the  Canadian  Government  would 
agree  to  it.    They  would  not  do  it  if  it  could  be  helped. 

Senator  Gorman.  Would  it  not  be  a  solution  of  the  problem  to  say 
to  the  Canadian  Government,  "  You  can  not  get  goods  across  the  border 
unless  you  permit  the  same  rule  to  apply  to  us  as  is  applied  at  the  other 
end  f 

Mr.  Newell.  I  think  that  result  would  be  effected  if  the  suggestion 
were  adopted.  The  foct  is  there  is  no  law  that  will  reach  them.  It  is 
an  advantage  for  this  maritime  nation  to  have  that  trade  there.  Their 
Government  seems  to  think  differently  from  ours  on  that  point. 


2G6  TRANSPORTATION   INTERESTS    OP 

Seiialor  Gorman.  So  that  as  a  gentleman  largely  engaged  in  the 
transportation  of  freight,  and  as  an  AiniTiean  citizen,  yon  would  say 
that  a  lair  adjustment  of  this  whole  matter  would  be  that  the  Canadian 
Government  and  the  Canadian  railroads  shall  come  under  our  inter- 
state-commerce law  and  that  Canadian  jtorts  shall  he  open  to  American 
vessels  to  receive  fish  and  other i>roducts  for  transpoitation  on  the  same 
terms  precisely  that  we  permit  grain  and  their  proihuts  to  go  over  our 
roads  into  Canada  and  hack  into  this  country. 

Mr.  Newell.  Most  assuredly;  I  believe  in  recii>rocity  in  all  busi- 
ness. 

Senator  Blair.  All  along  our  line  we  have  a  general  railroad  law 
in  operation.  Why  should  not  the  Canadians  give  us  the  benefit  of  a 
general  railroad  law  in  their  country  T  We  can  furnish  the  money 
and  make  the  connections  with  our  own  roads  as  the\  e(»nstructed  these 
two  routes  leading  from  the  Sank  Saint  Marie  to  Duluth  and  Minneap 
olis.  Why  shouhl  not  we  have  the  benetit  of  a  general  railroad  law  in 
Canada? 

Mr.  Newell.  I  think  they  would  give  it  to  you.  They  have  done  so 
in  several  instances. 

Senator  Blair.  You  think  that  should  be  done. 

Mr.  Newkll.  1  think  it  is  just.  I  do  n<»t  know  that  there  is  an\ 
objection  to  that  being  done. 

Senator  Blatr.  Is  there  not  a  monopoly  all  ahmg  the  line  of  the 
Canadiiui  I'acilief 

Mr.  Newef.l.  There  was  in  Manitoba,  but  as  I  heani  Mr.  \'an  Homo 
say  today,  they  sutrendere«l  that  monopoly. 

Senator  Blair.  At  one  i>artieular  point,  but  it  is  not  the  ( 'anadian 
Pacific.  It  is  a  local  road  that  has  been  C4)nKtructe4l,  a.s  w;i.s  pointed  out 
yesterday. 

Mr.  Newell.  I  do  not  know  as  to  that.  My  jinlgment  about  that 
may  be  warped  a  little.  If  I  had  charge  of  this  matter  1  woidd  elimi 
nate  the  general  railroa<l  laws  from  the  statute  books  of  excry  State  in 
the  Union. 

Senator  Ulair.  Men  who  have  railroiuls  would,  but  tho.se  who  ha\r 
not  would  not. 

Mr.  Newkll.  I  know,  but  here  you  go  on  piling  capitiil  on  capital, 
and  for  what  1 

Senator  1>lair.  My  iiKjuiry  does  not  raise  that  questioiu  \Vhy  not 
give  us  the  i)rivilege  of  making  these  i»eo|>h^  hoiuogene«uis  by  enaliling 
American  capitalists  to  buihl  railroads  in  (^auiwla,  and  to  draw  the 
commerce  of  Canada  .southward  through  the  natural  ehannel  (jf  trade, 
rather  than  submit  to  the  present  (rouilition  of  things,  which  enables  Can 
ada  to  build  exclu.sively  in  her  own  territory,  and  t«  transp«)rt  products 
outside  over  American  lines? 

Mr.  Newell.  I  believe  in  perfect  re<'iproeity.     If  we  are  to  l>e  dis 
barred   from    any  privilege   in    Canada,  if    seems  to  me   right  to  say  to 
those  j;entlemen,  "  You  must   remove   tlie.se  di.sabilities  before  you  can 
come  here  an<l  enjoy  a  privilege  that  you  deny  us." 

Senator  Blair.  There  are  four  great  sections  of  productive  count rv 
in  the  south  of  Canada  sei»arated  by  mountains  and  morasses,  and  tlnir 
are  long  strips  of  country  between  that  are  uninhabited  an«l  wlioll\ 
unproductive.  These  great  valleys  should  .send  th.ir  products,  by  tin' 
laws  of  nature,  over  American  niilroads,  and  if  we  should  construcl 
American  railroads  into  that  country,  and  trans])ort  over  thoiie  Amen 
can  lines  the  trade  refened  to,  it  would  bv  a  style  •)f  nn-iprocity  that  1 
would  believe  in  myself.  There  is  a  country  up  there  ius  pnMluctive  a.s 
anything  we  have  north  of  Ma.son  and  Dixon's  line. 


THE    UNITED    STATES    AND    CANADA.  267 

STATEMENT  OF  HENRY  B.  LEDYARD. 

Mr.  Henry  B.  Ledyard,  President  and  General  Manager  of  the 
Michigan  Central  Kailroad  Company,  api^eared. 

The  CHAIRMAN.  What  is  your  business  or  position  at  this  time,  Mr. 
Ledyard  1 

Mr.  Ledyard.  I  am  president  and  general  manager  of  the  Michigan 
Central. 

The  Chairman.  Are  you  connected  with  that  line  only  ? 

Mr.  Ledyard.  The  Michigan  Central  and  its  leased  and  operated 
lines. 

The  Chairman.  What  are  they  ? 

Mr.  Ledyard^  They  are  about  a  thousand  miles  of  railroad  in  Mich- 
igan, and  four  hundred  in  Canada.  The  main  line  is  from  Chicago  to 
Detroit,  known  as  the  Michigan  Central,  and  a  line  in  Canada  from 
Detroit  to  Suspension  Bridge,  known  as  the  Canada  Southern. 

The  Chairman.  You  say  you  have  about  a  thousand  miles  of  road  iu 
Michigan  1 

Mr.  Ledyard.  Yes,  sir. 

The  Chairman.  What  are  the  termini  of  the  main  line? 

Mr.  Ledyard.  Chicago  and  Buffalo. 

The  Chairman.  Can  you  give  the  lengths  and  the  termini  of  the 
branch  lines  in  Michigan  ? 

Mr.  Ledyard.  One  line  from  Jackson  to  Saginaw,  and  a  line  from 
Saginaw  to  Mackinaw  City. 

The  Chairman.  How  long  is  that  line? 

Mr.  Ledyard.  Three  hundred  miles.  Then  the  Detroit  and  Bay  City 
line  from  Detroit  to  Bay  City,  a  distance  of  108  miles ;  the  Grand  River 
Valley  line  from  Jackson  to  Grand  Rapids,  98  miles;  the  Kalamazoo 
and  South  Haven  line,  from  Kahxmazoo  to  South  Haven,  40  miles  ;  the 
Joliet  and  Northern  Indiana  line,  from  Lake  to  Joliet,  45  miles;  the 
Michigan  Air  Line,  from  South  Bend  to  Jackson,  about  120-o(ld  miles; 
the  Michigan  Midland,  from  St.  Clair  to  Lenox,  15  miles,  and  the  Toledo, 
Canada,  Southern  and  Detroit,  Detroit  to  Toledo,  60  miles.  Those  are 
all  the  lines  west  of  the  Detroit  River. 

The  Chairman.  Have  you  any  line  or  lines  east  of  the  Detroit  River? 

Mr.  Ledyard.  There  iis  the  Canada  Southern  from  Windsor  to  Sus- 
pension Bridge,,  with  a  branch  line  to  Fort  Erie,  opposite  Buffalo,  with 
a  branch  from  Essex  Center  to  Amherstburg,  and  the  Erie  and  Niagara, 
Buffalo  to  Niagara  City. 

The  Chairman.  How  long  are  those  branches  ? 

Mr.  Ledyard.  I  suppose  the  total  mileage  in  Canada  amounts  to 
about  400  miles ;  and  the  Canada  Southern  controls  a  line  from  Toledo 
to  Detroit. 

The  Chairman.  Your  system  seems  to  be  pretty  well  spread  out? 

Mr.  Ledyard.  It  is. 

The  Chaibmam.  What  is  the  total  mileage  of  the  whole  system  ? 

Mr.  Ledyard.  About  1,500  miles. 

The  Chairman.  Do  you  do  business  in  connection  with  any  of  the 
Canadian  roads  ? 

Mr.  Ledyard.  None,  excepting  the  Canadian  Southern,  and  to  a  small 
extent  the  Canadian  Pacific. 

competition  of  the  grand  trunk. 

The  Chairman.  Are  you  in  competition  with  any  of  the  Canadian 
roads  ? 


2G8  TRANSPORTATION    INTERESTS    OF 

Mr.  Ledyard.  Yes,  sir ;  with  the  Grand  Trunk  particularly. 

The  Chairman.  Uow   do  you  get  along  in  competition  with  that 

road  ? 

Mr.  Ledyard.  We  do  not  fare  very  well. 

The  Chairman.  Why  not? 

Mr.  Ledyard.  Well,  there  is  a  variety  of  reasons.  In  the  first  place, 
the  Canada  Southern  was  built  for  a  tlirou^Mi  line,  and  was  built  re- 
gardless of  towns,  and  took  the  straiglitest,  shortest,  and  easiest  line 
that  could  be  picked  out  between  the  Niagara  frontier  and  the  Detroit 
Kiver. 

The  Chairman.  Who  built  it ! 

Mr.  Ledyard.  I  think  it  was  built  by  American  capital.  It  was  built 
way  back  in  1809. 

The  Chairman.  And  designed  to  bo  a  thnuigh  liile  as  between  what 
points  ? 

Mr.  Ledyard.  iJetween  Chicago  and  Buftalo.  The  design  was  to 
push  the  road  to  Chicago,  but  the  promoters  got  into  linancial  diHicul- 
ties,  and  the  road  was  reorganized  in  1S7.S,  Mr.  N'anderbilt  lent  them 
money  to  put  them  on  a  sound  tlnancial  foundation,  and  the  Michigan 
Central  in  18S2  made  a  eontra<"t  to  run  and  ojx'rate  theroa<l.  Tliat  ro;wl 
has  but  little  local  tratticr.  We  tind  that  the  CJanadian  roiuls  by  charg- 
ing higher  rates  on  the  local  trallic  in  Canada,  are  enabled  to  charge 
lower  thi(»ugh  rates  on  trallic  from  the  United  States,  and  we  lind  that 
the  Grand  Trunk  does  not  observe  the  interstat*'  commerce  act  in  so 
far  as  trani(;  going  from  the  Unit<'«l  States  into  Canada  is  concerne<l. 

The  Ciiair:man.  Have  you  any  evidence  that  they  do  not  observe  the 
act  in  that  resi)ect  i 

Mr.  Li:i>YAKD.  Yes,  sir;  I  made  a  complaint  al)out  it  before  the  In- 
terstate-Commerce Commission  sixty  days  ago.  That  is  one  ciuse.  I 
have  another  case  of  non  <'omi)liancc  with  their  published  tarilf.  Here 
is  a  tarill  siicet  of  the  Grand  Trunk  liadway  [exhibiting|,  reading,  '♦  In- 
terstate taritf  on  grain  from  Port  Huron  ex  late  from  Chicago."  It 
gives  no  other  point  but  Chicago  as  tlie  i>oint  td"  orgin.  Grain  has  been 
taken  out  of  our  elevators  in  Detroit  in  the  hwt  month  by  vessel  and 
taken  to  Wnt  Huron,  and  thence  forwanled  by  the  Gran<l  Trunk  to 
Portland,  Maine.  The  rate  from  Detroit  to  Portland  by  the  Grand 
Trunk  and  the  Michigan  Central  is  the  same. 

The  Chairman.  Tiie  publishe«l  rate  is  the  same! 

JNIr.  Ledyard.  Yes,  sir;  and  the  all  rail  tariff"  from  Port  Huron  to 
Portland  is  the  same  as  Detroit  to  Portland.  Here  is  a  tarilf  on  grain 
only,  ex-lake  from  Chicag()  [exhibiting].  That  same  tarilf  is  apjdied  by 
the  Grand  Trunk  on  grain  by  vessel  trom  Detroit  to  Portlan<l.  That 
results  in  reducing  the  rate,  all-rail,  by  two  and  a  half  cents. 

The  CiiAiiiMAN.  Which  is  a  means  of  getting  around  the  interstate- 
commerce  act  without  anybody  discovering  what  it  is.  That  is  the  case 
you  have  just  described  ? 

Mr.  Ledyard.  Yes,  sir;  I  can  not  find  that  any  tarifl'  has  been  is- 
sued from  Detroit  via  lake  and  via  Port  Huron  to  Portland,  or  any 
other  eastern  point. 

The  Chairman.  What  is  the  date  of  that  last  tarift'you  speak  off 

Mr.  Ledyard.  April  10.  That  specifies  the  point  of  origin  aa  Chi 
cago. 

LOCAL  RATES  ON  THE  GRAND  TRUNK. 

The  Chairman.  lUit  it  does  not  show  where  the  traffic  is  going? 
Mr.  Ledyard.  it  gives  the  jmintof  destination,  but  says  the  grain 
must  be  ex-lake  from  Chicago.     We  have  felt  the  competition  of  the 


THE    UNITED    STATES    AND    CANADA.  269 

Graud  Trunk  more  than  any  other  line,  much  more  kSO  thau  those  lines 
lying  south  of  Lake  Erie,  and  that  Ithink  is  due  to  three  causes.  The  first 
is  that  in  Canada  they  have  no  general  railroad  laws.  In  the  United 
States  anybody  can  build  a  railroad,  but  in  Canada  you  have  to  get  a 
charter  or  special  act  from  the  government.  Those  railroads  are  gener- 
ally subsidized  by  the  government  to  the  extent  of  from  three  to  live 
thousand  dollars  a  mile.  The  counties  and  towns  are  allowed  to  vote 
large  bonuses — bonuses  so  large  as  to  be  unheard  of  in  America.  The 
last  report  of  the  chief  engineer  of  the  government  railways  of  Canada 
shows  the  bonuses  of  the  government  provinces  and  municipalities 
voted  to  railroads  to  be  about  one  hundred  and  fifty  millions  of  dollars, 
an  amount  unheard  of  in  the  United  States.  The  local  rates  for  short 
hauls  are  much  higher  than  in  the  United  States.  The  passage  of  the  inter- 
state-commerce act  had  the  effect  in  this  country  of  reducing  local  rates, 
growing  out  of  the  application  of  the  long  and  short  haul  i)rovisi()ns  of 
the  act.  If  you  will  compare  the  rates  given  by  the  distance  tariffs  on 
one  class  of  freight,  you  will  find  that  the  Grand  Trunk  rates  in  Canada 
are  from  10  to  25  per  cent,  higher  on  lumber,  for  equal  distances,  than 
are  charged  by  the  Michigan  Central  Railroad  in  Michigan. 

Again,  taking  the  general  local  tariffs  of  the  two  companies,  we  may, 
for  the  purpose  of  comparison,  consider  Detroit  and  Toronto,  with  re- 
gard to  the  territories  they  serve,  as  analogous  centers  of  trade.  The 
Grand  Trunk  rates  from  Toronto  to  Stratford,  88  miles,  range  from  28 
cents  per  100  pounds  on  the  highest  class  of  freight,  to  9  cents  per  100 
on  the  lowest.  The  Michigan  Central  rates  from  Detroit  to  A-lbion,  90 
miles,  range  from  19i  cents  on  the  highest,  to  6i  cents  on  the  lowest. 
Toronto  to  London,  115  miles,  tlie  Grand  Trunk  tariff  ranges  from  32 
cents  to  10  cents  per  100,  according  to  classes.  The  Michigan  Central, 
Detroit  to  Battle  Creek,  115  miles,  from  21.^  cents  to  7^  cents  i)er  100 
pounds.  Toronto  to  Chatham,  180  miles,  from  34  to  10  cents  per  100. 
Detroit  to  Niles,  191  miles,  from  26|  to  9  cents  per  100  pounds,  accord- 
ing to  classes.  These  figures  show  relatively  what  the  local  rates  are 
in  the  two  countries. 

The  Chairman.  The  rates  appear  to  be  much  higher  in  Canada  than 
in  this  country  ? 

Mr.  Led  YARD.  Yes,  sir ;  much  higher.  Our  local  rates  are  higher  in 
Canada  than  in  the  United  States.  Our  local  traffic  there  is  compara- 
tively nothing,  however. 

The  Chairman.  So  there  you  have  an  advantage  on  account  of  the 
local  rates,  more  than  from  any  other  cause! 

Mr.  Led  YARD.  To  a  very  great  extent. 

The  Chairman.  And  you  think  you  can  show  that  the  Canadian 
roads  do  not  observe  the  interstate  commerce  act  ? 

Mr.  Ledyard.  I  simply  can  state  that  the  position  taken  by  the 
Grand  Trunk  in  the  complaint  I  made  against  them  on  coal  taken  from 
Buffalo  to  Hamilton,  was  that  the  interstate-commerce  act  did  not  con- 
trol that  traffic.  Now,  if  they  pay  rebates  on  that  traffic,  why  should 
they  not  i)ay  rebates  on  traffic  froni  Chicago  to  Montreal  ?  1  know  they 
have  paid  rebates  on  traffic  from  Buffalo  and  Black  Rock  into  Caniula. 

The  Chairman.  Do  you  think  any  foreign  trade  has  been  drawn  from 
you? 

Mr.  Ledyard.  We  have  lost  nearly  all  our  export  trade. 

The  Chairman.  On  what  account  ? 

Mr.  Ledyard.  Simply  on  account  of  the  arrangement  made  with  the 
Grand  Trunk  Company  with  vessels  running  from  Portland.  Instead 
of  charging  the  lull  inland  rate,  they  have  divided  the  through  rate  on 


270  TRANSPOKTATION    INTEUESTS    OF 

an  agreed  percentage.    They  have  subsidized  vessels  to  come  to  Port- 
hind,  and  hove  aHowed  them  more  than  they  wonhl  otiierwise  get. 

The  CHATiniAN.  And  you  have  been  losing  your  foreign  trade? 

Mr.  Ledyard.  Yes,  sir. 

EEGULATION  OF  THE  CANADIAN  ROADS. 

The  Chairman.  Do  yon  think  tliere  is  any  way  of  protecting  the 
American  roads  in  maiiitaining  the  published  rates  in  competition  with 
the  Canadian  roads? 

Mr.  Ledyard.  Yon  gentlemen  recogin'/e  I  hope  that  I  contnd  a  Ca- 
nadian road.  I  control  a  road  running  parallel  in  Cana<la  with  the 
Grand  Trunk  road,  and  what  1  say  1  state  in  reference  to  all  Canadian 
roads.  I  made  a  suggestion  to  .Tndgi' Cooley  som«'  two  years  since, 
with  regard  to  the  state  of  affairs  then  existing,  and  he  ask«'d  me  what 
I  thought  about  the  matter,  and  I  told  him  I  thought  that  all  Canadian 
railways,  before  being  allowed  to  do  business  in  earrviug  trallic  from 
the  United  States  into  Canada,  or  from  the  Cnited  States  into  Canada 
and  then  into  the  United  States  again,  or  from  Canada  into  (he  Uuit<'d 
States,  should  lile  with  the  Commission  tln'ir  assent  to  the  law,  and 
that  they  should  not.be  allowed  to  change  any  rate  affecting  interstate 
or  international  tralhc  without  the  consent  of  the  Interstate  Commerce 
Commission. 

The  Chairman.  If  you  do  that,  the  same  law  ought  to  apply  to  tlio 
American  roads  as  well. 

Mr.  Ledvaud.  I  hold  that  if  an  American  road  found  it  necessary  to 
change  rates,  (he  Commission  W(»uld  allow  the  same  privilege  at  the 
same  time  to  the  Cana<lian  road;  but  I  (liink  (hat  a  commission  com- 
posed of  Americans,  (o  allow  the  Camnlian  roads  to  carry  our  tratVie  at 
less  than  they  think  would  be  a  reasonable  rate  for  an  American  road, 
would  be  doing  an  injustice  (o  the  Amt'rii'an  roads.  If  there  is  a  reason 
why  reasonable  rates  should  be  «'harged  from  Chi<'ago  to  New  Y(uk  by 
the  Pennsylvania  road,  the  same  rule  should  a]»ply  totheCrand  Trunk, 
but  the  Crand  Tiuid;  should  not  l)e  allowe*!  to  reduce  below  a  n-ason- 
able  figure  the  rates  fixed  by  the  IVnnsylvaniaor  other  American  roads 
comi>eting  therewith,  all  of  whose  tralVie  is,  to  a  greater  or  less  extent, 
governed  by  the  i)rovisionsof  the  int<Mstate  commerce  act.  Tlie  through 
rates  in  force  for  the  last  fiue  years  have  been  lower  than  any  wlu-re  else 
in  the  world.  Our  through  tratlic  last  year  netted  us  ab(»ut  om^  lialf  a 
cent  i)er  ton  per  mile  east  and  west  bound,  and  our  local  tnitlic  about 
eight  mills. 

The  Chairman.  There  is  alxmt  that  difference,  is  there,  bctwccu  the 
charges  on  local  and  through  traflie? 

INIr.  Ledyard.  Local  trallic  is  always  a  little  higher. 

The  Chairman.  Is  that  about  the  relative  dillerence  on  all  the  rojuls  ! 

I\Ir.  Ledyard.  On  all  the  roads  east  of  Chicago. 

The  Chairman.  Do  anv  of  these  branch  lines  of  yours  run  to  the 
Sault  vSte.  :Marie  IJiver! 

]\Ir.  Ledyard.  No,  sir. 

The  Chairman.  Do  any  of  your  branches  run  over  that  bridge  at  the 
Sault  Ste.  Marie? 

Mr.  Ledyard.  No,  sir;  we  did  at  one  tinu>  do  some  business  with 
the  Duluth,  South  Shore  and  Atlantic,  but  do  not  now  do  much  bu.si 
ness  with  that  line.     That  rojul  was  originally  built  to  connect  Mar- 
quette and  Mackinaw,  and  then  afterwards  extended  to  Diduth. 

The  Chairman.  What  is  your  understanding  uf  the  control  of  that 
bridge^who  controls  it? 


THE    UNITED    STATES    AND    CANADA.  271 

Mr.  Ledyard.  As  I  understand  the  situation,  the  bridge  is  controlled 
by  the  Ciiuadian  Pacific,  the  Minneapolis,  Sault  8te.  Marie  and  Atlan- 
tic, known  as  the  "  Soo  Line,"  and  theUuluth,  South  Shore  and  Atlan- 
tic, and  the  control  of  the  stock  of  the  last  two  companies  is  in  the  bands 
of  the  Canadian  Pacific  people,  who,  through  Mr.  Van  Home,  practi- 
cally control  the  operation  and  the  policy  of  those  companies. 

The  Chairman.  Did  you  hear  Mr.  Van  Home's  testimony  to-day  ? 

Mr.  Ledyard.  Yes,  sir;  I  was  told  by  one  of  the  leading  ofliceVs  of 
one  of  these  roads  that  Mr.  Van  Home  was  the  controlling  person  in 
fixing  their  policy. 

Senator  Gorman.  He  admitted  that. 

Senator  Eeagan.  Does  that  apply  to  the  Duluth  road  as  well  as  the 
St.  PauH 

Mr.  Ledyard.  I  speak  now  particularly  of  the  Duluth,  South  Shore 
and  Atlantic. 

The  Chairman.  The  right  to  pass  over  that  road  is  an  important 
right  to  American  interests,  is  it  not? 

Mr,  Ledyard.  That  depends  ;  now  it  is  not. 

The  Chairman.  It  is  a  matter  of  some  interest  to  the  Northern  Pa- 
cific, is  it  not  ? 

Mr.  Ledyard.  Yes,  if  they  want  to  build  down  there.  What  good 
would  it  do  them  to  get  there  if  they  would  have  to  give  their  business 
to  a  rival  road?  If  other  connecting  roads  should  build  there  it  might 
be  a  very  important  right. 

The  Chairman.  I  think  some  one  was  trying  to  build  a  road  from 
opposite  Cleveland  up  to  that  point. 

Mr.  Ledyard.  The  Grand  Trunk  was  talking  of  building  a  road  up 
there.  They  have  some  kind  of  agreement  that  gives  them  a  right  to 
cross  that  bridge  when  they  get  there. 

Senator  Blair.  Is  that  a  very  expensive  bridge? 

Mr.  Ledyard.  I  do  not  think  so. 

Senator  Blair.  I  notice  that  you  touch  upon  this  matter  of  the  gen- 
eral railroad  law. 

Mr.  Ledyard.  Yes,  sir. 

Senator  Blair.  Is  there  reciprocity  in  that  regard  ? 

Mr.  Ledyard.  I  do  not  think  you  could  reciprocate  to  amount  to 
anything  so  long  as  the  Canadian  Government  is  willing  to  give 
bonuses  to  aid  in  building  roads.  I  do  not  think  you  could  ever  get  a 
railroad  law  in  Canada  that  would  give  bonuses  to  aid  outside  roads, 
because  the  Canadian  policy  is  not  to  allow  the  building  of  rival  lines. 

Senator  Blair.  But  they  might  have  to  change  their  policy  in  a  great 
many  things  to  give  us  a  fair  chance  at  this  trade,  might  they  not  ? 

Mr.  Ledyard.  I  am  not  a  believer  in  the  general  power  to  build  rail- 
roads.   I  think  it  has  done  more  harm  than  anything  else. 

Senator  Blair.  We  have  it  here,  do  we  not? 

Mr.  Ledyard.  Yes ;  but  I  do  not  believe  in  it. 

Senator  Blair.  Do  you  think  if  we  should  build  in  the  direction  of 
Winnipeg,  and  American  capital  should  be  exerted  in  that  northwestern 
wheat  country  and  the  cereals  brought  down  to  St.  Paul,  we  could  get 
our  share  of  the  traffic  obtainable  in  that  country? 

Mr.  Ledyard.  I  do  not  think  the  American  roads  could  compete 
with  the  Canadian  railroads  in  face  of  the  subsidies  they  have. 

Senator  Blair.  That  difficulty  may  be  in  the  way,  and  if  that  one 
difficulty  is  enough  to  prevent  our  competing  with  the  Canadian  roads, 
why  go  on  with  these  flimsy  exactions  ! 

Mr.  Ledyard.  I  do  not  think  it  a  flimsy  exaction  to  make  the  Cana- 


272  TRANSPORTATION    INTERESTS    OF 

dian  roads  live  up  to  our  interstate-commerce  law  aod  give  the  properly 
appointed  body  here  supervision  over  their  traffic. 

Senator  Blair.  The  interstate-commerce  law  exercises  no  super- 
vision over  the  rate  of  a  tariff. 

Mr.  Led  YARD.  I  think  they  should,  so  far  as  foreign  carriers  are  con- 
cerned. 

Senator  Blair.  Then  you  want  a  new  law  » 

Mr.  Ledyard.  1  think  they  should  observe  the  rates  our  Commission 
say  are  proi)er. 

Senator  Blair.  In  other  words,  you  want  us  to  regulate  the  amount 
of  fares  and  the  amount  of  rates  on  freights  in  Canada,  and  provide  by 
law  that  the  Canadian  roads  shall  not  carry  merchandise  cheaper  than 
the  American  roads  do,  because  if  they  carry  cheaiKT  than  we  do  they 
take  the  trade.  That  is  exercising  a  power  in  a  foreign  country  that 
you  are  not  exercising  in  your  own  country. 

Mr.  Ledyakd.  1  say  with  reference  to  traffic  that  originates  or  conies 
into  this  country. 

Senator  Blair.  You  think  we  should  treat  frallic  through  Canada 
in  such  manner  as  will  ])rev('nt  the  Canadian  linrs  from  <-li;»tgin«,'  any 
more  to  the  sliijiixT than  the  Anieiican  railroad  charges  to  the  shipper  1 

Mr.  Ledyakd.  Yes,  and  that  they  shall  not  vary  that  rate  without 
the  consent  of  the  Interstate  Commerce  Commission. 

Senator  Blair.  I  have  been  trying  to  develop  the  idea  that  it  is  not 
of  the  slightest  consc(]nence  to  you  railroa<l  people  to  apply  the  inter- 
state-commerce law  in  Canatla,  as  the  law  is  today. 

Mr.  Ledyakd.  I  agree  with  yon  in  that. 

Senator  BLyMK.  Then  1  am  glad  we  understand  e^ich  other.  You  are 
now  basing  youi"  remedy  upon  the  assumption  tliat  we  are  to  regulate 
the  fares  and  rates  of  freights  on  trallic  carrie«l  by  the  Canadian  roads 
through  the  IJiiitt'd  States! 

Mr.  Ledyakd.  We  are  to  re;iiilal«'  the  charges  imposed  by  Canadian 
railways  on  trallic  pa.ssing  over  Canadian  roads  froni  tlie  Cnited  SUitets 
into  Canaila  and  from  ('anada  into  the  Cnited  States. 

Senator  15laik.  Then  if  we  proviile  that  it  shall  cost  us  much  to  t-arry 
that  trallic  in  Canada  as  it  will  c«).st  to  carry  tiiat  trallic  in  the  United 
States,  do  you  say  yon  can  compete  T 

Mr.  Ledyakd.  Then  we  can  comj)ete. 

Senator  Blair.  ]Sow,  if  along  this  line  where  the  Canjulian  Pjtcific 
is  to  be  in  the  fuHire  they  are  to  build  branches  leading  to  this  country 
by  way  of  Sault  Ste.  Marie  and  Duliitli  and  drain  that  western  country; 
if  they  are  to  tap  tUiicago;  if  the.\  are  to  come  into  the  Cniti-d  States 
by  every  line  of  land  and  water  that  they  choose  to  invest  their  cajiital 
in,  and  if  they  are  rich  enough  to  obtain  the  control  of  every  railroad  in 
this  country,  why  should  we  not  have  the  same  right  to  invest  <»nr  caji- 
ital in  reaching  that  northwestern  country  and  sharing  in  the  traffic! 
If  they  are  to  have  the  privilege  of  coming  into  this  country  and  tap- 
ping our  commercial  centers,  why  should  not  our  roads,  wlu'-i-e  we  can 
touch  and  tap  the  coming  development  of  Camula,  have  that  same 
X)rivilege? 

Mr.  Ledyakd.  \Ve  should. 

Senator  Blair.  You  think  that  if  thev  have  the  privilege  of  meeting 
our  capital  here,  we  should  have  the  privilege  of  meeting  their  capital  in 
Canada  I 

Mr.  Ledyard,  We  ought  to  have  that. 

Senator  Blair.  It  has  been  shown  that  Canada  possesses  150,000 
square  miles  of  as  good  wheat  country  a«  we  have,  which  wheat  coun- 


THE    UNITED    STATES    AND    CANADA.  273 

try  extends  1,500  miles  farther  on  towards  the  XortU  Pole.  Now  why 
when  the  products  of  that  area  come  this  way,  should  not  the  American 
roads  haul  themf 

Mr.  Led  YARD.    There  is  no  reason  why  they  should  not. 

Senator  Blair.  The  Canadians  are  not  raising  the  quantity  of  wheat 
now,  but  when  they  do,  is  there  any  reason  why  American  capital 
should  not  build  roads  to  tap  that  country  and  get  the  benefit  of  that 
long  haul  ? 

Mr.  Ledyard.  There  is  no  reason  why  they  should  not. 

Senator  Blair.  And  if  we  build  roads  in  Canada  we  can  extend  to 
Canada  the  same  privileges  with  respect  to  this  country  under  a  gen- 
eral railroad  law. 

Mr.  Ledyard.  Exactly. 

Senator  Blair.  And  the  remedy  for  the  difiQculty  now  existing  lies 
in  this  general  railroad  law  affording  equal  privileges  to  both  countries. 

Mr.  Ledyard.  Yes,  sir. 

Senator  Blair.  Then  the  application  of  the  interstate-commerce  law 
as  it  is  to-day  is  not  a  remedy  for  existing  evils,  and  its  application  in 
Canada  is  not  of  the  slightest  consequence "? 

Mr.  Ledyard.  I  do  not  see  how  it  can  be  enforced.  A  rebate  may 
be  given  in  Canada,  and  how  are  you  going  to  remedy  if? 

Senator  Blair,  Well,  we  have  got  to  do  some  fighting,  that  is  all, 
«nless  we  can  agree  upon  something.  Can  you  think  of  any  other  con- 
ditions that  ought  to  be  imposed  upon  Canada,  in  order  to  give  the 
American  roads  a  chance  ? 

Mr.  Ledyard.  IS'othing. 

Senator  Gorman.  If  the  rule  that  you  suggest  is  carried  out,  what 
would  be  the  effect  upon  the  producers  in  this  country  as  to  rates  I 

Mr.  Ledyard.  If  the  entire  system  maintained  rates,  and  there  was 
no  fluctuation,  it  would  make  no  difference  as  to  the  amount  of  the  rate 
from  the  great  gathering  centers  to  the  sea-board.  It  might  if  any  con- 
cessions were  made,  but  in  the  general  question  it  would  not.  There 
is  competition  enough  between  the  American  railroads  to  always  keep 
rates  down. 

Senator  Gorman.  How  with  respect  to  the  facilities  for  carrving  the 
freight  ? 

Mr.  Ledyard.  The  facilities  are  more  than  we  want  to-day,  and  are 
more  than  we  will  want  for  a  good  many  years  to  come. 

Senator  Gorman.  Do  you  not  think  that  if  the  Commission  had  power- 
to  fix  an  arbitrary  rate  on  every  ton  of  freight  moved,  the  effect  would 
be  that  the  Canadian  roads  would  put  up  their  rates  to  the  same  point  I 

Mr.  Ledyard.  I  say  that  the  Canadian  roads  ought  not  to  be  per- 
mitted to  change  their  rate  without  the  consent  of  the  Commission.  I 
think  the  Commission  is  too  broad-minded  to  allow  the  Pennsylvania 
Eailroad  to  make  a  20cent  rate  from  Chicago  to  New  York  and  not 
allow  the  Grand  Trunk  to  do  the  same.  I  say  that  the  Commission 
ought  to  say  to  the  Canadian  roads,  "You  shall  not  go  below  a  reason- 
able rate  while  our  railroads  are  observing  the  long  and  short  haul 
clause,  and  have  to  make  low  local  rates  on  that  account,  because  you 
can  recoup  yourselves  on  the  local  business  in  Canada  and  the  Ameri- 
can railroads  can  not." 

Senator  Gorman.  I  understand  your  reason  for  that  is  this :  that  the 
Canadian  road  is  constructed  by  public  money. 

Mr.  Ledyard.  Largely  aided  by  public  money,  and  they  can  operate 
cheaper. 

6543 — -18 


274  TRANSPORTATION    INTERESTS    OF 

Senator  Gorman.  And  tlie  conditions  are  sucli  tbat  they  can,  in  fact, 
carry  the  grain  cheaper,  not  having  to  make  retnrns  to  the  investors. 

Mr.  Ledyaed.  Not  only  that,  but  they  can  and  do  charge  higher  local 
rates,  and  in  connection  with  the  investment  can  operate  cheaper  than 
the  American  roads. 

Senator  Gorman.  Therefore  you  would  treat  the  traflBc  over  their 
railroads  like  property  that  comes  in  from  abroad,  and  you  would  put  a 
tax  upon  it,  or  allow  it  to  come  in  on  such  terms  as  would  not  be  a  men- 
ace to  American  railroads  ? 

Mr.  Ledyard.  I  would  not  put  a  tax  on  it.  1  would  say  simply,  "If 
you  want  to  do  the  business,  you  shall  do  it  on  princii)les  that  are  Just 
to  you,  but  not  unjust  to  the  American  railways  that  have  not  the  aid 
you  have,  and  that  are  not  able  to  recoup  themselves  by  charging  as 
liigh  local  rates  as  you  can  charge." 

Senator  Gorman.  And  you  advocate  on  our  side  the  legalizing  of 
l^ooling  ?  Would  you  go  as  far  as  Mr.  Depew  an<l  make  the  condition 
that  the  Interstate  Commerce  Commission  should  agree  to  the  rates 
that  shall  be  charged  by  the  trunk  lines  before  the  i)Ool  rates  become 
operative?    Do  you  see  any  objection  to  that  f 

Mr.  Ledyard.  Not  the  slightest. 

Senator  Gorman.  And  you  think  by  these  two  arrangements  the 
cost  of  transportation  to  the  i>ublic  would  still  be  kept  at  the  minimum  f 

Mr.  Ledyard.  Yes,  sir;  and  leave  a  fair  return  for  the  investment. 
I  do  not  think  any  railroad  can  lor  a  long  time  make  any  money  out  of 
the  rate  of  half  a  cent  per  ton  per  mile. 

Senator  Gorman.  Can  any  railroad  make  money  out  of  that  rate  for 
any  length  of  time? 

Mr.  Ledyard.  I  think  not.  It  is  about  one-third  of  what  the  Eng- 
lish rates  are  for  the  same  distance. 

Senator  Gorman.  So  with  the  luesent  facilities  we  have,  and  all  the 
improvements  we  have,  you  believe  that  half  a  cent  a  ton  per  mile  is 
lower  than  you  can  haul  the  freight  for  and  make  a  fair  return — say  a 
return  of  4  per  cent,  on  the  capital  invested  t 

Mr.'LEDYARD.  Yes,  sir;  and  keep  the  proi)erty  up  and  provide  for 
the  betterments. 

Senator  Barbour.  Would  not  your  local  business  stand  a  higher 
charge  ? 

Mr.  Ledyard.  The  local  charge  was  higher  heretofore,  but  the  local 
business  is  now  governed  by  the  through  rate.  If  the  tnrough  rate 
goes  down,  the  local  rate  goes  down. 

Senator  Barbour.  That  is  the  aggregate,  but  not  the  rate  per  ton 
per  mile  ? 

Mr.  Ledyard.  If  you  put  down  your  through  rate  to  3  mills,  your 
local  rate  will  go  down  to  5  mills. 

cost   of  operating  CANADIAN  ROADS. 

Senator  Blair.  Relatively,  how  much  more  expensive  is  it  to  operate 
a  railroad  in  this  country  than  in  Canada  ! 

Mr.  Ledyard.  I  could  not  give  the  exact  tigures.  but  I  should  say 
considerably  more.  I  have  bought  steel  rails  delivered  in  New  York  as 
low  as  $20  a  ton,  and  I  have  ha^l  to  pay  $;35  lor  steel  rails  at  the  Pitts- 
burgh mills. 

Senator  Gorman.  That  is  not  so  of  to-day,  is  it  ? 

Mr.  Ledyard.  Steel  rails  are  lower  to-day  than  thev  have  ever  been 
m  this  country.    There  is  now  a  combiuatioii  between  "the  English  steel- 


THE  UNITED  STATES  AND  CANADA  275 

rail  makers  to  put  up  the  prices.  Again,  mauy  classes  of  labor  are 
cheaper  in  Canada  than  here,  running  from  10  to  15  per  cent,  lower. 
Engineers  get  about  the  same.  Trackmen,  conductors,  traiumenj 
operators,  station  agents,  and  machinists,  I  think,  run  from  10  to 
15  per  cent,  lower  than  the  wages  paid  to  similar  persons  in  the  United 
States.  The  only  thing  in  Canada  that  costs  more  than  in  the  United 
States  is  fuel. 

Senator  Gorman.  Do  the  Canadians  have  as  good  a  class  of  men  at 
these  lower  prices  as  in  the  United  States  ? 

Mr.  Ledyard.  Just  as  good  men.  The  best  class  of  common  labor 
I  ever  saw  in  my  life  is  on  the  Canadian  railroads.  I  think  in  some  re- 
spects they  are  a  better  class  of  labor  than  our  men.  A  great  many  of 
them  are  young  men.  Farmers'  sons  and  men  from  England  and  Scot- 
land come  over  and  form  a  better  class  of  labor  than  we  can  get  here. 
The  mechanics  are  about  the  same  class  of  men  as  ours. 

Senator  Blair.  Do  you  say  that  is  true  of  all  the  railroads  in  Can- 
ada « 

Mr.  Ledyard.  I  say  it  is  true  of  all  the  railroads  east  of  Lake  Huron. 

Senator  Blair.  Among  operating  expenses,  is  any  one  item  larger 
than  that  of  labor  ? 

Mr.  Ledyard.  No,  sir.  Next  to  the  item  of  labor  is  fuel,  and  that 
costs  more  in  Canada  than  in  the  United  States. 

Senator  Blair.  What  proportion  of  operating  expenses  do  you  think 
labor  constitutes  ? 

Mr.  Ledyard."  Labor  constitutes,  I  think,  not  far  from  50  to  60  per 
cent.    By  labor,  I  mean  all  salaries. 

Senator  Blair.  Equalizing  all  expenses  for  fuel,  how  do  the  other 
items  compare? 

Mr.  Ledyard.  All  are  in  favor  of  the  Canadian  railroads. 

Senator  Blair.  Can  you  give  an  approximate  statement  of  how 
much  greater  the  percentage  of  expenditure  is  in  this  country  than  in 
Canada  for  operating  railroads,  taking  everything  into  accountj  the 
higher  rates  of  capital  and  everything  ? 

Mr.  Ledyard.  That  depends  on  the  length  of  the  railroad. 

Senator  Blair.  Then  leave  out  the  matter  of  capital  and  tell  me. 

Mr.  Ledyard.  That  I  can  not  tell  you.  I  think  the  Canadian  rail- 
roads, at  the  jiigher  rates  and  lower  expenses,  can  earn  more  on  a  given 
amount  of  capital  than  an  American  road  can. 

Senator  Blair.  Can  you  give  an  average  of  how  much  ? 

Mr.  Ledyard.  I  do  not  know.  They  organize  their  roads  differently 
from  ours.  They  have  no  bonds.  They  have  first  or  second  preferred 
stock.  Then  they  have  elements  that  enter  into  the  building  of  roads 
there  that  do  not  enter  here. 

Senator  Blair.  Did  your  road  have  a  bonus  from  the  Canadian  Gov- 
ernment? 

Mr.  Ledyard.  Yes,  sir ;  the  Canada  Southern  received  certain  bo- 
nuses.    We  got  $350,000. 

Senator  Blair.  Then  it  was  practically  the  competition  of  individuals 
against  a  foreign  government  ? 

Mr.  Ledyard.  Yes,  sir ;  practically  that. 

At  4  o'clock  and  55  minutes  p.  m.,  the  committee  adjourned  until  to- 
morrow at  10  o'clock  a.  m. 


276  TRANSPORTATION  INTERESTS  OF 

New  YoPvK,  May  10.  1880. 
The  committee  met  at  10  o'clock  a.  m.,  pursuant  to  adjounmieut. 

STATEMENT  OF  CHARLES  S.  SMITH. 

Mr.  Charles  S.  Smith,  president  of  the  Chamber  of  Commerce  of 
New  York  City,  appeared. 

The  Chairman.  Mr.  Smith,  what  is  your  relation  to  the  business  men 
of  this  city  ? 

IMr.  Smith.  I  am  a  retired  dry  goods  commission  merchant,  and  am 
president  of  the  Chamber  of  Commerce  of  New  York. 

The  Chairman.  You  have  been  listening;  to  what  luis  been  said  here 
this  morning.  You  will  please  give  your  views,  in  your  own  way,  touch- 
ing the  questions  of  interest  to  the  public  whu.h  the  committee  is  here 
to  examine  into. 

Mr.  Smith.  Mr.  Chairman,  and  gentlemen  of  the  committee:  The 
Chamber  of  Comnjenie  which  I  have  the  honor  to  rcpres<>nt  are  (»f  tin- 
opinion  that  the  interstate  coniincrce  bill  in  its  ((juMation  has  been  of 
very  great  public  service.  1  believe  that  we  are  indebted  to  you,  sir, 
Mr.  Chairman,  and  to  your  associate,  njy  fiiend  S«'iiat»»r  Iveagau,  as  i la- 
authors  of  that  bill.  I  esteem  it  to  be  of  great  public  utility  tliat  there 
has  been  this  free  discussion  before  a  committee  of  the  Senate  of  the 
United  States,  who  have  given  so  much  stuily  to  this  question  and  who 
are  so  well  versed  and  so  well  skilled  in  the  various  ramifications  of  the 
railroad  problem. 

Now,  sir,  while  my  associates  in  the  Chamber  of  Commerce  and  I  are 
ready  to  give  credit  to  the  Interstate  Commerce  Commissioners  and  to 
the  operation  of  that  law  to  the  fullest  extent,  yet  we  are  of  the  opini(»n 
that  the  laws  which  govern  the  operation  of  that  Commission  are  capa- 
ble of  wise  revision  and  amendment.  1  will  endeavor  to  indicate  the 
points  which  seem  to  us  desirable  in  respect  to  which  this  law  should 
be  amended;  but  before  doing  so  I  wish  to  ask  your  indulgence  for  a 
very  few  moments  to  refer  to  some  facts  which  relate  to  the  existing 
state  of  things. 

You,  Mr.  Chairnnin,  and  your  associates  on  this  committee,  are  per 
fectly  aware  that  for  a  quaterof  a  century  and  tmtil  receittly  the  great 
railroad  corporations  of  our  country  controlled  absolutely  our  State  leg- 
islatures in  respect  to  everything  which  aflected  the  making  of  laws 
concerning  them. 

About  ten  or  twelve  years  ago  a  very  interesting  state  of  things  oc- 
curred in  New  York,  which  my  friend  Mr.  Kernan,  laU'  New  York 
State  railroad  commissioner,  will  remembeu.  In  consequence  of  a 
contest,  or  a  railroad  war— perhaps  it  is  too  strong  to  call  it  a  war,  but 
it  gave  rise  to  a  very  great  diflerence  of  opinion  between  certain  mem- 
bers of  the  trunk  lines— a  state  of  atlairs  existed  in  New  York  which 
created  very  great  indignation  on  the  part  of  the  merchants.  For  a 
period  of  about  three  weeks  or  more  New  York  shii)i>ers  were  unable 
to  send  their  goods  West  without  paying  a  discriminating  price  of  from 
10  to  22  cents  per  hundred  i)Ounds  higher  than  the  same  lines  accorded 
to  Philadelphia  and  IJoston  and  to  other  Eastern  cities.  The  existence 
of  that  state  of  facts  was  proved,  and  was  a<lmitted  bv  the  railroads, 
and  finally  terminated  in  the  calling  of  a  very  prominent'  me.'ting  in  the 
Chamber  of  Commerce  in  this  citv.  The  result  of  that  meeting  was  an 
application  to  the  legislature  of  the  State  of  New  York  for  a  committee 


THE    UNITED    STATES    AND    CANADA.  277 

of  investigatiou,   which   caused   the    appoiutment  of   the  committee 
known  as  the  Hepburn  investigating  committee. 

You  will  admit,  sir,  I  am  sure,  that  that  committee  did  very  great 
service  to  the  public.  It  supplied  us  with  a  vast  amount  of  valuable 
information  concerning  railroad  methods,  which  did  great  service  both 
to  the  railroads  and  to  the  public,  and  which  has  been  the  basis  of  sub- 
sequent railroad  legislation  throughout  the  whole  country.  The  out- 
come of  this  Hepburn  investigating  committee  was  the  appointment  of 
a  State  railroad  commission  in  New  York  State,  and  the  working  of  the 
railroad  commission  was  so  satisfactory  to  the  Chamber  of  Commerce, 
and  to  the  merchants  of  New  York  generally  that  they  were  prepared 
to  favor  the  interstate  commerce  bill.  We  were  prejudiced  in  favor  of 
it  at  the  start. 

THE  LONG  AND  SHORT  HAUL  CLAUSE. 

One  of  the  Senators  from  our  State  at  the  time  this  bill  was  under  dis- 
cussion—I think  it  was  in  January  1887 —  wrote  a  letter  to  the  Chamber 
of  Commerce  asking  them  to  consider  the  provisions  of  the  proi)osed 
bill  for  the  regulation  of  interstate  commerce,  and  to  submit  to  him  their 
views  upon  the  subject.  A  committee  of  the  Chamber  of  Commerce 
cousidered  the  bill  and  made  a  report,  and  I  think  experience  since  then 
has  justified  the  conclusions  at  which  the  committee  arrived  at  that 
time. 

The  committee  feared  that  the  long  and  short  haul  provision  in  sec- 
tion 4  of  the  bill  would  have  a  tendency  to  diminish  our  export  trade, 
and  that  it  would  have  a  like  tendency  to  retard  the  progress  of  the 
West  and  decrease  the  value  of  farming  lands. 

Now,  sir,  I  want  to  call  your  attention  to  a  few  facts  in  substantia- 
tion of  the  opinion  which  the  committee  of  the  Chamber  of  Commerce 
then  entertained,  and  which  it  now  entertains.  Before  doing  so,  how- 
ever, I  will  allude  to  a  fact  familiar  to  you,  which  will  lead  up  to  the 
figures  to  which  I  ask  your  attention. 

The  foreign  export  price  of  flour  and  grain  is  fixed  mainly  in  London. 
Chicago  fixes  the  home  price,  and  the  question  whether  Chicago  can 
meet  the  English  price  or  the  continental  price  depends  mainly  upon 
the  price  of  transportation  between  Chicago  and  the  sea-port.  Now, 
necessarily,  that  price  must  be  elastic.  We  have  to  compete  in  foreign 
markets,  and  the  competition  with  India,  Russia,  and  the  Black  Sea 
districts  is  growing  every  day,  and  they  are  supplying  a  large  portion 
of  the  foreign  demand  to  our  exclusion. 

The  balance  in  our  favor  with  all  foreign  countries  was,  in — 

1877 $151,000,000 

1878 257,000,000 

1879  264,000,000 

1880 167,000,000 

1881  259,000,000 

Since  1881  the  balance  in  our  favor  has  gradually  been  reduced  until 
1887,  when  the  excess  was  only  $23,000,000,  and  in  1888  the  balance  of 
trade  against  us  was  $28,000,000. 

Now,  I  do  not  pretend  to  claim  that  this  is  all  due  to  the  operation 
of  the  long  and  short  haul  clause  in  the  interstate-commerce  bill,  but  I 
do  claim  that  that  is  one  of  the  important  factors,  and  unless  it  is  modi- 
fied as  far  as  it  affects  the  export  trade  it  will  affect  injuriously  the  re- 
vival of  the  demand  for  our  Western  products  in  the  future. 

I  am  sure,  sir,  if  in  your  wisdom  you  do  not  recommend  some  change, 


278  TRANSPORTATION  INTERESTS  OF 

at  least  in  the  direction  of  export  products,  that  the  Kuroi)ean  markets 
will  be  larj?el.v  supplied,  more  so  than  in  the  past,  by  India,  Russia,  and 
the  Black  Sea  districts.  They  are  already,  as  I  have  betore  remarked, 
usurping  our  former  place  in  those  markets  to  a  very  large  extent. 

THE  QUESTION  OF  POOLING. 

Now,  gentlemen  of  the  committee,  as  to  pooling.  The  Chamber  of 
Commerce  never  cousidered  that  an  unmitigated  evil.  We  have  always 
considered  that  there  were  two  sides  to  the  (juestion  and  that  there  was 
a  good  deal  to  be  said  on  both  sides.  We  feel  sure,  sir,  that  the  opera- 
tion of  pooling  tended  largely  to  decrease  the  outrageous  discriminations 
against  certain  individuals  and  localities  whieh  existed  before  the  pool- 
ing system  came  into  operation.  It  secured  greater  unitbrmity  of  rates. 
Of  that  I  am  certain  from  my  own  ex]»erience  ;is  a  shipper.  It  was  (»f 
more  benefit  to  a  shipper  to  negotiate  with  Mr.  Fink  as  representing  all 
The  trunk  lines  than  to  visit  all  the  otlices  in  the  city  in  detail  and  try 
to  deal  with  them.     Those  were  the  advantages. 

It  had  its  disadvantages,  which  I  must  mention.  It  had  this  very 
grave  disadvantage,  that  it  was  absolutely  and  entirely  under  the  con- 
trol of  the  railroads.  There  was  no  law  abov*'  them.  There  was  no  one 
to  call  them  to  account,  and  they  pursued  that  advantage  sometimes 
very  arbitrarily. 

Now,  if  you  could  see  a  way  by  which  you  could  n-cognize  this  pooling 
system  in  some  degree,  and  place  it  under  the  immediate  supervision  of 
the  Interstate  Commerce  Commissioners,  1  am  of  the  oi)inion  that  tin 
disadvantages  of  the  system  would  lu-  done  away  with  toa  very  large  ex 
and  the  advantages  to  wliich  I  referred  would  be  made  available.     I 
think  it  would  be  wise  to  try  that  measure. 

We  in  New  York  always  considered  when  this  interstate-commerce 
law  was  framed  and  went  into  operation  that  it  was,  to  a  certain  ex- 
tent, tentative.  It  was  a  radical  departure  from  previous  methods. 
We  supposed,  as  a  matter  of  course,  tliat  no  body,  wise  as  is  the  Senate 
of  the  United  States,  could  frame  a  law,  which,  if  experience  proved 
was  necessary,  would  not  have  some  amendment,  an«l  I  think  in  the 
matter  that  1  have  indicated  it  is  worthy  of  your  study,  although  I  am 
quite  aware  that  similar  arguments  have  been  addressed  t«>  you  over 
and  over  again. 

One  great  difficulty  with  the  operation  of  the  i>resent  law  is  this:  1 
do  not  believe  that  the  law  is  carrie<l  out  by  the  railroads.  A  very 
prominent  railroad  official  told  me  the  other  day  tliat  he  believed  the 
interstate  commerce  law  was  violated  secretly  every  twenty-four  hours, 
and  that  this  was  true  of  all  the  trunk  lines,  this  may  be  a  stnmg  state- 
ment, but  there  is  very  little  belief  on  the  part  of  the  railroad  officials 
or  the  public  that  this  interstate  law  is  observed  in  iU*  integrity. 

VALUE  OF  THE   CANADIAN   LINES. 

Mr.  Chairman,  I  desire  to  say  a  few  words  about  Canada  and  the 
Canadian  lines.  As  to  the  Canadian  lines,  thev  have  been  of  very 
great  advantage  to  New  England  and  to  the  West.  "Tlierearealargenum 
berof  very  important  mills,  with  a  production  of  from  oue  to  two  md- 
lions  per  annum,  located  in  the  East,  notablv  at  such  places  as  York. 
Lewiston,  Saco,  and  Biddeford,  which  can"  ship  their  goods  bv  the 
Canadian  lines  direct  to  Chicago  (pute  as  cheaply,  and  1  have  known 


THE    UNITED    STATES   AND    CANADA.  279 

instances  in  which  they  have  have  been  shipped  5  cents  per  hundred 
cheaper,  than  they  could  be  landed  in  New  York  from  the  poiuts  I  have 
named.         , 

Now,  it  is  unfair  to  cut  off  Chicago  and  other  Western  cities  from 
these  facilities.  If  you  should  do  away  with  competition  by  the  Cana- 
dian lines  our  Western  friends  would,  in  many  instances  and  at  certain 
times,  have  to  pay  at  least  50  per  cent,  more  on  freight,  because  the 
goods  would  have  to  be  brought  to  isew  York  or  Boston  and  then 
shipped  to  the  West. 

I  agree  with  my  friend,  Mr.  Wimau,  and  other  friends  that  commer- 
cial  union  and  fair  reciprocity  with  Canada  is  a  very  good  thing  to  have. 
We  have  five  millions  of  people  there,  and  if— and  this  is  a  big  "  if,"  I 
admit — but  if  Canada  would  assimilate  her  tariff  to  that  of  the  United 
States,  make  it  alike,  or  substantially  like  ours,  then,  in  that  case,  I 
should  be  glad  to  see  as  free  trade  between  the  United  States  and  Can- 
ada as  to-day  exists  between  the  State  of  New  York  and  your  own 
State  of  Illinois.  I  do  not  say  that  it  is  possible ;  it  is  not  possible  in 
the  near  future,  but  I  think  it  looms  up  in  the  distant  future,  and  when 
it  comes  I  think  it  will  be  advantageous  to  all  of  us. 

In  regard  to  these  Canadian  lines,  I  have  some  considerable  fault  to 
find  with  them  in  reference  to  a  statement  which  I  will  now  make  to 
you.  The  firm  with  which  I  was  formerly  connected  shipped  forexport 
last  year,  I  think,  about  two  millions  of  plain  cotton  goods.  These  goods 
were  sent  largely  to  China,  some  few  to  India  and  Japan,  and  some  to 
the  Ked  Sea  ports.  Every  bale  of  those  goods  was  shipped  by  the  Can- 
adian Pacific  line  and  by  English  steamers  from  Vancouver.  I  think 
that  this  is  substantially  true  of  probably  from  six  to  seven  million  dol- 
lars more  of  cotton  goods  which  were  exported  by  our  Eastern  and 
Southern  mills  last  year.  I  am  told  that  more  than  90  per  cent,  of  our 
export  of  cotton  goods  went  by  that  line — the  Canadian  Pacific.  And 
it  is  probable  that  the  tea  and  silk  trade  will  also  be  diverted  in  the 
same  direction. 

There  is  some  reason  for  that.  You  can  not  make  this  diversion  of 
trade  from  the  former  methods  of  shipment  to  the  Canadian  Pacific 
Eailway,  as  I  have  remarked,  without  a  reason,  and  that  reason  must 
be  a  pecuniary  one.  I  have  no  proof  that  the  Canadian  lines  have  given 
rebates  to  secure  this  trade,  but  certainly  some  inducement  has  been 
given  for  this  diversion  of  trade. 

I  consider  it,  furthermore,  absolutely  unfair  and  unjust  to  our  ex- 
clusively American  lines  that  the  Canadian  lines  should  be  permitted 
to  take  goods  in  New  England,  carry  them  through  Canada,  and  re-enter 
the  States  of  Michigan  and  Illinois  and  deliver  those  goods  in  compe- 
tition with  our  lines  unless  they  are  subjected  to  the  same  conditions, 
substantially,  to  which  our  lines  are  subjected. 

I  know  that  the  Canadian  railroad  ofiicials  claim  that  they  observe 
the  provisions  of  the  interstate-commerce  law.  It  is  denied  on  the  part 
of  our  American  friends.  I  know  personally  that  the  Canadian  lines 
are  getting  a  very  much  larger  percentage  of  business  from  the  New 
England  States  and  Chicago  than  they  received  in  former  years,  and  I 
think  it  is  due  to  our  exclusively  American  lines  that  they  should  have 
a  fair  investigation  of  that  subject,  and  that  the  question,  as  far  as  tbey 
are  concerned,  should  be  put  upon  a  fair  basis.  That  is,  we  ask  fair 
play  for  American  lines  j  we  do  not  ask  anything  more. 

I  will  be  glad  to  answer  any  questions,  Mr.  Chairman,  which  any  mem- 
ber of  the  committee  may  see  fit  to  ask. 


280  TRANSPORTATION    INTERESTS    OF 

SHIPMENTS  TO  CHINA  AND  JAPAN. 

The  Chairman.  You  referred  to  a  shipment  of  cotton  jroods  by  your 
old  firm  by  way  of  the  Canadian  I'acific  Railway  to  the  Pacific  coast. 
What  road  did  it  go  on  from  here  to  where  it  struck  the  Canadian 
Pacific  ? 

Mr.  Smith.  It  went  by  the  Grand  Trunk  line  throngh  Maine. 

The  Chairman.  Your  firm  is  lotated  liere  in  New  York,  is  it  not? 

Mr.  Smith.  Yes,  sir;  and  in  P>ost(>n,  too. 

The  Chairman.  What  is  the  method  of  shipment  of  these  export 
cotton  goods? 

Mr.  Smith.  When  full  car-load  shi|)nients  are  to  be  made  the  rail- 
road company  runs  cars  into  the  mill-jard,  and,  wLeu  loaded,  removes 
them. 

Senator  Reagan.  Do  you  send  by  water  or  by  land  ? 

Mr,  vSmith.  By  land  to  Vancouver  ;  then  by  water  to  China. 

Senator  Reaoan.  IIow  much  less  did  you  say  the  charge  wiis  for 
transportation  on  tLe  Canadian  lines  than  could  l)e  procured  on  Amer- 
ican lines  ? 

Mr.  Smith.  I  did  not  state  that.  I  do  not  know.  I  stated  that  there 
must  have  been  some  discrimitjation  in  order  to  secure  the  diversion 
from  the  American  to  the  Ciinadian  lines. 

Senator  Reagan.  Do  yon  know  what  the  actual  charge  is  this  year  .' 

Mr.  Smith.  Goods  go  by  the  Canadian  Pacific  Railroad  to  Vancouver, 
and  then  take  English  steamers  on  the  Pacilic.  The  cost  of  freight  taken 
from  the  mills,  say  at  Lowell,  Mass.,  or  other  large  manufa<-turing  cities 
in  New  England,  for  drills  and  sheetings  landed  in  Shangliai,  China,  is 
$13  for  40  cubic  feet.  Exceptional  rates  have  been  made  as  low  jis 
$12. 

Sheetings  are  packed  twenty  pieces  of  40  yards  each  in  a  bale,  and 
drills  fifteen  pieces  of  40  yards  ;  four  to  five  bales  of  sheetings  30  inches 
wide,  and  six  bales  drills  30  inches  wide,  measure  40  cubic  feet. 

The  advantage  of  shipping  by  the  Canadian  route  is  the  saving  of 
handling.  The  goods  loaded  in  cars  at  the  mills  are  changed  only  once, 
whereas  by  other  routes,  starting  say  from  New  York,  two  more  hand- 
lings are  necessary,  and  the  extra  expense  of  carting  is  to  be  added. 
The  frequent  hamlling  of  baled  goods  for  export  is  very  oi))ectiouable. 

By  direct  steamer  Irom  New  York  to  Shanghai,  via  the  Suez  Canal, 
the  price  is  40  to  45  shillings  sterling  per  40  (nibic  feet  landed  in  Sbang- 
Lai.  This  route  takes  thirty  days  longer  and  insurance  costs  §  of  1 
percent,  more  than  by  the  Pacitic  Mail  and  Panama  route  or  by  the 
Canadian  Pacific.  Shipments  by  Pacific  Mail,  via  Panama,  to  San 
Francisco,  by  steamer  to  Shanghai,  cost  $30  jter  40  cubic  feet. 

One  large  American  shipping  house  occasionally  loads  chartered 
steamers  (route  via  Suez  Canal)  with  their  own  sliiimients  at  a  pre- 
sumed saving  in  the  cost  of  freight  over  other  modes  of  shipment. 

Tea  and  silk  from  China  and  Japan  come  mainly  to  this  country  bv 
the  Suez  Canal  route. 

The  Chairman.  The  Interstate  Commerce  Commission  have  recently 
intimated  that  they  would  require  the  ])ublication  of  the  inland  route 
separate  and  distinct  from  the  rate  to  China,  for  instance.  J)o  you 
know  what  the  inland  rate  was,  or  whether  it  was  a  separate  rate  from 
the  rate  clear  through  ? 

Mr.  Smith.  No,  sir;  I  do  not.    The  only  rate  given  is  a  through  one 


THE   UNITED   STATES   AND   CANADA.  281 

THE  EXPORT  BUSINESS. 

Senator  Reagan.  Do  you  think  it  would  be  advisable  to  repeal  the 
fourth  section  of  the  bill,  the  long  and  short  haul  clause? 

Mr.  Smith.  I  think  it  would  be  advisable  to  amend  It,  at  least  in  re- 
spect to  our  export  business.  I  think  that  we  should  allow  more  lati- 
tude to  exporters ;  that  is,  that  we  should  do  nothing  to  prevent  our 
products  going  abroad.  It  is  a  great  aid  to  us.  While  I  would  not 
abrogate  it  absolutely,  I  think  that  in  regard  to  export  business  some 
amendment  should  be  made. 

Senator  Reagan.  Would  you  favor  an  amendment  that  would  enable 
the  roads  to  carry  freight  through  from  Chicago,  for  instance,  to  the 
sea-board  for  less  than  the  cost  of  transportation,  in  order  to  reach  the 
competition  of  Russia  and  Asia? 

Mr.  Smith.  I  think  it  would  be  an  evil,  but  it  would  be  the  lesser  of 
two  evils.     We  must  make  rates  so  that  our  produce  can  be  exported. 

Senator  Reagan.  In  that  event  would  not  the  result  be  that  the 
railroads  would  be  greatly  the  sufferers  on  account  of  the  loss  of  reve- 
nue, or  they  would  have  to  tax  the  people  of  ISTew  York  or  other  Stales 
more  than  reasonable  rates  in  order  to  make  up  the  deticit  of  revenue  ? 

Mr.  Smith.  I  think  there  is  some  foundation  for  that  argument,  but, 
at  the  same  time,  the  export  business  is  so  small  a  percentage  of  their 
entire  traffic  that  that  question  would  not  have  very  great  weight  in  the 
general  result  of  their  earnings. 

Senator  Reagan.  If  the  export  traffic  is  very  small,  compared  with 
the  income  of  those  lines,  would  it  not  be  a  great  hardship  to  impose 
upon  that  internal  commerce  a  burden  not  proper  for  it  to  bear  in  order 
to  facilitate  some  other  interest  ? 

Mr.  Smith.  I  think  so,  sir,  to  a  certain  extent,  but  I  think  it  would 
result  in  the  greatest  good  to  the  greatest  number,  and  I  think  it  is  very 
much  to  the  advantage  of  the  West,  and,  indeed,  to  the  whole  country, 
that  we  should  not  prohibit  our  export  trade.  While  there  is  truth  iu 
what  you  say,  and  the  railroads  must  make  a  profit  on  the  average,  yet 
I  think  it  is  so  desirable  that  we  keep  this  export  business  moving  that 
it  would  be  the  lesser  of  two  evils  if  the  lines  did  occasionally  carry  a 
thousand  cars  of  grain  at  a  little  less  than  the  cost  of  transportation. 

Senator  Harris.  Is  not  your  recommendation  practically  this:  That 
the  law  should  be  so  amended  as  to  authorize  the  carrier  to  jmblish  two 
through  rates,  one  a  through  rate  for  export  traffic,  and  the  other  the 
rate  to  New  York,  for  instance,  for  domestic  consumption — two  through 
rates  for  the  same  character  of  merchandise,  but  at  different  rates  of 
transportation  over  the  same  line  and  between  the  same  points? 

Mr.  Smith.  Yes,  sir;  practically  that. 

The  Chairman.  Could  that  be  done  without  encouraging  fraud? 

Mr.  Smith.  I  think  so  under  the  direction  of  the  Interstate  Commis- 
sion. Suppose  you  should  permit  the  railroads  to  make  a  through  rate, 
in  combination  with  the  steam-ship  lines,  from  Chicago  to  Liveriiool. 

Senator  Reagan.  Would  not  that  destroy  the  business  of  your  local 
merchants  here? 

Mr.  Smith.  No,  I  think  not.  Our  merchants  in  New  York  are  largely 
brokers,  as  far  as  the  export  of  grain  is  concerned.  For  instnuce,  they 
make  contracts  for  delivering  the  grain  that  is  stored  in  Cliicago,  just 
as  we  do  with  our  cotton  mills.  We  formerly  kept  all  our  goods  here 
in  New  York.  Now  we  largely  keep  samples  here,  and  deliver  orders 
from  the  mills.  It  is  a  saving  of  handling  and  freight.  New  York 
merchants  make  contracts,  and  deliver  grain  from  the  elevators  in  Chi- 


282  TRANSPORTATION    INTERESTS    OF 

cargo  to  the  sbips  in  our  harbor,  and  save  liaudliug  aud  storage  charges 
in  New  York. 

Senator  Eeagan.  Would  you  regard  it  as  fair  to  the  people  of  this 
community  to  compel  them  to  pay  more  than  the  cost  of  transportation 
of  their  flour  from  the  West  in  order  to  enable  the  railroads  to  carry 
grain  and  flour  for  less  than  the  cost  of  transportation  for  the  foreign 
markets  ?     Would  it  be  just  to  the  people  of  this  country  and  this  city  f 

Mr.  Smith.  I  do  not  think  it  would  be  just,  to  answer  that  question 
abstractly,  but  at  the  same  time  1  go  back  to  my  original  proposition 
that  it  is  the  lesser  of  two  evils.  We  can  not  eat  all  we  raise.  We  must 
have  a  foreign  outlet  for  our  products  or  stagnate,  and  we  must  have  it 
by  the  sea-board  and  in  competition  with  Ivussia  and  India  and  the 
Black  Sea.  There  must  be  a  combination  l)t*twoen  steamship  lines  and 
our  railroads  in  order  to  meet  that  competition,  and  they  unitedly  must 
make  a  price  that  will  enable  us  to  secure  a  foreign  market  for  our  ex- 
port products. 

Senator  Gorman.  You  do  not  attribute  the  decrease  in  our  exports  to 
the  long  and  short  haul  clause  alone  or  the  railroad  charges  in  our  coun- 
try, do  you  ? 

Mr.  Smith.  No,  sir.  J  stated  that  1  did  not  attribute  it  to  that  alone, 
but  I  think  it  is  one  of  the  factors. 

Senator  Gorman.  Is  it  not  a  very  minor  factor  T  Are  there  not  other 
conditions  ? 

Mr.  Smith.  I  think  so  (cornrrs  in  whrat,  for  example,  are  factors  in 
obstructing  export),  but  it  is  not  an  unimi>orfant  fa»"tor,  sir.  1  think  that 
we  are  going  to  have  jitter  competition  with  India.  They  are  bnilding 
roads  very  rapi<lly ;  they  are  bringing  grain  t^  the  seaboanl,  anil  1  am 
very  a])prehensive  that  we  shall  lose  our  markets  abroad 

The  Chairman.  In  any  event  f 

Mr.  Smith.  Yes,  sir ;  in  any  event,  unless  we  make  extraordinary  ex- 
ertions, which  we  must  do;  it  is  vital. 

The  Chairman.  Is  there  any  condition  of  accommodation  to  the  trans- 
portation lines  of  the  country  that  in  a  year  or  two  hence  will  enable  us 
to  successfully  compete  with  India  ? 

Mr.  Smith.  I  am  not  a  prophet,  but  1  sliould  tliink  there  is.  I  think 
with  our  labor-saving  agrieultural  machines  and  the  ingenuity  of  our 
people  at  the  West  wo  can  comjjete  with  them.  We  are  doing  so  to- 
day in  the  manufacture  of  cotton  goods,  although  we  are  i)aying  40  to 
50  per  cent,  more  for  labor  tlian  are  the  manufacturers  of  Englami  ;  I 
mean  on  a  low  grade  of  goods,  where  the  cost  of  production  is  mainly  in 
the  raw  material.  We  are  comi)eting  with  England  in  the  China  and 
Japan  markets.  This  is  done  solely  by  Yankee  i)luck  and  the  use  of 
the  best  labor-s-aving  machinery.  I  do  not  think  our  great  West  is 
going  to  be  satisfied  without  customers  abroad. 

Senator  Gorman.  Is  it  not  a  fact  that  since  the  passage  of  the  inter- 
state-commerce law  with  the  long  and  short  haul  clause  there  has  been 
a  very  large  decrease  in  the  aggregate  charges  from  Chicago  to  New 
York,  for  instance,  on  grain  and  all  other  dead  freight! 

Mr.  Smith.  I  have  that  impression,  hut  I  can  not  answer  the  ques- 
tion with  any  exactness.  I  have  been  out  of  business  for  eighteen 
months,  and  have  not  been  interested  in  the  matter.  Formerlv  1  took 
great  interest  in  it.  was  chairman  of  the  interstate  commerce  committee 
of  the  Chamber  of  Commerce,  and  kept  the  run  of  it. 

Senator  Gorman.  If  it  be  a  fact,  as  it  is,  that  there  has  been  a  very 
considerable  decrease  in  the  aggregate  charge  for  the  through  haul  from 
Chicago  to  New  York,  and  that  it  is  now  about  a  half  a  cent  a  ton  a 


THE    UNITED    STATES    AND    CANADA.  283 

mile,  do  you  believe,  as  a  business  man,  that  it  is  possible  for  the  car- 
riers to  carry  for  much  less  than  that  ? 

Mr.  Smith.  I  shoald  say  not,  with  the  present  state  of  their  watered 
stocks.  If  they  were  capitalized  at  what  the  roads  actually  cost  then  I 
should  think  they  might  do  so 

Senator  Gorman.  Eliminating  all  that— 1  am  talking  about  the  oper- 
ating expenses,  without  regard  to  the  capital  invested— if  it  be  a  fact, 
as  asserted  by  the  railroad  people,  that  it  is  not  possible  to  haul  freight 
and  pay  operating  expenses  for  less  than  a  half  a  cent  a  ton  a  mile,  and 
the  roads  are  now  down  to  that  point,  does  it  not  follow,  as  a  matter  of 
course,  that  you  must  look  finally  for  economies  to  meet  this  competi- 
tion that  you  talk  about ! 

Mr.  Smith.  Yes,  sir ;  that  would  be  entirely  true,  if  we  did  not  all 
know  that  as  soon  as  trade  revived  the  railroads  would  put  up  prices. 
There  is  no  law  to  govern  or  stop  them  from  putting  up  prices  to  double 
what  they  are  now.  They  have  done  it  before.  It  is  only  natural  to 
expect  they  will  do  it  again. 

Senator  Keagan.  We  have  this  law  now,  that  under  the  interstate 
commerce  law  the  Commission  has  the  right  to  demand  copies  of  rates, 
and  that  the  rates  must  be  reasonable. 

Mr.  Smith.  That  is  a  very  elastic  word.  If  one  man  was  asked  what 
"reasonable"  meant  in  regard  to  freight  he  might  put  it  at  10  cents 
per  hundred,  another  at  15  cents,  and  another  at  20  cents.  I  think  the 
rates  are  very  reasonable  now.  None  of  us  have  any  complaint  to  make 
as  to  the  present  rates. 

Senator  Gorman.  Is  it  rot  true  that  your  rail  competition  comes 
from  the  fact  that  the  English  and  Russian  Governments,  as  such,  are 
constructing  railroads  in  India  and  Russia,  and  theii  supplying  the  line 
of  steamers  with  public  money  to  carry  their  freight  to  Liverpool  and. 
elsewhere  at  a  rate  that  it  is  not  possible  for  private  competition  to 
meet?    Is  not  that  the  trouble? 

Mr.  Smith.  I  am  sure  that  we  in  this  country  can  never  compete  on 
ocean -carrying  trade  if  our  Government  is  going  to  jiursue  the  policy 
that  it  will  not  subsidize  ocean  steamers.  England  is  doing  it  when- 
ever it  is  necessary,  and  we  have  got  to  let  them  do  the  ocean-carrying 
trade  unless  we  arrive  at  the  conclusion  that  it  is  best  to  have  Ameri- 
can steamers.  The  English  Government  has  built  her  ocean  steam- 
ship business  under  absolute  protection  principles.  When  I  first 
crossed  the  Atlantic  the  English  steamers  got  $15,000  for  carrying  the 
mails  each  trip;  and,  of  course,  we  can  not  compete  with  England, 
France,  or  Germany  until  we  do  something  of  that  sort  at  the  com- 
mencement. 

Senator  Gorman.  So  that  it  is  not  alone  the  charges  on  our  railroads 
that  control  this  trade  ? 

Mr.  Smith.  There  is  not  a  single  American  steamer  on  the  north 
Atlantic  now  (if  we  except  one  or  two  that  were  bought  by  the  Inman 
Line,  formerly  running  from  Philadelphia  as  American  ships)  between 
Kew  York  aiod  any  European  port.  The  foreign  companies  on  the 
average  pay  small  dividends,  and  the  people  are  satisfied,  and  of  course 
we  can  not  compete  with  them  now  unless  we  have  Government  aid. 
It  would  be  utterly  useless  to  attempt  it  without  it. 

Senator  Gorman.  Is  not  that  the  real  reason  why  you  are  compelled 
to  ship  your  cotton  goods,  which  you  say  are  manufactured  in  the  United 
States,  and  go  west  to  tlie  Pacific  Ocean  and  then  to  China  and 
Japan,  by  the  English  lines  ? 

Mr.  Smith.  Yes,  sir ;  but  not  entirely.    We  used  to  ship  our  goods 


284  TRANSPORTATION    INTERESTS    OF 

by  the  Pacific  Mail  and  by  the  Union  Pacilic.  ^Ve  formerly  had  large 
shipments  by  direct  steamers  here  that  were  loaded  in  New  York,  went 
through  the'^Suez  Canal,  around  the  peninsula  and  into  China. 

Senator  Gorman.  That  was  all  prior  to  the  completion  of  the  Cana- 
dian Pacific? 

Mr.  Smith.  Yes,  sir ;  but  they  are  running  to-day.  They  a<lverti8e, 
but  they  do  not  get  much  freight,  at  least  of  cotton  goods.  I  saw  an 
advertisement  in  the  Journal  of  Commerce  yesterday  of  that  line  of 
steamers.  It  is  a  question  of  prices.  xVnybody  will  ship  by  the  cheap- 
est lino,  other  things  being  equal. 

Senator  (Iorman.  Is  it  not  a  fact  that  the  English  Government  have 
subsidized  lines  of  steamers  running  from  Vancouver  to  Cliina  and 
Japan "? 

ikir.  Smith.  Yes,  sirj  that  is  true. 

Senator  Gorman.  Is  no:  that  the  reason  ])rincipally  why  the  trade  is 
now  being  diverted  and  all  of  it  sent  over  the  Canadian  Pacific! 

Mr.  Smith.  I  have  no  doubt  it  is  one  of  the  factors  contributing  to 
that  end. 

Senator  Gorman.  How  are  we  to  meet  it  T 

Mr.  Smith.  We  must  do  the  same  thing.  Why  shouhl  we  not  do  it? 
We  have  done  it  for  the  railroads.  Why  should  we  not  doit  for  the 
steam-ships  ?  It  concerns  <»ur  <lignity  as  a  nation,  as  w«'ll  as  our  inter- 
est, to  have  our  own  ships. 

Senator  Gorman.  So  that  1  understand  you  to  say  that  in  dealing 
with  this  (jiiestion  and  holding  our  own  on  both  the  Atlantic  and  the 
Pacific,  we  have  got  to  look  beyond  the  railroads  to  the  steam-ships? 

Mr.  Smith.  Yes,  sir:  in  my  o|)inion,iii  the  end. 


STATEMENT  OF  J.  H.  HERRICK 

Mr.  J.  H.  Herrick,  a  grain  merchant  of  New  Y^ork  City,  appeared. 

The  Chairman.  What  is  yourotiicial  relation  to  a  portion  of  the  mer- 
chants of  this  city  ? 

Mr.  IlERRiCK.  I  am  a  grain  merchant,  and  have  been  for  thirty  years 
or  more. 

The  Chairman.  Are  you  not  at  the  head  of  some  organization  ? 

Mr.  IIerrick.  I  am  chairman  of  the  committee  on  interstate  com- 
merce of  the  New  York  Produce  Exchange,  the  largest  collection  of 
merchants  in  New  York. 

The  Chairman.  You  have  been  listening  to  and  reading  what  has 
been  said  here  before  this  committee  for  several  days,  and  you  know 
generally  what  the  committee's  mission  here  is.  Will  you  proceed  now, 
in  your  own  way,  with  what  you  have  to  say  in  reference  to  the  general 
subject  ^ 

Mr.  Herrick.  I  did  not  understand  that  the  interstate  commerce 
law  was  as  much  under  discussion  as  it  seems  to  ha\  e  been  here. 

The  Chairman,  The  committee  has  not  come  here  for  a  general  dis- 
cussion of  the  interstate  commerce  act.  That  has  only  come  in  by  way 
of  sufferance  and  by  way  of  suggestion.  The  purpose  of  the  committee 
here  principally  is  to  deal  with  the  Canadian  question.  You  can  refer 
to  either  or  both  if  you  think  proper. 

Mr.  Herrick.  I  will  begin  with  the  law,  because  I  differ  very  much 
from  the  views  of  the  previous  witness. 

The  Chairman.  Well,  give  us  your  views. 

Mr.  Herrick.  Before  the  law  was  passed  pooling  was  customary 


THE  UNITED  STATES  AND  CANADA.  285 

and  general,  and  under  the  system  of  pooling  then  in  existence  the  dis- 
crimination was  of  the  most  flagrant  and  unjust  character.  Since  the 
passage  of  the  law,  the  abrogation  of  pooling  and  the  enforcement  of 
the  long  and  short  haul  clause,  the  position  of  the  merchant  has  very 
greatly  improved  and  there  is  very  much  less  discrimination  than  ])re- 
viously  existed,  and  we  now  feel  that  the  only  or  principal  iault  of  the 
law,  prior  to  its  amendment  in  March,  was  that  its  penalties  were  not 
sufficient. 

It  would  seem  as  if  the  law  was  drawn  and  its  penalties  emasculated 
before  it  was  passed,  but  some  of  these  objections  have  been  remedied 
by  the  legislation  of  last  March,  and  as  a  general  thing  the  condition 
of  the  mercantile  interest  in  this  country  is  very  much  better  than  it 
was  previous  to  the  passage  of  the  law. 

THE  EXPORT  TRADE. 

But  the  railroads  have  adopted  another  system  which  is  totally  de- 
structive to  the  commerce  of  the  entire  sea-board,  namely  :  They  make 
cheaper  through  rates,  including  ocean  freight,  to  any  foreign  port  than 
they  will  make  for  the  same  article  to  the  sea-board,  and  the  committee 
of  which  I  am  chairman  was  formed  about  a  year  ago  to  try  this  un- 
lawful discrimination  before  the  Interstate  Commerce  Comm'issiou,  on 
the  trial  of  which  we  proved  that  bills  of  lading  on  the  same  day  from 
Milwaukee  to  Liverpool  were  19  cents  a  hundred  and  33  cents  a  hun- 
dred to  Kew  York,  and  as  a  result  of  that  trial  it  was  admitted  by  the 
railroad  defendants  that  the  rates  would  average  10  to  12  cents  more 
per  hundred  for  sea  board  transportation  than  for  export  consignment. 

Senator  Harris.  At  what  date  was  that? 

Mr.  Herrick.  That  was  a  year  ago  last  January — January,  1888 ; 
the  case  was  tried  in  June ;  the  system  generally  prevailed  of  a  dis- 
crimination against  the  sea-board,  and  the  effect  was  to  totally  destroy 
the  commercial  interests  in  grain  and  provisions  in  ISTew  York. 

The  Chairman.  On  account  of  the  discrimination  between  export 
products  and  those  coming  to  New  York  and  Boston  for  local  consump- 
tion? 

Mr.  Herrick.  Yes,  sir;  local  consumption  or  export  sale  from  here. 
The  argument  has  been  advanced,  as  the  witness  before  me  a(lvance<l 
it,  that  cheap  transportation,  or  rather  a  cut  rate,  sliould  be  made  in  order 
that  our  surplus  may  compete  in  foreign  markets,  whereas  although  the 
making  of  a  cheaper  rate  to  Liverpool  may  temporarily  stimulate  the 
movement  and  thereby  depress  that  market,  which  not  only  affects  the 
price  on  the  western  farm  but  all  over  the  world,  the  ultimate  result  is 
injurious ;  it  is  a  very  simple  matter  to  prove  this ;  foreign  markets  de- 
pend on  our  surplus  grain  and  provisions  ;  if  withheld,  prices  in  Europe 
would  be  much  higher ;  if  you  let  the  natural  law  take  its  course  with- 
out this  artificial  stimulus  of  supplies,  the  markets  will  absorb  our  sur- 
plus at  better  prices  without  unjust  discrimination  to  the  merchants  of 
the  sea-board,  who  have  large  warehouses,  capital,  and  plants  for  the 
management  of  a  share  of  our  exportable  products. 

The  Chairman.  What  remedy  have  you  to  suggest  for  the  present 
condition  of  affairs  1 

Mr.  Herrick.  The  railroads  as  a  general  rule  seem  to  give  their 
hearty  approval  of  the  law,  provided  pooling  and  the  long  and  short 
haul  clause  were  altered,  but  I  believe  it  is  the  opinion  of  our  mer- 
chants judging  from  the  treatment  of  the  mercantile  interests  by  the 
railroads,  that  the  very  things  the  railroads  want  abrogated  are  the 
very  things  the  mercantile  interests  want  kept  in  force. 


28C  TRANSPORTATION    INTERESTS    OF 

The  ijroductiou  of  grain  all  over  the  world  has  increased,  and  it  is  a 
wider  question  than  1  or  2  cents  on  a  rate  between  Chicago  and  foreign 
ports.  It  is  a  far  wider  question.  There  is  no  rate  than  can  be  miide 
that  can  overcome  the  overproduction  of  grain,  and  unless  we  change 
our  farming  more  in  keeping  with  the  English  plan,  where  their  aver- 
age is  from  28  to  30  bushels  to  the  acre,  while  ours  is  only  12  bushels  to 
the  acre,  in  twenty  jxars  we  shall  have  no  grain  for  exjwrt,  but  will 
consume  it  all  ourselves.  Our  land  needs  the  English  system  of  high 
manuring  to  ])roduce  from  28  to  30  l)usliels  to  the  aero,  and  that  will 
not  come  until  it  is  Ibrced  upon  us.  The  producing  region  is  moving 
west,  and  after  awhile  we  will  reach  the  limit  of  virgin-soil'  production. 

Now,  the  rate  of  freight  from  Chicago  to  New  York  to-day  is  8  cents  a 
bushel,  lake  and  rail.  That  is  equivalent  to  about  IS.^  cents  a  hundretl, 
and  the  railway  ])eople  say  thai  it  is  utterly  impossible  for  them  to  haul 
grain  at  less  than  20 cents  a  hundred  and  get  tlieir  nioney  back.  In  the 
season  of  open-water  navigation  all-rail  rates  are  very  low  indeed,  or 
else  all  grain  comes  down  the  lakes  and  takes  cither  the  canal  or  rail- 
road at  Dunkirk,  liullalo,  or  Erie. 

We  have  sustained  canals  in  the  State  of  New  York  for  years,  and 
these  canals  are  regulators  of  rates.  Without  the  canal  to  regulate  the 
radroads  the  rates  would  be  higher  all  the  year  arountl.  We  are  op- 
posed to  shutting  out  the  Canadian  roads,  because  they  act  in  the  winter 
as  the  canal  acts  in  the  summer  season  to  regulate  the  railroad  rates. 
If  the  Canadian  railroads  wvvv  prcvente*!  from  hauling  this  ])roperty 
the  trunk  lines  in  the  United  States  wouhl  naturally  raise  their  price. 

The  CHAimiAN.  Suppose  the  Canadian  railroads  are  put  under  the 
operation  of  the  same  law  that  the  railroads  in  the  United  States  op- 
erate under? 

Mr.  IIj':rkick.  I  was  just  coming  to  that.  So  far  as  the  State  of 
New  Y'oik  is  concerned,  it  is  probable  that  from  a  selfish  stand  point 
the  cutting  off  of  those  roads  woul<l  ining  to  New  York  and  Philadel- 
phia a  good  deal  of  property  that  now  goes  through  Canada  to  Portland 
or  Boston.  But  New  York  has  no  sclli.>h  interest  when  you  want  to  ben- 
fit  the  whole  country.  We  need  the  Canadian  ukuIh  as  a  regulator,  but 
we  must  put  the  Canadian  roads  under  the  same  system  of  government 
as  our  own  roads. 

The  C^AIRMA^^  How  wouhl  they  be  a  regulator  if  they  were  under 
the  same  system  ? 

Mr.  Hkrrick.  The  more  the  avenues  of  transportation  the  cheaper 
would  be  your  rate. 

The  Chairman.  That  would  be  the  theory. 

Mr.  Herrick.  Yes.  sir. 

Senator  Blair.  With  a  jmol ! 

Mr.  Hkrrick.  I  am  not  in  favor  of  a  pool.  I  am  very  much  ojiposed 
to  a  pool.  The  previous  witness  state<l  that  pooling,  under  some  plan 
of  supervision  by  the  Government,  would  be  a  good  thing,  but  it  seems 
to  me  that  is  simi)ly  another  way  of  stating  that  a  Goveinment  regula- 
tion would  be  the  best  thing  to  have,  and  I  am  not  sure  that  these  rail- 
road gentlemen  can  be  kept  in  order  without  Government  regulation 
sooner  or  later. 

The  Chairman.  We  have  some  Government  regulation  now. 

Mr.  Herrick.  Now,  as  to  this  cheaper  rate  to  the  foreign  consumer 
than  to  the  sea-board  consumer,  we  think  it  is  very  wicked.  We  have 
not  had  a  decision  from  the  Commission  yet,  butVe  are  expecting  it. 
JMinneapolia  flour  is  cheaper  in  London  than  in  New  York  City.    It  is 


THE    UNITED    STATES   AND   CANADA.  287 

taken  over  there  cheaper  than  it  is  brought  to  the  sea-board.  At  times 
American  flour  can  be  bought  in  London  and  brought  back  here  and 
sold  at  a  profit. 

The  Chairman.  What  is  the  explanation  of  that? 

Mr.  Heerick.  It  is  carried  over  there  so  cheaply. 

The  Chairman.  By  what  route  or  routes  ? 

Mr.  Herrick.  I  do  not  know  by  what  route  it  arrived  there. 

The  Chairman.  What  route  did  it  take  from  Minneapolis  ? 

Mr.  Herrick.  It  probably  came  over  the  trunk  lines. 

The  Chairman.  Did  it  travel  on  the  rail  at  all? 

Mr.  Herrick.  Yes,  sir ;  all  rail.  It  was  winter  season.  Last  Janu- 
ary there  was  a  difference  of  10  or  15  cents  per  hundred  on  a  through 
bill  to  London  as  against  New  York.    That  is  30  cents  a  barrel. 

The  Chairman.  It  went  through  some  port  of  the  United  States ; 
went  out  and  came  back  again  through  some  portion  of  the  United 
States,  did  it  ? 

Mr.  Herrick.  Yes,  sir ;  but  all  routes  compete  at  this  rate. 

The  Chairman.  And  yet  it  can  get  to  London  at  so  cheap  a  rate 
that  it  can  come  back  here  and  be  sold  at  a  profit. 

Mr.  Herrick.  Yes,  sir ;  but  I  do  not  mean  to  say  that  it  was  a  con- 
stant thing,  by  any  means.  The  opportunity  occurred,  however,  from 
time  to  time. 

The  Chairman.  What  does  it  cost  you  to  get  your  flour  from  the 
Minneapolis  mills  at  this  time  ? 

Mr.  Herrick.  Mr.  Carl  can  tell  you  better  about  that.  I  deal  in 
grain  and  not  in  flour. 

Mr.  Carl.  Twenty-seven  and  a  half  cents  a  hundred  from  Minneapo- 
lis here. 

The  Chairman.  These  lines  of  steamers  operated  by  the  Canadian 
roads,  or  operated  in  connection  with  them,  are  subsidized  by  the  Brit- 
ish Government,  are  they  ? 

Mr.  Herrick.  Yes,  sir ;  so  I  understand,  and  they  receive  quite  large 
subsidies.  With  the  same  subsidies  I  believe  we  could  do  our  share  of 
the  carryiug  trade  without  a  doubt. 

The  Chairman.  You  think  that  this  reduction  of  export,  which  has 
seemed  to  be  going  on  for  a  number  of  years,  has  other  cause  than  lo- 
cal legislation. 

Mr.  Herrick.  Very  much  so.  The  interstate  commerce  act  can  not 
affect  our  agricultural  products  one  jot  I  should  think.  It  is  a  very 
much  larger  question. 

The  Chairman.  It  is  a  question  of  supply  and  demand. 

Mr.  Herrick.  Yes,  sir ;  the  world  demand.  I  do  not  think  econom- 
ically that  the  most  profitable  thing  that  we  can  do  is  to  raise  grain  for 
export.  I  think  we  get  less  money  out  of  it  than  on  any  other  articles 
we  raise. 

The  Chairman.  You  also  expressed  the  belief  that  unless  there  is  a 
more  economical  condition  of  affairs  in  the  agricultural  business  of  the 
country  we  will  not  raise  any  more  grain  than  we  need  for  ourselves. 

Mr.  Herrick.  The  increase  of  population  is  greater  than  the  increase 
of  our  producing  area,  and  we  will  reach  a  point  in  a  very  few  years 
when  we  will  consume  all  our  products.  Our  crops  were  deficient  tliis 
year ;  there  was  a  large  deficiency.  It  was  G0,000  less  of  wheat  than 
our  usual  production. 

The  Chairman.  For  the  year  1888 1 

Mr.  Herrick.  Yes,  sir.  We  began  on  a  declining  scale  of  prices  in 
1883,    Prior  to  that  time  $1  for  a  bushel  of  wheat  in  New  York  was  cou- 


288  TRANSPORTATION  INTERESTS  OF 

sidered  hard  pan,  and  we  felt  absolutely  sure  that  it  would  range  hifrber 
than  that,  but  since  1883,  under  increased  foreign  production,  cheaper 
methods  of  cultivation  and  much  lower  rates  of  transportation  the  par 
value  of  wheat  seems  to  have  declined  from  $1  per  bushel  to  80  cents. 

The  Chairman.  That  is  so  everywhere,  is  it  ? 

Mr.  Herrick.  Yes,  sir. 

The  Chairman.  On  account  of  the  increased  i)roduction  ! 

Mr.  Herbick.  On  account  of  the  increased  production  throughout 
the  world.  If  the  penalties  of  the  interstate  commerce  act  are  made 
sufficiently  stringent  it  will  be  found  to  be  a  vast  advantage  both  to  the 
railways  and  to  the  merchants.  The  railway  people  themselves  state 
that  if  this  law  can  be  enforced  they  would  like  nothing  better. 

The  Chairman.  And  the  merchants  say  the  same  thing! 

Mr.  llERRiCK.  Yes,  sir.  I  want  to  say  on  this  subject  of  through 
freight  that  it  is  not  a  (juestion  of  Xew  York  charges  or  New  York  com- 
merce. The  New  York  merchants  only  ask  that  if  the  rate  be  1*0  cents 
to  New  York  that  the  ocean  rate  shall  be  atlded  and  nothing  else.  It  is 
not  that  the  sea-board  people  want  to  tax  this  tratli*;  in  any  way. 

The  Chairman.  You  exi»ress  the  belief  that  these  Canadian  roails 
ought  to  be  put  under  the  operation  of  the  interstate  commerce  act,  so 
far  as  any  business  touching  the  United  States  is  concerned. 

Mr.  llERRiCK.  Yes,  sir. 

The  Chairman.  And  if  that  were  done  you  would  be  satisfied. 

Mr.  Herrick.  Yes,  sir ;  and  if  it  can  not  be  reached  in  any  other 
way  I  do  not  see  but  that  yon  will  have  to  exclude  them  as  the  lesser 
of  two  evils. 

The  Chairman.  You  would  not  favor  the  exclusion  of  the  Canadian 
roads  unless  there  were  no  other  way  to  jtrevent  tlu'ir  getting  an  advan- 
tage over  American  capital  and  roads. 

Mr.  IIerrick.  No,  sir.  The  «pK\stionof  the  most  good  to  the  largest 
number  is  reached  by  the  largest  number  of  carriers. 

Senator  Corman.  You  stated  a  moment  ago  that  the  Erie  Canal  was 
a  regulator  of  the  railroad  charges  during  the  season  of  navigation. 

Mr.  IIerrick.  Yes,  sir. 

Senator  Gorman.  Is  it  a  very  imi)ortant  fsictor  ! 

Mr.  IIerrick.  We  consider  it  very  much  of  a  fiu-tor;  yes,  sir. 

Senator  Gorman.  It  is  now  practically  a  free  canal  ? 

Mr.  IIerrick,  Yes,  sir. 

Senator  (ioRMAN.  What  is  the  result  of  that ;  to  bring  the  railroads 
down  to  the  minimun  charges? 

31  r.  IIerrick.  Yes,  sir. 

Senator  CrOiiMAN.  And  the  prices  are  satisfactory  to  the  merchants 
generally,  are  they  ! 

Mr.  Herrick.  Yes,  sir;  the  prices  at  i)resent  are  as  low  as  could  be 
expected  or  wished.  I  paid  years  ago  'A)  cents  a  bushel  for  wheat  from 
Chicago  to  New  York,  and  you  can  bring  it  now  for  8  cents. 

Senator  Gorman.  Now,  what  elfect  have  the  Canadian  railroads  on 
this  transportation  by  lake  and  through  Canadian  canals! 

Mr.  Herrick.  There  is  some  diversion  in  that  direction,  in  years  of 
large  sui)ply  and  active  foreign  markets,  when  the  rates  are  variable; 
but  the  carrying  tonnage  by  way  of  Montreal  is  not  sufficient  to  make 
that  an  important  factor. 

Senator  Gorman.  Then  that  is  for  want  of  transportation  from  Mon- 
treal on  ocean  steamers  ? 

Mr.  Herrick.  Yes,  sir. 

Senator  Gorman.  But  I  am  speaking  of  that  route  itself.  Do  you 
know  anything  about  the  condition  of  it! 


THE    UNITED    STATES    AND    CANADA.  289 

Mr.  Hebrick.  Do  you  mean  whether  it  is  in  workino-  order? 

Senator  Gorman.  Yes ;  and  as  to  its  economy,  and  wiiethor  it  is  likely 
to  be  an  active  competitor  with  your  water  lines  in  the  State  of  New  York. 

Mr.  BlERRiCK.  I  do  not  think  I  have  studied  that  matter  sufliciently 
to  make  my  views  of  any  value.  Tliere  is  talk  of  deepening  the  Wet- 
land Canal  and  taking  larger  vessels  through.  But  the  navigation  of 
the  St.  Lawrence  is  intricate  and  dangerous,  and  1  think  that  will  always 
handicap  that  route. 

Senator  Reagan.  What  is  the  cause  of  danger  there  ? 

Mr.  Herrick.  It  is  the  great  distance  and  the  rapidity  of  the  cur- 
rent, and  they  have  a  canal  that  goes  by  the  rapids  above  Montreal. 

Senator  Gorman.  I  understood  you  to  say  a  moment  ago  that  you 
were  opposed  to  pooling. 

Mr.  Herrick.  Yes,  sir. 

Senator  Gorman.  Are  you  opposed  to  an  arrangement  by  which  the 
railroads  could  come  together  as  they  do  now  and  agree  u[)on  uniform 
basis  of  charges  for  various  classes  of  freight  between  here  and  Chicago  ? 

Mr.  Herrick.  I  should  have  no  objection  to  that. 

Senator  Gorman.  Then  if  they  made  such  a  rate  as  now  exists,  alow 
and  satisfactory  rate,  and  made  an  equal  charge  to  every  shipper,  it  is 
what  you  desire,  I  understand,  as  a  merchant? 

Mr.  Herrick.  Yes,  sir;  it  is  necessary  in  order  that  the  merchant 
might  live.  One  man  can  not  live  if  another  has  a  better  rate  than  he. 
If  a  large  proportion  of  the  movement  of  grain  or  ])rovisions  goes  in  one 
direction  it  is  moral  evidence  that  the  rate  of  freight  has  something  to 
do  with  it.     Water  does  not  run  n\)  hill. 

Senator  Gorman.  That  is  what  they  profess  to  do  now. 

Mr.  Herrick.  Yes,  sir. 

Senator  Gorman.  What  objection  would  you  have,  as  a  merchant  and 
citizen,  if  the  law  permitted  the  railroads  to  make  that  combination  and 
agree  upon  the  rates  as  they  are  now,  and  they  were  enforced  under 
the  provisions  of  the  law  after  the  Interstate  Commerce  Commission  ap- 
proved the  rates  so  agreed  upon  ? 

Mr.  Herrick.  Well,  my  experience  with  them  makes  me  very  dis- 
trustful of  railroads,  and  if  this  plan  fails  then  I  agree  with  Mr.  Smith 
that  Government  supervision  is  the  only  thing  that  will  keep  us  safe. 

Senator  Gorman.  Would  not  that  afford  you  greater  protection  than 
you  have  to-day  *? 

Mr.  Herrick.  Well,  I  do  not  think  pooling  would.  I  do  not  know- 
that  I  could  tell  exactly  why  it  would  not. 

Senator  Gorman.  Do  you  think  it  would  give  more  stability  to  rates? 

Mr.  Herrick.  It  is  not  necessary  to  have  a  system  of  pooling  to  have 
uniform  rates.    They  do  that  by  agreement  without  pooling. 

Senator  Gorman.  Well,  it  is' the  same  thing.  I  treat  the  pool  as  an 
agreement  with  respect  to  rates. 

Mr.  Herrick.  There  is  no  objection  to  an  agreement  as  to  rates  if 
that  was  all. 

Senator  Gorman.  Then  would  not  the  public  be  very  much  better 
protected  if  it  came  within  the  law  that  the  Interstate  Commerce  Com- 
mission had  a  right  to  enforce  that  contract  and  see  that  it  was  abso- 
lutely fair  between  points  and  individuals! 

Mr.  Herrick.  If  that  is  all  there  is  in  pooling,  yes. 

Senator  Gorman.  What  else  do  you  understand  there  is  in  it? 

Mr.  Herrick.  I  do  not  know  what  else  there  is  about  it. 

Senator  Harris.  Allow  me  to  inquire  if  under  the  pooling  contract 
the  pool  shall  control  the  distrlbutiou  of  freights  aud  de|)rive  the  shiij- 


290  TRANSPORTATION   INTERESTS   OF 

per  of  the  privilege  of  selecting  bis  own  line,  would  not  that  be  an  in- 
convenif uce  and  an  evil  ? 

Mr.  Herrick.  Yes,  and  an  injustice  besides. 

Senator  Harris.  I  think  so,  too.  If,  on  tlie  other  hand,  any  one  car- 
rier failed  to  get  the  percentage  of  tratiic  that  the  pool  allowed  him, 
he  was  paid  in  cash  to  make  up  the  deticit  for  services  that  he  had 
not  rendered  and  that  were  rendered  by  another  carrier,  and  would  not 
that  be  an  injustice  and  a  wrong  ?  To  illustrate :  If  the  Erie  road  is  en- 
titled to  such  a  percentage  of  tratiic  au<l  tails  to  get  it  and  the  New- 
York  Central  does  that  amount  of  traflic  in  excess  of  the  percentage 
allowed  it,  and  the  New  York  Central  is  comi)elled  to  pay  the  difference 
and  makeup  the  shortage,  would  it  not  be  an  injustice  and  a  wrong  f 

Mr.  Herrick.  Supposing  such  an  allowance  were  not  made,  the 
the  natural  tendency  of  the  Erie  roa<l,  for  example,  would  be  to  cut  the 
rate.  They  would  have  to  put  the  price  dowu  to  such  a  point  that  they 
would  get  some  business. 

Senator  Harris.  So  I  understand.  But  if  the  Erie  road  did  not  get 
its  percentage  of  the  trathc  and  thi'  Ntw  York  Central  got  an  excess  of 
the  percentage  allowed  it,  and  the  New  York  Central  carried  the 
freight,  and  the  New  Y'ork  Centr.d  had  to  make  up  the  shortage,  as 
there  is  some  evidence  tending  to  show  it  tli<l,  if  it  does  not  absolutely 
show  it,  under  the  old  pooling  system,  the  Erie  liaving  received  $.">(»(),0()0 
a  year  chiefly  from  the  New  York  Central,  is  iu)t  tin*  effect  of  that,  that 
the  New  York  Central  r(»ad  h;is  d(»nc  that  amount  oi  business  for  which 
it  gets  no  compensation,  and  tlu'  ICrie  gets  that  am«)unt  of  money  for 
which  it  renders  no  service  ,' 

Mr.  1Ii:ki;ick.  It  seems  to  mc  the  railroads  are  <juit«*  as  great  a  ne- 
cessity to  the  merchants  as  the  merchants  are  to  Mu'  railroads,  and  no 
system  can  be  cairiedon  unless  it  brings  with  it  fair  eoiii|»ensation,  and 
the  ertect  of  jmying  the  Erii'  for  Irallic  it  did  not  carry  is  to  keep  rates 
at  a  moderately  remunerative  basis.  That  is  the  object.  The  merchant 
will  not  gain  by  the  bankrupting  of  the  railway,  and  if  the  railway  does 
not  receive  a  compensation  of  some  kiiul  it  will  reduce  the  price  to  get 
the  business. 

Senator  Harris.  Then  you  think  it  is  wise  to  sustain  a  road  tliat  is 
not  necessary  to  the  commerce  of  the  country  through  which  it  runs! 

Mr.  Herrick.  There  is  a  mercantile  standard  that  if  every  carrier 
maintains  will  be  of  advantage  to  the  whole  country. 

Senator  Hakkis.  Do  you  not  think  if  the  New  York  Central  could 
carry  an  amount  of  trallic,  the  charges  upon  which  ag;:regate  83(iU,(t(i(> 
a  year  without  comi»ensation,  that  it  could  carry  those  freights  that  it 
got  for  a  less  price  than  it  is  in  the  habit  i)f  charging  when  it  mak«'s  up 
this  half  million  of  <lollars  ? 

Mr.  Herrick.  There  is  no  question  of  the  correctness  of  that  posi- 
tion theoretically,  but  the  very  moment  there  are  a  less  number  of  car- 
riers there  will  be  a  higher  price  for  those  remaining. 


STATEMENT  OF  EDWARD  H.  AMMIDOWN. 

Mr.  Edward  H.  Ammidown,  of  the  Chamber  of  Commerce  of  New 
York,  appeared. 

The  Chairman.  Y^ou  are  a  business  man,aiul  occupy  an  official  rela- 
tion to  some  commercial  organization,  do  you  not  t 

Mr.  Amjiidown.  Yes,  sir. 

The  (;uairman.  Pleusc  state  what  that  relation  is. 


THE    UNITED    STATES   AND    CANADA.  291 

Mr.  Ammidown.  I  am  chairman  of  the  committee  on  foreign  commerce 
and  the  revenue  laws  of  the  Chamber  of  Commerce  of  New  York. 

The  Chairman.  Are  you  in  active  business  besides  ? 

Mr.  Ammidov^^n.  Yes,  sir. 

The  Chairman.  Will  you  please,  in  your  own  way,  give  your  views 
to  the  committee  on  the  subject  under  consideration,  more  especially 
with  reference  to  our  relations  with  Canada  on  the  transportation  ques- 
tion. 

Mr.  Ammidown.  Mr.  Chairman,  I  heard  what  Mr.  Smith,  president  of 
the  Chamber  of  Commerce,  had  to  say.  He  went  over  the  ground  very 
fully,  and  as  to  the  material  part  of  his  observations  I  fully  concur. 
There  may  be  some  statements  or  details  of  fact  in  which  I  might  differ 
with  him,  but  generally  I  would  like  to  be  understood  as  indorsing  what 
Mr.  Smith  has  said  in  respect  to  the  question  as  to  what  arrangement 
can  be  made  to  prevent  the  Canadian  roads  competing  unduly  with  the 
American  roads. 

I  do  not  believe  there  is  much  difference  of  opinion  on  that  subject. 
It  is  a  question  of  fair  dealing.  No  man  would  claim — I  do  not  believe 
a  fair  Canadian  himself  would — that  the  Canadian  roads  should  be  al- 
lowed to  take  advantage  of  specific  legislation  controlliug  American 
roads.     I  am  quite  sure  the  American  people  will  not  stand  it. 

The  argument  that  perhaps  cheaper  transcontinental  transportation 
or  transportation  i'rom  the  interior  of  the  country,  through  Canada,  to 
the  sea-ports  might  be  of  advantage  in  promoting  foreign  commerce  I 
do  not  consider  of  much  consequence,  for  the  reason  that  as  compared 
with  the  internal  traffic  of  this  country  our  foreign  commerce  is  unim- 
portant. It  is  a  mere  drop  in  the  bucket,  and  should  not  be  considered 
in  any  discussion  or  argument  concerning  the  advantages  of  the  inter- 
nal commerce  of  the  country. 

Mr.  Herrick,  w  ho  preceded  me,  stated,  I  think,  that  our  ex])orts  of 
food  products  were  growing  less;  and  that,  I  think, is  the  testimony  of 
the  Government  reports,  that  in  proportion  to  the  production  of  raw 
material  the  exports  of  raw  material,  food  or  other,  are  growing  less, 
and  the  conversion  of  food  and  raw  material  into  manufactured  products 
for  export  in  this  country  is  growing  greater. 

For  that  reason  the  true  policy  of  legislation  in  this  country,  it  seems 
to  me,  should  be  to  develop,  protect,  and  promote  onr  internal  business, 
and  take  such  course,  in  reference  to  the  Canadian  roads,  or  any  other 
foreign  instrumentality  that  interferes  with  our  prosperity,  as  may  be 
necessary  to  prevent  their  doing  us  any  damage. 

COMPARATIVE  VALUE  OF  OUR  FOREIGN  COMMERCE. 

The  question  which  I  have  suggested  as  to  the  comparative  value  of 
our  external  trade  is,  it  seems  to  me,  one  that  should  be  considered  by 
your  committee  as  having  an  important  bearing  upon  your  conclusions. 

I  have  observed— and  I  want  to  bring  this  point  particularly  before 
you— I  have  observed  that  the  Bureau  of  Statistics  of  the  Treasury 
Department,  in  giving  the  proportion  of  our  exports  which  are  classed 
as  manufactured  articles  and  the  proportion  which  are  classed  as  raw 
material,  or  non-manufactured  articles,  states,  practically,  that  for  a 
number  of  years  onr  exports  of  manufactured  articles  have  not  exceeded 
from  15  to  20  per  cent,  of  the  total  exports. 

If  you  look  at  the  record  for  the  last  twenty-five  or  thirty  years,  say 
twenty -five  years,  you  Avill  find  that  even  according  to  the  method 
adopted  by  the  Treasury  Departmeut  iu  making  up  these  statistics  there 


292  TKANSPORTATION  INTERESTS  OF 

Las  been  a  gradual  increase  in  tlie  proportion  ol"  nianiiractnred  articles 
exported.  Twenty  years  aj^o  it  was,  say,  12  to  15  per  cent,  ^'ow  it 
runs  from  18  to  2li  per  cent.  These  figures  are  according  to  the  method 
adoi)ted  by  the  Bureau  of  Statistics  of  the  Treasury  i3(i)artment  in 
making  up  its  rei)orts,  but  there  is  a  gross  defect  in  the  method,  and 
that  is  what  I  want  to  call  to  your  attention. 

The  Census  Bureau  in  making  up  the  report  for  1880  stated  that 
our  manufactured  products  amounted  to  about  fifty  six  or  litty-seven 
hundred  millions  of  dollars;  and  it  gave  a  dt-taiU-d  statement  of  those 
manufactured  products,  the  amount  of  each  [iroduced  in  the  country, 
wages  paid,  their  market  price,  and  so  on. 

Now,  the  Treasury  statistics  of  annual  exports  totally  ignore  the 
classilication  of  the  Census  Bureau,  and  the  Treasury  Bureau  makes 
uj)  a  classification  by  which  it  excludes  from  the  class  of  manufactures 
a  great  variety  of  articles  which  the  census  rei>ort8  iuclude  as  products 
of  manufacture. 

The  effect  of  that  singular  discrimination  or  dill'erence  of  method  in 
making  uj)  the  reports  of  the  Government  is,  to  say  tiie  least,  remark- 
able ;  for  if  you  make  up  the  list  of  exports,  classilying  them  u('<;ording 
to  the  classilication  of  the  Census  Bureau,  you  will  tind  that  the  ex- 
ports of  numufactured  articles  lor  a  series  of  years  anmunt  to  nearly 
50  per  cent,  of  the  exports  of  the  United  States  instead  of  from  15  to 
20  percent.;  and  in  my  judgment  the  classilication  of  the  Census  i>u- 
reau  is  the  correct  one. 

So,  as  a  matter  of  fact,  instead  of  an  increase  of  exports  of  raw  ma- 
terials from  this  country,  we  are  increasing  more  rapidly  in  manulact- 
uied  exports  ami  are  gradually  learning  to  convert  the  raw  materials 
that  this  country  produces  into  manufactured  i)rodu<'ts  before  they  are 
exported,  instead  of  sending  them  abroad  in  the  raw  state  to  be  manu- 
factured there  and  brought  back. 

IMPORTANCE  OF  CHEAP  TRANSPORTATION. 

Now,  the  bearing  of  what  I  have  just  said  upon  the  <iiiostion  before 
you  is  this  :  That  it  is  Tuore  important  by  far  to  st'cure  eheap  transpor- 
tation within  the  United  States  than  it  is  to  consider  anything  else,  for 
by  cheap  transportation  the  cost  of  internal  trallic  of  all  kinds  and  of 
home  production  ^Yill  be  cheapened  along  the  line  on  which  reduction  of 
cost  may  be  most  readily  obtained.  Thereby  our  food,  raw  and  manu- 
factured products  may  be  cheapened  for  our  own  consuniption,  and  also 
may  reach  the  sea  board  and  go  into  foicign  markets  in  competition 
with  foreign  products  when  otherwise  it  would  be  impossible. 

The  fact,  it  seems  to  me,  that  we  are  sending  three  hundred  and  odd 
millions  of  dollars  of  Tuanufactured  products  abroad  slmws  that  we  can 
produce  manufactured  products  and  send  them  abroad  if  we  have  the 
proper  facilities  for  doing  so. 

Now  I  would  suggest  that  this  committee  consider  the  best  methods 
of  promoting  cheapness  of  transportation  within  the  United  States. 

The  (;HA.iRMAN.  That  is  wliat  we  have  been  trying  to  do. 

Mr.  Ammidown.  And  to  remove  every  ol)stacle  that  tends  to  prevent 
active  comj^etition  between  those  who  are  doing  the  transportation  busi- 
ness in  the  United  States. 

Let  these  roads  all  compete.  1  am  one  of  those  who  believe  that  com- 
petition should  not  be  i»revented  or  op|>osed  or  restricted.  I  want  to 
see  competition  among  the  transportation  lines  in  this  country,  and  I 
would  remove  every  obstacle  that  prevents  active  comjx'tition  between 
them,  so  tU^t  the  rates  luay  be  reduced  to  tUo  lowest  posisibie  poiut, 


THE   UNITED   STATES   AND   CANADA.  293 

I  do  not  believe  in  legislating  in  this  country  to  prevent  competition, 
for  the  soul  of  prosperity  in  this  country  is  competition,  and  I  would 
look  especially  to  the  avoidance  of  legislative  measures  which  \yould 
interfere  with  competition  among  the  lines  of  transportation. 

The  Chairman.  Do  you  mean  to  intimate  by  that  tbat  you  would  be 
opposed  to  any  species  of  pooling  by  the  railroads  ? 

Mr.  A.MMIDO-WN.  1  would  be  opposed  to  pooling  to  this  extent.  I 
would  be  opposed  to  pooling  unless  some  restriction  or  supervision 
should  be  placed  over  it  to  prevent  pools  from  interfering  with  free  com- 
petition in  transportation. 

The  Chairman.  If  the  railroads  are  allowed  to  make  contracts  with 
eacli  other,  is  there  any  way  to  prevent  it  ? 

Mr.  Ammidown.  I  do  not  know  that  there  is.  It  is  a  very  difficult 
question.  That  is  a  very  big  subject  and  a  very  complicated  one  and  a 
very  difficult  one  to  handle. 

The  Chairman.  I  think  the  committee  realize  that  pretty  well. 

Mr.  Ammidown.  That  is  all  I  have  to  say. 

The  Chairman.  You  have  no  suggestions  to  make  as  to  the  manner 
of  puttijig  the  railroads  of  Canada,  for  instance,  in  such  a  position  as 
that  they  should  only  be  on  perfect  equality  with  those  in  the  United 
States,  have  you  *? 

Mr.  Ammidown.  No,  sir ;  I  have  no  definite  programme  of  that  kind. 
I  think  it  is  a  very  difficult  question,  but  you  gentlemen  will  undoubt- 
edly ascertain  how  to  accomplish  that  purpose. 

Senator  Blair.  There  can  be  no  doubt  that  the  Canadian  railroads 
can  better  compete  and  so  the  more  reduce  internal  transportation  rates 
in  this  country  as  things  now  are  than  if  they  were  comijelled  to  con- 
form to  the  interstate  commerce  law,  is  there  ? 

Mr.  Ammidown.  No,  sir;  I  have  no  doubt  of  it. 

Senator  Blair.  We  are  not  responsible  for  the  legislation  of  Canada. 

Mr.  Ammidown.  No,  sir;  of  course  we  are  not. 

Senator  Blair.  And  existing  conditions  do  exist. 

Mr.  Ammidown.  There  is  no  doubt  about  that. 

Senator  Blair.  Now,  can  you  disturb  those  conditions  by  any  affirma- 
tive action  that  extends  the  interstate  commerce  law  to  the  C<tnadian 
roads  without  increasing  the  cost  of  transportation  to  the  people  of  this 
country  ? 

Mr.  Ammidown.  You  have  got  to  meet  the  popular  demand  that  the 
transportation  lines  of  Canada  shall  not  i)rofit  by  any  legislation  en- 
acted in  the  United  States  applying  to  American  roads  only.  You  have 
got  to  meet  that. 

Senator  Blair.  The  Canadians  are  not  to  blame  for  that  legislation. 

Mr.  Ammidown.  I  know  that,  but  the  people  of  this  country  will  not 
permit  the  Canadian  roads  to  have  the  benefit  of  our  legislation. 

Senator  Blair.  Would  you  recommend  to  the  committee  that  they 
report  any  legislative  action  as  desirable  by  Congress  that  would  in- 
crease the  cost  of  transportation  to  the  people  of  this  country  .' 

Mr.  Ammidown.  No,  I  am  not  in  favor  of  that,  but  it  may  tempo- 
rarily be  necessary.  Yet  I  can  see  that  if  you  remove  all  obstacles  to 
competition,  and  let  the  railroads  here  in  this  country  compete  freely, 
they  will  reduce  rates,  as  they  have  been  doing  for  the  last  twenty-five 
years,  as  rapidly  as  new  inventions  and  the  rapidly-increasing  business 
will  permit.     Rates  are  constantly  being  reduced  on  the  average. 

Senator  Blair.  Yet.here  are  two  countries  alongside;  each  legislates 
for  itself.  The  conditions  which  existed  up  to  the  enactment  of  the  in- 
terstate commerce  law  came  about  legally  under  treaties  and  the  natural 


294  TRANSPORTATION  INTERESTS  OP 

relations  existing  between  these  great  people  alongside  each  other  under 
independent  political  control.  All  these  relations  were  entered  into  with 
the  knowledge  of  each  party.  Now  we  come  along  and  impose  upon 
our  own  railroads  by  our  own  action  conditions  tliat  compel  an  increase 
of  the  cost  of  transportation  to  the  i)eople  of  this  country. 

Mr.  Ammidown.  That  is  the  question,  whether  it  would  or  not.  I 
think  that  is  an  open  question. 

Senator  Blair.  If  that  be  an  open  question,  until  that  question  is 
settled,  why  should  we  impose  the])rovisionsof  the  interstate  commerce 
law  upon  the  roads  of  Canada  ?  We  do  not  know  that  there  is  any  oc- 
casion for  it. 

Mr,  Ammidown.  We  should  impose  it  npon  the  Canadian  railways, 
because  it  is  demanded  by  the  people  of  this  country. 

Senator  Blair.  Tliat  may  be  a  question  wliether  the  people  of  this 
country  are  demanding  it.  Now,  iftliey  do  <lem;ind  it,  what  wouhl 
they  not  demand  if  they  examined  the  (juestion  turther ;  and  atter  all, 
are  we  not  committed  to  the  real  equity  of  the  (piestion  rather  than  to 
the  interest  or  the  cU'sire  of  the  peopk*  ? 

Mr.  Ammidown.  You  stand  between  two  fires.  There  is  a  i)ossibility 
of  your  action  restricting  traflic  over  the  American  roads,  and  on  the 
other  hand  there  is  a  general  demaiul,  based  on  a  sense  of  justice  and 
equity,  that  the  Canadian  roads  should  not  be  jiermitted  to  take  ad- 
vantage of  legislation  in  this  country  for  their  own  protit.  Now  as  be- 
tweeu  those  two  liresyou  have  got  to  liud  a  way  to  do  what  is  best. 

STATEMENT  OF  JOHN  D.  KERNAN. 

Mr.  John  D.  Kernan  appeared. 

The  Chairman.  This  committee,  some  years  ago,  heard  you  in  this 
city  when  you  were  a  railroad  commissioner  for  the  Statt'  of  New  York. 
You  understand  the  general  purposes  for  which  the  committee  is  here, 
and  we  would  be  gla<l  to  hear  you  on  the  subject-matter  of  this  impiiry. 

]Mr.  Kernan.  1  understand  the  object  of  this  inquiry  to  be  to  ascer- 
tain what,  if  any,  further  legislation  is  necessary  to  i)rotect  American 
railways  engaged  in  through  transportation  from  the  West  against 
what  is  alleged  to  be  the  competition  of  the  Canadian  lines. 

While  this  impiiry  is  useful  to  ascertain  the  results  thus  far  attained 
under  the  attemi»t  at  the  regulation  of  railways  hy  law,  known  as  the 
interstate  commerce  act,  it  seems  quite  clear  that  the  time  for  further 
legislation  has  not  arrived,  except  jtossihly  in  one  single  direction,  and 
there  is  great  doubt  as  to  that. 

The  two  clauses  of  the  act,  their  observance  of  which  is  said  to  ])ut 
our  railroads  at  a  disadvantage  with  the  Canadian  lines,  are,  of  course, 
the  pooling  ])iohibition  and  the  long  and  short  haul  clause.  The  first 
forbids,  as  we  all  understand,  an  amicable  arrangement  with  the  Cana- 
dian lines  by  which  satisfactory  rates  can  be  agreed  upon  and  the  traf- 
fic divided  into  agreed  proportions. 

THE   QUESTION    OF    LEGALIZING   POOLING. 

I  have  always  thought  that  it  would  have  been  better  to  have  left  out 
the  pooling  prohibition  as  a  lirst  step  in  national  railway  legislation. 

1  wrote  for  the  New  York  Times  an  article  which  states  my  position, 
and  from  which  1  would  like  to  read  a  paragraph: 

ITpon  tlu"  question  itf  n'strainine;  execsHivc  ami  riiiiidiia  ronipotition  of  a  diviHion, 
eitbcr  oteariiiiiysor  of  busiucss  between  exist  iny  lines,  anil  of  setthng  disputes  with- 


THE    UNITED    STATES    AND    CANADA.  295 

out  rate  wars,  something  will  have  to  be  done,  I  urged  Senator  Ciillom's  committee 
not  to  forbid  "pooling,"  but  to  provide,  as  they  did,  that  the  subject  should  be  left 
to  the  further  investigation  of  the  United  States  commission  before  legislation  should 
deal  with  it.directly.  This  was  not  because  I  believed  "pooling  "  to  be  legal,  because 
on  the  contrary,!  thonght  it  to  be  in  some  respects  an  illegal  conspiracy  and  an  as- 
sumption of  power  by  the  corporations  engaged  in  it  entirely  outside  of  that  given  to 
them  by  their  charters.  But  "pooling"  was  working  at  this  problem,  and  it  seemed 
safe,  in  view  of  the  other  provisions  of  the  act  as  to  unjust  discriminations,  etc.,  to 
leave  it  in  its  crippled  condition  without  adding  a  statutory  to  the  existing  common 
law  prohibition.  The  object  of  thus  leaving  it  was  simply  that  it  might  develop  the 
principles  upon  which  legislators  might  proceed  to  remedy  certain  conceded  evils 
without  injustice  to  any  public  interest.  It  is  not  certain  but  tbat  Congress  was,  on 
the  whole,  right.  The  crisis  of  prohibition  has  come  and  gone  with  less  disturbance 
than  was  anticipated.  A  keen  appreciation  of  the  evils  of  excessive  competition  haa 
come  from  the  suspension  of  "pooling,"  and  it  may  be  that  just  remedial  legislation 
can  now  be  more  easily  obtained  than  if  the  field  was  not  clear.  At  any  rate,  this  ia 
a  great  pressing  question  for  railway  owners.  It  is  also  one  as  to  which  it  is  doubtful 
whether  their  late  action  and  presidents'  agreement  will  long  aid  them.  The  iuherent 
legal  defect  of  the  old  "pool"  is  dangerously  close  to  that  agreement.  Nothing  will 
remove  it  except  legislation.  Railway  presidents  can  hardly  present  what  many  re- 
gard as  a  misdeed  and  abuse  on  their  part  for  legislative  approval.  Railway  ownera 
well  organized  and  thorough  masters  of  the  question  could  speak  louder  and  would 
be  more  graciously  received.  If  they  proceeded  in  the  broad  spirit  suggested  they 
would  disarm  opposition  by  coupling  with  their  proposals  fair  and  adequate  provision 
for  governmental  supervision,  or  some  other  form  of  suitable  protection  for  the  public 
interests  involved. 

Why  do  I  say  that  Congress  was  probably  right  in  the  view  it 
adopted  ?  Because  the  act  went  further  than  I  anticipated.  The  inter- 
state act  not  on-]}-  forbids  pooling,  but  attempts  to  substitute  for  it  i)ro- 
visions  that  preserve  to  railroads  all  of  the  legitimate  advantages 
claimed  to  result  from  pooling. 

I  am  not  sure  that  this  act  does  not  give  to  railroads  all  the  legiti- 
mate advantages  that  pooling  ever  gave  them,  aithough  my  idea  was 
to  leave  pooling  in  its  crippled  condition  under  the  common  law,  before 
going  beyond  the  provisions  of  the  act  with  respect  to  unjust  discrimi- 
nations, etc.  The  professed  object  of  pools  was  to  maintain  upon  rail- 
roads uniform  and  steady  rates  and  to  forbid  unjust  discrimination. 
The  interstate  commerce  act  seeks  to  accomplish  this  same  object  un- 
der the  provisions  which  forbid  unjust  discriminations,  and  which  require 
that  rates  shall  be  published  and  shall  not  be  cut  by  rebates,  etc. 

Until  the  law  has  been  longer  in  force  and  more  thoroughly  tested, 
the  people  do  not  desire  that  its  jirovisious  be  changed  so  as  to  legalize 
pooling.  This  is  true,  I  think,  even  though  the  proposition  to  legalize 
pooling  be  sugar-coated  with  the  suggestion  that  the  same  shall  be 
placed  under  the  supervision  of  the  national  Commission.  I  am  not  at 
all  certain  but  that  at  some  future  time  something  like  pooling  may 
become  a  necessity,  but  that  time  needs  to  be  preceded  by  longer  ex- 
perience in  the  testing  of  the  act  in  its  present  shape,  so  that  when  Con- 
gress legalizes  pooling  it  may  be  able  to  determine  what  restrictions 
and  safe-guards  are  needed  to  protect  the  public. 

When  the  question  is  asked,  "Do  you  object  to  an  agreement  among 
trunk  lines  to  avoid  discriminations  and  to  maintain  steady  rates?" 
the  reply  is,  "Not  at  all;  but  the  difQcidty  is  that  at  present  you  can 
not  pass  a  law  which  shall  legalize  a  pool  and  yet  which  shall  contain 
adequate  provisions  to  protect  the  public  against  those  abuses,  which 
we  know  have  always  been  incidental  to  pools." 

Here  is  an  illustration  of  those  abuses  :  At  Middletown  there  was  a 
condensed-milk  establishment  that  was  shipping  heavily  and  there  were 
three  roads  competing  for  its  business  to  and  from  New  York,  the  Erie, 
the  New  York,  Ontario  and  Western,  and  the  New  York,  Susquehanna, 
and  Western.    The  rate  went  down  to  6  cents  a  hundred.    The  three 


296  TRANSPORTATION   INTERESTS   OF 

roads  then  combined.  What  was  tbe  result  ?  They  put  the  rate  up  to 
15  cent  a  hundred,  and  then  made  this  division  between  them.  The 
road  that  did  the  work  ^ot  G  cents  as  covering'  the  expense  of  the  serv- 
ice; and  the  9  cents  of  profit  was  divi<led  between  the  three  roads 
equally.  This  is  an  illustration  of  the  evil  that  may  come  from  legaliz- 
ing a  pool.  The  rate  which  excessive  competition  made  too  low  was  by 
the  action  of  a  pool  made  unnecessarily  hijrh.  It  is  just  as  Senator 
Harris  suggested,  that  under  a  ])ool  some  lino  that  is  doiirg  no  work 
whatever  gets  paid  just  as  large  a  share  of  the  j>rotit  in  the  transaction 
as  the  road  receives  that  does  all  the  work.  That  was  the  precise  case 
in  that  instance. 

Again,  there  is  another  phase  of  the  question  to  be  considered. 
When  raiboads  insist  that  a  remedy  against  Canadian  comiietition  can 
be  found  in  pooling,  they  forget  a  good  deal  of  their  history.  When 
pooling  existed  the  Canadian  loads  were  always  kicking  out  of  the 
traces;  they  always  retiretl  from  the  pool  when  a  scarcity  of  transpor- 
tation invited  the  cutting  of  rates.  They  were  only  loyal  to  the  pool 
when  there  was  plenty  of  traflic  and  no  jkk)!  was  needetl.  So  I  doubt 
whether  there  would  be  the  relief  a tlordetl  in  this  direction  that  is  an- 
ticii)ated. 

The  i)roi)Osition  before  this  committee  is  simjily  whether  the  time  has 
yet  come  when  any  further  legislation  on  this  pooling  question  can  be 
had.  It  seems  to  me  that  the  tijne  has  not  yet  arii\  ed,  because  this 
act  was  designed  to  give  to  railroads,  if  they  obeyed  its  jirovisions,  jire- 
cisely  the  benefits  that  they  had  <lerive<l  under  the  pool.  Having 
adopted  such  policy  tiiere  ought  not  to  be  further  legislation  by  Con- 
gress upon  the  subject  until  the  law  is  longer  tested  and  if  is  ;)s<',er- 
tained  whether  or  not  it  will  accomplish  its  design. 

THE  SHORT-UAUL  PROVISION. 

Neither  does  the  long  and  short  haul  clause  stand  in  that  way  of  the 
American  lines  in  competition  with  the  Canadian  lines  as  much  as  some 
insist. 

After  examining  that  (pu'stion  thoroughly  I  introduced  an  act  before 
the  New  York  board  ajiplying  the  long  and  short  haul  clause  to  the 
transportation  of  New  York  State.  I  reached  the  conclusion  that  the 
long  and  short  haul  clause  was  right  in  i>rinciple,  and  thai  it  would 
operate  beneficially  to  the  people  and  without  injury  to  railroads  within 
the  limits  of  a  State. 

When  asked  by  Senator  Culhun's  committee  whether  it  was  advisable, 
to  insert  the  long  and  short  haul  clause  in  the  interstate  commerce  act 
and  apply  it  at  once  to  the  transportation  of  the  whole  United  States, 
I  said  that  I  believed  it  wiser  not  to  put  it  in  this  first  act  of  national  leg- 
islation. The  history  of  raihoad  regulation  by  law  has  always  been 
that  it  is  best  that  it  be  a  matter  of  slow  grow  tli,  and  that  seri()us  com- 
plications are  apt  to  residt  from  the  sudden  api»lication  of  extreme 
measures. 

The  long  and  short  clause  has  at  times,  when  made  of  universal  ap- 
plication, proved  not  only  injurious  to  the  railronds  but  also  to  the  peo- 
ple, and  therefore  there  always  should  be  authoritv  in  some  bo«lv  in 
excei)tional  cases  to  modify  its  ai)i)licatiou. 

It  seemed  as  though  a  national  commission  of  live  men  wotild  not  be 
equal  to  the  task  of  speedily  con.sidci  ing  and  delennining  the  many  ex- 
ct  ptional  cases  which  would  be  likely  to  arise  throughout  the  entire 
United  States. 


THE   UNITED    STATES   AND   CANADA.  297 

The  poople,  however,  are  not  ready  to  have  this  clause  repealed  to 
the  end  that  the  Americau  liues  raay  fight  the  Canadian  lines  on  Ihroii'^U 
business  and  recoup  on  local  business.  We  hare  gone  throu^-h  this 
crisis  of  adopting  the  long  and  short  haul  principle,  and  the  evils  that 
were  predicted  by  the  railroad  men  if  this  clause  were  put  in  the  act 
have  not  generally  been  fulfilled ;  at  least  the  people  do  not  so  concede. 

It  is  by  no  means  yet  clear  that  the  trunk  lines,  in  fairly  good  times, 
can  not  live  even  under  the  long  and  short  haul  clause!  Their  locai 
business  is  so  much  higher  in  grade  and  greater  in  volume  than  upon 
the  Canadian  lines  that  they  have  a  great  advantage  over  the  latter. 
This  argument  seems  well  sustained  when  you  think  of  a  line  like  the 
Pennsylvania,  running  from  Chicago  through  a  ricli  territory,  as  com- 
pared with  the  Canadian  Pacific,  running  through  a  sparsely-settled 
country,  poor  in  local  business.  Our  local  trade  is  a  so  much  better  pay- 
ing business  to  our  railroads  than  theirs  is  to  Canadian  roads  that  the 
American  roads  can  probably  keep  their  local  rates  within  the  law,  or 
within  the  through  rates,  and  live,  while  Canadian  lines  will  starve 
under  their  policy  of  making  low  through  rates  to  get  the  business  to 
Portland,  and  then  getting  just  as  high  local  rates  as  their  local  business 
will  stand.  This  may  be  wrong,  but  at  this  stage  of  the  question  the 
people  will  insist  that  the  wrong  shall  be  much  more  clearly  and  prac- 
tically developed  than  it  is  today  before  they  are  ready  to  have  that 
clause  changed  or  repealed.  People  now  regard  the  Grand  Trunk  in 
winter  as  the  equivalent  of  the  Erie  Canal  in  summer  as  a  rate-regu- 
lator, and  would  no  more  tolerate  legislation  to  cut  ofi"  one  than  to  fill  up 
the  other. 

REGULATION  OF   THE   CANADIAN  LINES. 

The  one  direction  in  which  we  can  move  seems  to  be  simply  to  insist 
that  the  Canadian  lines  in  competition  with  American  liues  over  Amer- 
ican soil  to  and  from  American  points  shall  observe  American  laws 
applicable  to  that  transportation  upon  our  own  railroads.  IS'ow  this 
demand  of  the  American  railroads  is  right.  If  you  attempt  to  restrict 
an  American  railway  by  law  it  is  the  duty  of  the  country  to  it  as  one 
of  its  citizens,  and  it  is  the  duty  of  the  country  to  the  capital  invested 
in  it,  that  we  insist  that  foreign  competing  liues  ruuniug  in  and  out  of 
American  points  shall  observe  that  same  law.  While  this  is  true,  it  is 
a  very  difierent  question  to  say  that  we  mustamend  the  interstate  com- 
merce act  to  accomplish  it. 

Senator  Blair.  You  are  evidently  proceeding  upon  the  principle 
that  the  railroads  in  this  country  are  guaranteed  all  the  transportation 
of  the  country,  and  that  anything  that  occurs  to  take  from  existing 
railroads  here  any  of  the  transportation  of  the  country  is  a  wn  ng. 

Mr.  Kernan.  i  do  not  say  that. 

Senator  Blaie.  Then  why  is  it  a  wrong  to  the  railroads  of  thiscountry 
that  transportation  maybe  taken  along  the  border  by  existing  railroads 
under  the  conditions  in  another  country  that  previously  existed,  with- 
out imposing  conditions  upon  the  foreign  country  1 

Mr.  Kernan.  I  say  simply  this,  that  if  you  put  American  railroads 
engaged  in  transporting  traffic  from  Chicago  to  New  York  under  cer- 
tain restrictions,  such  as  the  publication  and  filing  of  rates,  the  long 
and  short  haul  clauses,  etc.,  that  in  justice  to  them  you  ought  to  put 
foreign  lines  carrying  from  Chicago  to  New  York,  or  from  Chicago  to 
Portland,  under  the  same  law  ;  that  is  all. 

Senator  Blair.  Then  leave  out  these  land-ways  and  consider  the 
water-ways  which  tap  these  centers  in  some  way.    If  you  impose  the 


298  TRANSPORTATION   INTERESTS    OF 

regulations  of  this  interstate  commerce  law  upon  the  American  land- 
ways,  why  must  you  not,  in  justice  to  the  American  laud-ways,  impose 
the  same  conditions  upon  the  ocean? 

Mr.  Kernan.  Because  you  have  got  to  consider  all  questions  of 
transportation  as  ending  at  your  sea-board. 

Senator  Blair.  Why  any  more  than  at  the  termini  of  your  hind 
boundaries! 

Mr.  Kernan.  Simply  because  30U  can  not  control  rates  on  the  ocean. 

Senator  Blair.  Neither  can  you  in  a  foreign  country. 

Mr.  Kernan.  I  think  tliere  are  two  sides  to  the  question  as  to 
■whether  the  Canadian  roads  are  under  the  law  today  or  not.  I  under- 
stand the  Interstate  Commerce  Commission  to  hold  that  the  transiK)r- 
tation  of  coal  from  liullalo  to  a  j»oiiit  in  Canada  is  under  the  interstate 
commerce  law  and  that  the  obligation  to  i)ublish  rates,  etc.,  applies  to 
that  shii)ment. 

The  CnAimiAN.  AVe  have  the  decision  here. 

Mr.  Kernan.  My  jwint  is  tliis,  that  the  interstate  conunerce  law  in 
its  substantial  provisions  applies  to  all  classes  of  business  that  the  Can- 
adian lines  take  at  American  i)oiuts  and  carry  over  American  soil 
partly  and  over  Canadian  soil  jiartly  and  then  to  American  i)oints;  at 
least  until  this  question  is  juilicially  d«'teruuned  to  the  contrary,  we  do 
not  need  liutlier  legislation  or  aineiidment. 

The  CiiAimiAN.  And  in  addition  to  that,  whethei  any  business tou<'h 
ing  the  United  States  and  g<»ing  into  Canada  or  coming  from  Canada 
into  the  United  States  is  not  covered  l>y  the  act. 

Mr.  Kernan.  I  think  it  a  <|uestion  how  far  the  interstate  commerce 
law  applies  on  Canarlian  lines  to  trallic  taken  from  Ameiican  points 
into  Canada  and  brought  back  to  American  points.  Ct)nceding  tiiat 
the  Canadian  lines  ouglit  to  be  under  the  same  control  as  the  United 
States  lines  which  are  engaged  in  that  competitive  business,  still  no 
legislation  need  be  had  yet,  because  it  has  not  been  det«'rmined  by  any 
court  as  to  how  far  the  present  law  covers  the  situation. 

The  complications  that  nniy  result  to  our  own  merchants  from  harsh 
legislation  as  well  as  to  the  citizens  of  a  fiiendly  foreign  neighbor 
warn  us  to  go  slowly  about  this  (juestiou,  which  involves  such  vast 
commercial  interests. 

Senator  Blair.  I  do  not  know  but  what  you  may  have  misunder- 
stood me.  You  are  laying  down  the  proposition,  as  othei-s  have,  that 
it  is  an  injustice  to  the  American  railroads  to  impose  ujton  tiiem  the  in- 
terstate commerce  law,  and  at  the  same  time  permit  the  Canadian  roads 
to  take  transportation  from  our  country  without  applying  to  them  the 
interstate  commerce  law.  I  was  asking  you  with  reference  to  that.  I 
was  not  discussing  the  question  whether  it  ought  to  be  ai)plied  or  not. 
Now,  if  it  be  a  principle  that  all  the  transportation  that  exists  in  this 
country  belongs  to  the  railroads  in  this  country,  and  that  the  producers 
and  those  who  want  transportation  are  not  to  avail  themselves  of  the  op- 
l)ortunities  of  nature  outside  of  our  own  boundary,  without  our  going 
beyond  our  political  boundary  and  imi)osinfi:  our  hiws  elsewhere,  if  that 
be  the  principle,  so  far  as  land  carriage  is  concerne<l,  why  not  ai>ply  it 
to  the  high  seas? 

Mr.  Kernan.  My  position  simply  is  that  in  so  far  as  Canadian  rail- 
ways are  American  railways,  in  so  far  as  they  come  on  American  soil 
to  get  and  take  business,  to  that  extent  the  laws  ought  to  be  similar 
with  reference  to  them  and  to  our  own  railroads. 

Senator  Blair.  Within  our  territory  or  outside  our  territory  T 

Mr.  Kernan.  In  so  far  as  we  may  legislate.     There  ia  no  reason  why 


THE   UNITED    STATES   AND    CANADA.  299 

the  same  rule  should  not  apply  to  water-ways  in  so  far  as  we  can  prac- 
tically reach  them  by  legislation,  but  I  do  not  see  how  ocean  rates  can 
be  touched  at  all ;  they  are  entirely  beyond  our  jurisdiction. 

There  is  reason  to  believe  that  the  substantial  provisions  of  the  inter- 
state commerce  act  apply  to-day  to  the  Canadian  lines,  and  the  only 
provision  that  probably  does  not  apply  is  the  long  and  short  haul  clause 
to  some  extent;  that  is,  they  may  carry  at  a  low  rate  from  Chicago 
to  Portland,  and  then  recoup  their  loss  in  Canada  by  a  higher  local 
rate.  I  do  not  think  the  interstate  commerce  law  will  reach  that  prop- 
osition, but  after  all  this  fact  is  not  very  important  if  it  be  true  that 
the  higher  grade  and  greater  amount  of  local  business  on  our  trunk 
lines  wid  enable  them  to  keep  within  the  law  ami  live,  while  Canadian 
railroads  starve  upon  what  they  can  get  out  of  their  local  rates  while 
carrying  their  through  business  below  cost. 

THE   EXPORT  BUSINESS. 

There  have  been  other  questions  talked  about  here  that  are  impor- 
tant, this  question  for  instance  about  export  rates.  1  was  counsel  for 
the  Produce  Exchange  against  the  trunk  lines  when  that  question  was 
brought  before  the  Interstate  Commerce  Commission  ;  the  evidence 
was  all  presented  a  j^ear  ago.  The  whole  question  was  investigated  as 
to  whether  in  the  first  place  the  law  forbids  a  lower  inland  transporta- 
tion rate  for  exports  than  for  consignments  to  the  sea-board  ;  in  the  next 
place  whether,  if  the  law  does  forbid  it,  it  is  wise  public  policy  to  amend 
the  law  and  to  thus  facilitate  the  removal  of  American  products  to  for- 
eign markets;  and  thirdly,  whether  if  it  is  wise  to  i^ermit  low  export 
rates  to  the  sea  board,  they  can  be  practically  maintained  without  com- 
plete rate  demoralization. 

The  practice  of  making  lower  export  rates  on  the  trunk  lines  to  the 
sea-board  to  enable  us  to  meet  competition  in  foreign  markets,  etc.,  was 
tried  by  the  trunk  lines,  and  it  utterly  failed  by  the  vote  of  the  trunk 
lines  themselves.  They  determined  that  it  could  not  be  practically 
done. 

The  reasons  why  it  is  not  practical  to  do  it  are  many.  I  will  suggest 
one.  You  can  not  maintain  two  rates  for  like  transportation  service 
between  Chicago  and  New  York.  The  lower  rate  is  constantly  drag- 
ging down  the  higher  one.  Upon  some  of  the  trunk  lines  coming  to 
New  York  City  they  were  carrying  grain  for  export  in  the  winter  of 
1887-88  at  15  cents  a  hundred,  while  at  the  same  time  the  tariff  rate  to 
the  sea-board  was  30  cents  a  hundred.  They  were  thus  carrying  for 
less  than  cost  for  export  and  at  the  same  time  they  were  maintaining 
against  the  consignee  at  the  sea-port  a  rate  that  was  double  the  inland 
export  rate;  they  were  losing  money  on  the  export  business  and  recoup- 
ing on  the  local  business. 

Senator  Gorman.  You  say  you  went  over  this  matter  some  timeago? 

Mr.  Kern  AN.  Yes,  sir.  I  asked  Mr.  Fink,  "  Have  you  ever  known  a 
condition  of  foreign  markets  which  made  it  necessary  that  the  truidc 
lines  should  cut  the  rate  in  this  way  *? "  He  said  that  he  had  not  known 
a  time  when  the  inland  tariff  rate  would  not  move  the  grain  to  meet 
competition  abroad,  though  such  occasions  might  arise.  Also  that  he 
had  not  known  a  time  when  such  cuts  in  the  export  rate  on  the  part  of 
railroads  had  not  been  caused  rather  by  a  desire  to  cut  into  each  other's 
business  than  by  any  competitive  conditions  existing  in  foreign  markets 
which  required  the  cut  to  send  our  surplus  abroad. 

November  4,  1887,  the  trunk  lines  adopted  this  new  plan  of  making 


300  TRANSPOPtTATION    INTERESTS    OP 

export  rates.  Tliey  provided  that  the  basis  of  tlie  rate  shouUl  be  to 
take  the  inland  tariiVrare  and  to  aihl  the  ocean  rate,  the  sum  of  both 
to  make  the  thronoli  rate.  The  desired  llt-xiliility  \i\y  in  tlie  use  of  the 
word  "substantially,"  and  the  residt  was  that  dnrinf;  that  winter  they 
carried  grain  at  30  cents  a  hundred  and  less  Ironi  Chieaj^o  to  Liverpool. 

Let  us  see  how  that  operated.  The  ocean  steamer  got  15  cents  a  hun- 
dred for  carrying  to  Liverpool,  while  the  railroad  got  15  cents  a  hundred 
for  carrying  from  Chicago  to  New  York,  ami  at  the  same  time  the  tariff 
rate  that  the  railroad  maintained  was  from  L'5  to  30  cents  a  hundred 
from  Chicago  to  Xew  York  to  tlie  domestic  sea-board  consignee. 

At  the  time  these  steamers  were  getting  15  cents  a  hundred  you  could 
get  a  steamer  in  the  harbor  of  New  York  at  2  or  3  cents  a  hundred  to 
carry  to  Liverpool.  What  became  of  tliis  overcharge  on  the  ocean! 
Being  put  into  the  hands  of  the  steanier,  it  was  outsicle  of  ourjurisdic- 
th)U,and  it  there  formed  a  big  fund  for  the  purpose  of  paying  theiebates 
that  secured  the  business  in  the  competitive  tights.  Tiie  railroads  paid 
no  rebates  of  any  kind  whatever,  but  the  lund  was  put  where  it  could 
be  used  lor  that  i)Ui|)ose  entirely  (uitside  of  the  rea(;h  of  the  law. 

There  is  another  dilliculty  alxuit  this  theory.  Coiuu'ding  there  may 
be  times  in  foreign  markets  when  it  would  be  wise  jxilicy  and  iieneticial 
for  our  Western  jiroducrr  to  have  a  low  rate  from  f  lie  West  din'ct  to  for- 
eign jiorts,  the  diniculty  is  such  a  low  rate  can  not  be  given  to  export 
business  exclusively  becausi*  you  can  not  maintain  besi«le  each  other 
two  rates  tor  the  same  service.  Every  one  wants  the  lower  rate,  and 
in  the  struggle  to  get  it  all  sorts  of  rate-cutting  devices  are  develoi»ed 
and  worked  uniil  your  taritl"  rates  are  totally  demoralized. 

Senator  Keagan.  Have  you  copies  of  your  brief  in  that  case? 

Mr.  Kernan.  Y'es,  sir;  ami  I  will  furnish  them  to  you.  The  ques- 
tion is,  does  the  law  now  forbid  this  practice  of  making  a  lower  inland 
rate  for  export  than  for  sea-board  c«)nsignment  ?  We  insist  that  the  law 
forbids  it,  and  that  the  tarilV  rate  must  be  tlu'  inland  rate  on  all  bus- 
iness to  the  sea-board,  otherwise  yon  put  the<;ontrol  of  your  inland  rates 
in  the  steamship  lines,  whereby  all  control  over  your  inland  rates  is 
lost. 

My  conclusion  is  that  it  is  as  yet  premature  to  nnderfake  to  amend 
the  interstate  commerce  act,  either  as  to  pooling,the  long  and  short 
haul  clause,  or  for  the  puri>ose  of  restricting  Canadian  railroad  compe- 
tition. 

STATEMENT  OF  JOSIAH  J.  WHITE. 

Mr.  JosiAH  J.  White,  of  the  Chamber  of  Commerce,  ap])eared. 

The  Chairmam.  j\Ir.  White,  you  have  given  the  subject  of  interstate 
commerce  considerable  thought,  and  I  notice  that  you  have  attended 
most  of  the  sessions  of  the  committee  and  have  been  a  close  listener. 
Will  you  please  go  on  in  your  own  way  without  the  interposition  of 
questions  by  the  committee  and  give  us  your  views  as  well  as  a  brief 
summing  up  of  the  situation  as  brought  out  by  the  testimony. 

Mr.  White.  I  did  not  think  when  the  resolution  under  whieh  you  are 
acting  was  presented  to  me  that  there  would  be  anything  which  I  could 
say  which  would  be  of  service  to  y(»ur  committee.  The  witle  range,  how- 
ever, which  the  iiupiiry  has  taken  has  brou^iht  out  matters  pregnant 
with  interest  and  instinctive  to  the  student  of  interstate  commerce,  of 
which  I  am  one,  having  been  engageil  tlie  greater  part  of  my  life  in 
the  transportation  linsiness  and  in  both  foreign  and  domestic  commerce. 
Comments  and  attacks  have  been  made  here  upon  some  of  the  provisions 


THE    UNITED    STATES    AND    CANADA.  301 

of  the  law  itself  which  calls  for  some  auswer,  and  as  I  am  put  down  as  one 
of  the  fathers  of  the  law,  1  will  try  to  make  such  answer  as  is  possible 
in  the  briet  time  given  me. 

First.  The  investigation  of  this  subject  has  brought  to  notice  very 
important  commercial  subjects,  which  I  beg  you  will  give  that  consider- 
ation which  the  magnitude  of  the  interests  involved  demand. 

It  has  not  been  shown  that  we  are  menaced  bv  lines  like  the  Grand 
Trunk  passing  from  one  State^to  the  other  via  Canada,  but  by  the  real- 
ization of  that  ancient  policy  of  Great  Britain  which  has  su'ccessfully 
wrested  from  us  the  ocean-carrying  business  of  even  our  own  ])roducts 
and  now  seeks  to  secure  what  naturally  belongs  to  American  transpor- 
tation lines,  viz,  the  overland  carrying  trade,  by  which  tlie  most  rapid 
transit  is  afforded  to  commerce  between  the  continents  of  Asia  and 
Europe,  and,  in  my  opinion,  this  British  line  will,  unless  aid  is  giveu  to 
our  transcontinental  lines,  do  the  carrying  across  the  continent  of  mer- 
chandise and  passengers  between  the  Pacific  coast  at  Puget  Sound  and 
the  American  Atlantic  sea-ports. 

In  our  modern  times  commerce  seeks  the  channels  which  afford  the 
shortest  routes  and  the  quickest  transportation;  especially  is  this  the 
case  with  valuable  and  perishable  merchandise  like  the  silks  and  teas 
of  China,  a  difference  of  one  day  even  in  the  time  of  their  transportation 
being  counted  as  of  importance.  Whichever  is  the  shortest  route 
across  the  continent  will  get  this  trade  in  the  through  trafhc  between 
Asia  and  Europe,  and  if  I  am  correct  in  my  figures" this  merchandise 
will  in  a  very  short  time  be  brought  from  the  Pacific  to  this  very  port 
of  New  York  in  less  time  via  the  Canadian  Pacific  Pailrond  than  via 
any  of  the  American  transcontinental  lines.  It  has  been  mentioned 
here  that  Halifax  will  probably  be  the  Atlantic  terminus  of  the  Cana- 
dian Pacific.  It  has  not  been  mentioned,  but  I  desire  to  call  your  at- 
tention to  the  fact  that  Halifax  is  700  miles  nearer  to  Liverpool  than  is 
New  York.  I  have  not  the  data  with  me,  but  I  am  under  the  impres- 
sion that  there  is  less  distance  between  Vancouver  (the  occidental  ter- 
minus of  the  Canadum  Pacific)  and  Yokahama  than  between  San  Fran- 
cisco and  Yokahama.  You  have  had  it  in  evidence  as  to  how  much 
shorter  the  Canadian  Pacific  route  is  between  the  Pacific  and  Atlantic 
sea-boards  than  any  of  our  American  routes,  and  can  readily  see  that 
commerce  will  be  conducted  between  Asia  and  Europe  by  the  n)uch 
shorter  route  controlled  by  our  foreign  neighbors.  It  can  not  but  be 
expected  if  added  to  these  natural  advantages  this  foreign  route  is,  as 
intimated,  in  receipt  of  substantial  aid  in  the  shape  of  subsidies  for  its 
railway  and  steamship  lines. 

I  desire  also  to  call  your  attention  to  the  fact  that  the  Canadian  Pa- 
cific has  a  station  at  Prescott,  Ontario,  directly  opposite  Ogdensburg, 
in  this  State,  which  is  the  northern  terminus  of  the  Rome,  \Vatertown 
and  Ogdensburg  Railroad;  that  without  breaking  bulk  the  cars  of  the 
Canadian  Pacific  may  be  transferred  across  the  St.  Lawrence  Kiver  on 
floats  similar  to  those  in  use  in  this  harbor,  to  the  Rome,  Watertowu 
and  Ogdensburg  Railroad,  and  by  it  distributed  to  the  various  railroads 
terminating  in  this  and  other  cities.  I  believe  that  ere  long  you  will  see 
Asiatic  merchandise  being  landed  in  this  metro]>olisby  this  route,  because 
it  can  be  done  in  less  time  than  by  any  existing  American  route,  and 
probably  at  less  freight  rate  because  of  the  shorter  distance. 

The  policy  of  Great  Britain  has  always  been  to  foster  its  commerce 
by  subsidies,  bounties,  etc.  It  has  kept  up  communication  with  the 
"uttermost  islands  of  the  seas,"  so  that  this  little  island  has  become 
tbe  comiaerQial  center  of  the  world  aud  the  mistress  of  the  seas,    By 


302  TRANSPORTATION   INTERESTS    OF 

the  same  liberal  policy  it  caused  all  exchanjres  to  center  in  London, 
whicb  is  now  the  money  center  of  tlie  world;  and  we  of  Anu'rica,  with 
our  vast  productions  and  riclies  of  the  earth  unsurpassed,  are  paying'  a 
tax  to  London  in  the  shape  of  a  banker's  commission,  because  of  these 
commercial  exchanges  centering  there. 

And  we  are  also  paying  vast  sums  to  these  subsidized  British  ships 
for  the  carriage  of  the  i)roducts  of  our  soil,  while  the  American  sliij)  has 
almost  ceased  to  exist,  and  has  littU^  or  no  share  in  the  carriage  of  Amer- 
ican merchandise.  It  is  not  pleasant  to  our  American  i)ride  in  this  cen- 
tennial time  of  glorification  to  contemi)late  that  of  the  total  tonnage  of 
vessels  entered  at  all  tlu^  ])orts  fif  the  United  States  one  hundred  years 
ago,  one-third  only  of  the  total  tonnage  was  that  of  foreign  bottoms, 
while  two-thirds  of  the  total  was  American,  whiU?  the  statistics  of  the 
year  1888  show  tliat  of  the  total  entries  at  all  i)orts,  three  tilths  of  the 
tonnage  was  foreign  and  only  twt)  tifrhs  was  AiiK'rican.  and  this  in- 
cludes the  tonnage  engaged  in  the  coastwise  trade,  front  which  foreign 
vessels  are  exchnled. 

It  would  seem  now  that  the  ancient  and  suc«'essful  jiolicyofdreat  Britain 
is  reasserting  itself  on  this  continent,  and  while  she  ma\  not  i>articipate 
in  our  coastwise  trade  she  a|>]»rcciates  tin-  value  of  the  transcontinental 
commerce  and  is  determined  on  maintaining  her  commercial  supremacy, 
and,  if  possible,  to  do  our  transcontinental  (lariying  for  us. 

Are  we  to  rest  quietly  and  see  this  channel  of  commerce  which  natur- 
ally belongs  to  the  United  Stat4»s  wreste«l  fnun  us?  For  many  years 
patriotic  American  merchants  hav«'i  urged  upon  the  attention  of  Con- 
gress remedies  for  the  declining  American  merchant  maiiiu*  without 
avail,  chietiy  becan>e  Western  (Congressmen  seem  to  have  regarded  the 
matter  as  an  Eastern  interest.  For  many  years  i)atriotic  business  men 
urged  interstate  commerce  legislation;  fortujiately  a  responsive  cord 
was  touched  in  the  hearts  of  their  Western  brethren  and  the  measure 
became  a  law.  Would  to  (lod  that  this  investigation  nmy  result  in  the 
better  consideration  and  amelioration  by  (J«>ngress  of  coinm«'rce  in 
general. 

Jf  I  understand  the  jiurpose  of  the  present  inquiry,  it  is  to  find  a 
remedy  for  a  supposed  injury  to  the  business  of  the  trunk  I  ties  which 
are  subject  to  the  interstate  commerce  law,  by  the  diversion  of  the  tralHc 
to  Canadian  railways  which  are  not  within  the  jurisdu'tioii  of  the  law 
as  to  their  local  trallic,  and  it  is  charge»l  by  the  complainants  that  this 
disparity  gives  the  Canadian  railways  the  advantage,  and  that,  in  order 
to  arrive  at  parity,  privileges  of  opeiatingin  this  country  should  be  de- 
nied the  Canadians,  and  that  the  salient  featnresof  the  interstate  com- 
merce law  should  be  rep«'aled. 

I  do  not  think  the  complainants  have  proven  their  case,  ov  that  the 
remedies  songht  should  be  applied.  Were  the  seUish  view  to  be  taken 
of  what  course  wouhl  tend  to  be  of  the  most  heiu-lit  to  New  York,  the 
decision  would  be  to  stop  the  operation  of  the  Cana  lian  railways  in 
this  country,  for  it  wouhl  «livert  tra<le  to  New  Yiuk  now  enjoyed  by 
Boston,  I\)rtland,  ami  other  New  I^nglaml  citii's,  for  without  tin* Cana- 
dian railways  the  Northeastern  States  would  have  to  lu«  subject  to  the 
arbitary  rates  imitosed  by  the  trunk  liiu's  for  the  longer  distance  from 
Chicago  to  the  New  Eiiglaml  towns,  while  the  Giand  Trunk  affords  as 
short  distance  to  these  pi)iiits  as  the  Anu'rican  lines  do  to  New  York. 
The  chief  complaint  seems  to  be  lodged  against  the  (Jrand  Trunk  Kail- 
road.  Its  route  to  New  York  is  much  longer  than  any  of  the  Amer- 
ican lines,  and  it  would  seem  that  the  short  lines  onglit  to  be  able  to 
compote  with  the  longer  ones,  and  I  do  not  think  that  lines  like  tbo 


THE    UNITED    STATES    AND    CANADA.  303 

Grand  Trunk  can  recoup  from  their  local  traffic  sufficiently  to  enable 
them  to  cut  the  trunk  lines'  rate  between  Chicago  and  ISTew  York.  It  is 
only  possible  for  the  latter's  rate  to  be  cut  by  the  Grand  Trunk  wheu 
it  is  excessive. 

For  the  first  six  months  after  the  interstate  commerce  act  went  into 
effect  it  was  the  practice  of  railroad  officials  to  cast  odium  upon  it  by 
charging  to  the  law  every  evil  complained  of  by  the  public.  After 
a  while  the  stockholders  of  the  railroads  realized  that  the  operation  of 
the  law,  while  it  cut  off  certain  privileges  which  railroad  magnates  en- 
joyed, increased  the  earnings  of  the  railroads,  and  the  crusade  against 
the  act  ceased. 

iS^ow,  apparently,  gome  of  these  magnates  want  these  privileges  re- 
stored, utilizing  the  question  now  under  consideration  for  a  reason  why 
the  anti-pooling  section  and  the  long  and  short  haul  clause  should  be 
repealed. 

No  feature  of  any  law  is  so  little  understood  as  this  long  and  short 
haul  clause.  It  can  not  be  this  provision  of  the  law  which  is  injurious 
to  the  complaiuers,  for  no  complaint  or  request  has  been  made  to  the 
Commission,  which  has  full  discretion  not  to  apply  this  clause  whenever 
it  is  deemed  necessary  to  suspend  its  operations.  The  common  impres- 
sion seems  to  be  that  the  railroads  are  obliged  under  this  clause  to 
charge  as  much  per  ton  per  mile  for  the  long  as  for  the  short  haul, 
whereas  the  fact  is  the  clause  permits  the  railroad  to  charge  as  much 
in  the  aggregate  for  a  haul  of  500  miles  as  it  does  for  a  thousand-jnile 
haul.  Even  this  just  provision  may  be  suspended,  and  were  it  shown 
to  the  Commission  that  its  suspension  was  necessary  to  the  competition 
with  Canadian  railways  it  is  to  be  believed  that  the  request  for  suspen- 
sion would  readily  be  granted. 

13ut  it  is  asked  that  the  anti  pooling  clause  shall  be  repealed,  and  that 
pooling  shall  be  legalized,  and  the  Government  shall  take  a  hand  in  the 
making  of  tariffs.  It  is  claimed  that  tariff"  rates  can  not  be  maintained 
without  pooling.  They  never  were  maintained  under  the  pool  and,  so 
far  as  the  trunk  lines  are  concerned,  have  been  better  maintained  since 
the  pool  was  abolished  than  they  ever  were  before. 

Senator  Blair.  Please  explain  about  that. 

Mr.  White.  The  pool  rates  were  established  only  to  serve  as  au- 
thority to  agents  at  local  stations  to  charge  high  rates  for  small  ship- 
ments, but  no  shipper  of  a  large  amount  ever  thought  of  paying  the 
tariff  rates ;  he  always  made  a  private  contract  for  a  rebate  on  the  tariff" 
rates ;  he  never  knew  how  much  rebate  his  neighbor  got,  and  if  he  at- 
tempted to  speculate  in  grain  or  produce  he  always  ran  the  risk  of  hav- 
ing some  railroad  magnate  interested  in  a  deal  in  which  the  rebate  was 
much  larger  than  his  and  which  would  be  the  ruin  of  his  speculation. 
It  took  but  a  short  time  to  have  the  information  that  rates  were  not 
maintained  to  reach  the  stock  market;  then  stocks  would  go  down  ;  the 
magnates  might  desire  to  bull  the  market  and  a  meeting  would  be  called, 
and  with  great  flourish  of  trumpets  it  is  announced  that  the  pool  rates 
are  restored,  and  up  go  stocks,  but  shippers  did  not  have  to  wait  long 
before  they  made  their  private  rates  with  the  railroad  officials. 

Senator  Blair.  Do  vou  mean  by  this  that  after  declaring  that  the 
full  tariff"  would  be  rigidly  enforced  they  would  within  a  few  days  pro- 
ceed to  cut  in  this  secret  manner  f 

Mr.  White.  Yes  ;  and  in  less  time  than  you  would  think. 

Senator  Blair.  How  soon  after  their  dechnation? 

Mr.  White.  I  have  been  to  one  of  these  officials  and  received  a  cut 
rate  in  less  than  thirty  minutes  after  he  attended  the  meeting. 


304  TEANSPOKTATION  INTERESTS  OF 

Senator  Blair.  Not  since  the  law  was  enacted  ? 

Mr.  White.  No  ;  before.  The  law  has  j)reventecl  these  evil  prac- 
tices. It  is  also  claiuied  that  a  governmental  contract  of  pooling  would 
prevent  discrimination  by  the  Canadian  roads.  According  to  Mr.  Fink's 
testimony  there  are  a  thousand  ways  to  evade  the  law  (and  it  is  pre- 
sumable that  it  is  being  evaded  by  the  American  railroads).  If  any 
discrimination  or  evasion  is  being  practiced  by  the  Canadians  it  is  be- 
ing done  in  tliis  country,  and  they  can  be  brought  under  the  same  juris- 
diction as  to  this  as  the  Americans,  If  you  want  to  stop  tliis  discrim- 
ination, 1  think  it  will  be  necessary  to  pass  an  amendment  which  will 
meet  the  case. 

The  Chairman,  What  would  you  suggest! 

Mr.  White.  The  law  should  be  made  so  as  to  meet  the  indirect 
methods  and  subleifuges  emjiloyed  in  its  evasion,  and  1  do  not  believe 
you  can  ever  etiectnally  prevent  it  without  providing  a  reward  lor  the 
informer.     This  would  be  an  etlectual  estoppel  to  the  law-breaker. 

The  pool  prevents  (;omi)etition  and  creates  monopoly.  'Iherc  is  no 
limit  to  the  ex(;essive  charges  which  can  be  made  if  competition  is  i)re- 
vented.  I  think  that  belbre  the  people  of  this  country  will  permit  its 
Government  to  be  the  administrator  of  a  j^ool  system,  or  of  the  making 
of  taritfs,  it  will  demand  that  these  oflieials  shall  be  selected  by  the  peo- 
ple, and  not  appointed  by  the  I'^xecutive. 

11  is  taking  a  long  step  t«)wards  government  ownership  of  the  rail- 
ways when  it  undertakes  to  run  pctols  and  make  tarills. 

J  think  it  is  im|»ossible  to  upset  the  natural  laws  of  trade;  that  rail- 
roads should  be  left  to  themselves  to  make  theii- rates  of  Ireight,  the 
same  as  ships  do;  that  freedom  to  conjpete  and  solicit  trallic  should  not 
be  hami)ered  by  any  such  obstructive  invention  as  is  the  ]mo\. 

There  is  no  indu(;ement  under  the  iiool  principle  for  a  railroad  to 
solicit  freight  or  make  inducements  for  trallic.  There  is  no  inducement 
to  improve  equipments  or  to  keep  up  with  the  march  of  railroad 
science,  which  is  progressing  with  almost  lightning  rapidity.  There  is 
no  need  of  keeping  up  the  roadbed;  even  the  road  may  remain  idle, 
and  yet  it  will  receive  payment  for  which  it  never  carried  transporta- 
tion. As  an  instance  of  how  rapid  is  the  jirogress  of  railroading,  I  will 
state  that  the  cost  of  transportation  in  ISso  was  only  onehfth  of  what 
it  was  in  18G5.  The  principle  of  the  pool  tends  to  stop  all  progress,and 
maintains  in  existence  elfete  railways.  Effete  railways,  like  effete  ships, 
must  give  way  to  modern  improvements.  The  useless  railways  should 
be  sold  as  old  junk,  as  is  the  case  with  the  old  hulk  when  it  becomes 
useless  as  a  transiwrter. 

It  has  been  said  that  the  railroads  are  sufieriug  because  they  are  not 
allowed  to  pool. 

The  railroads  of  this  country  which  havo  not  been  over-cai)italized,  or 
built  in  advance  of  the  needs  of  po|)ulation,  are  prosp<'rous,  but  many 
railways  have  been  built  in  advance  of  the  time  when  they  can  be  util- 
ized and  many  are  capitalized  for  three  times  their  cost.  The  railroads 
which  are  suflering  are  those  which  have  been  luiilt  merely  to  realize 
the  profits  of  projection. 

The  criticisms  made  of  the  interstate  commerce  law  and  of  the  Commis- 
sion created  by  the  act  are  in  the  main  unjust. 

It  is  not  a  perfect  act,  it  is  a  growing  one,  and  will  need  many  amend- 
ments, which  experience  and  the  requirements  of  commerce  will  dictate 
as  time  goes  on. 

One  of  the  measiires  which  the  sea-ports  are  verv  much  interested  in 
seeing  euaytea  m  the  prohibition  of  the  gruutiug  of  tbroufc^h  biUeof  lad 


THE    UNITED    STATES   AND    CANADA.  305 

iDg  from  interior  producing  sections  through  to  an  ocean  foreign  port 
at  a  less  rate  tliau  the  exporter  at  the  sea-port  can  get  from  tlie  railroad 
and  the  ocean  ship.  This  is  one  of  the  subterfuges  for  discriminating 
in  the  inland  railroad  freight  charge  and  has  been  very  disastrous  to 
the  business  of  exporting  at  the  sea-board  ports. 

inside  from  the  improvements  which  can  be  made  in  the  law  with 
the  aiding  light  of  experience,  the  law  has  not  had  a  fair  trial.  Not 
a  single  one  of  the  Commissioners  appointed  has  been  numbered 
among  the  pronounced  friends  and  advocates  of  the  law.  Isot  a 
single  one  of  the  Commissioners  has  ever  had  any  commercial  ex- 
perience—the priucipal  questions  which  the  Commission  have  before 
them  are  those  of  commerce,  of  grave  import.  Complaint  is  made  that 
decisions  are  slow,  but  the  public  should  be  patient  and  give  the  Com- 
missioners time  to  study  the  subject,  beariug  in  mind  that  the  Commis- 
sioners are  all  of  them  lawyers,  and  that  they  are  overworked,  the  of- 
fice work  alone  requiring  the  talents  and  entire  time  of  a  first-class 
business  man.  The  questions  of  law  submitted,  and  which  the  Commis- 
sioners are  perfectly  com])etent  to  deal  with,  are  very  few  and  might  be 
attended  to  by  counsel  which  the  Commissioners  could  employ  or  by 
the  Department  of  Justice. 

The  Commission  needs  more  forceful  administration  and  more  intel- 
ligence of  the  subject  treated.  Nearly  all  of  our  former  ship-owners 
and  merchants  have  gone  into  railroading,  -and  many  of  them  are  well 
versed  in  and  were  the  advocates  of  interstate  commerce  legislation. 
Had  some  of  these  been  selected  or  invited  to  act  as  Commissioners 
they  might  have  served  and  better  progress  would  have  been  made  and 
more  satisfaction  given.  Laymen  seem  to  have  been  unwilling  to  go 
before  a  body  composed  of  all  lawyers,  therefore  they  are  necessitated 
to  emi)loy  lawyers  to  conduct  their  cases.  This  is  contrary  to  the  de- 
sign of  the  authors  of  the  measure;  it  was  designed  that  lay  men  should 
in  part,  at  least,  compose  the  Commission,  as  in  the  various  State  com- 
missions, and  where  laymen  feel  no  hesitancy  in  presenting  their  cases. 
The  discretion  given  the  Commissioners  to  suspend  the  long  and  short 
haul  clause  should  be  exercised  only  by  those  intelligent  of  tbe  com- 
mercial conditions  which  would  warrant  such  suspension. 

In  conclusion,  1  would  say  that  the  only  danger  menacing  the  rail- 
ways of  the  United  States  is  that  mentioned  in  the  first  part  of  my  re- 
njarks.  It  is  a  grave  danger  and  calls  for  the  exercise  of  radical  pre- 
ventive measures.  We  have  the  climatic  advantage  in  this  country 
over  the  British  possessions,  and  if  we  do  not  possess  now  the  shortest 
overland  route  between  the  oceans  the  Government  sbould  aid,  if  neces- 
sary, in  building  one.  It  should  subsidize  fast  steam-ship  lines  which 
should  effect  communication  between  this  country  and  Asia  and  Europe 
in  the  shortest  possible  time.  It  is  to  be  hoped  that  Congress  will  now 
do  something  to  stay  the  loss  of  the  only  commercial  advantage  left  to 
this  country,  and  will  take  warning  of  the  decay  of  all  empires  from  the 
earliest  annals  which  have  neglected  their  commerce. 

The  largeness  of  the  subject  of  the  regulation  of  commerce  between 
the  States,  the  inability  of  the  present  machinery  to  properly  deal  with 
the  work,  together  with  tbe  vast  general  commerce  interest  of. this 
nation,  calls  for  especial  provisions  for  the  treatment  of  these  para- 
mount interests. 

I  had  the  honor  to  suggest  when  your  committee  met  here  last  to 
inquire  as  to  the  desirability  of  an  interstate  commerce  law  that  the 
magnitude  of  this  and  kindred  subjects  called  for  the  establishment  of 
6543 20 


306  TRANSPORTATION  INTERESTS  OF 

a  department  of  commerce  to  be  presided  over  by  a  cabinet  minister  of 
experience  in  commerce. 

May  1  not  hope  that  the  members  ot  tbis  committee  will  call  the  at- 
tention of  Congjress  to  the  desirability  and  the  necessity  for  this  de- 
partment of  the  Government. 

I  will  read,  in  conclusion,  a  short  extract  from  a  paper  written  by  me 
some  time  since  on  "  Transportation." 

It  is  said  that  the  earliest  perception  of  the  importance  of  transportation  facilities 
in  this  country  to  the  welfare  nf  the  whole  j)e(>i>li',  and  thenccoHsity  of  art  to  aid  the 
bountiful  provision  of  natural  water-ways  in  order  to  ;;ive  hotter  facilities  for  inland 
commerce,  originated  with  the  *'  Father  of  his  Country."  who,  hefore  the  war  was 
fairly  closed,  and  while  in  command  of  the  army  at  Newhur;;h,  traversed,  one  hun- 
dred years  ago,  n  region  not  far  from  wiiere  we  staud  lo-day,  and,  describing  this 
journey,  he  wrote: 

"  I  have  lately  made  a  tour  through  the  Lakes  George  and  Cbnniplain  as  far  as 
Crown  Point;  then  returning  to  Sclienectady,  I  iiroeeedi-d  up  the  Molinwk  River  to 
Fort  Schuyler,  crossed  over  to  Wood  Creek,  wliieh  empties  into  the  Oneida  Lake,  and 
atfords  the  water  communication  with  Ontario;  I  then  traversed  the  country  to  the 
head  of  the  eastern  hraneh  of  the  ^^^^^r|uehanna  and  viewed  the  LakoOtseg«»,  and  the 
portage  between  that  lake  and  tin-  Mohawk  River  at  Caiiajoharie.  Pronii)ted  by 
these  actual  oliservatirins,  I  could  not  help  taking  a  more  cont«"mj>lative  and  exten- 
sive view  of  the  vast  inland  navigation  of  these  United  States,  and  could  not  but  be 
struck  with  the  immense  ditVusiou  and  importance  of  it,  and  wiih  the  goodness  of  that 
Providence  who  has  dealt  his  favors  to  us  with  so  i>rofuHe  a  hand.  Wonitl  to  God  we 
may  have  wisdom  enough  to  improve  them!  I  shall  not  rest  contented  until  I  have 
explored  the  western  country,  and  traversed  those  lines  which  have  given  bounds  to 
a  new  empire." 

At  the  close  of  the  war  Wasliington  made  his  trip  to  the  Western  States,  and  thus 
re])nited  to  the  governor  of  \'irginia  : 

"The  Western  States  (I  speak  n»iw  from  my  own  observation)  hang  upon  a  pivot. 
The  touch  of  a  feather  would  turn  them  any  way.  They  have  looked  down  tlie  Mis- 
sissippi till  the  Sjianiards,  very  impoliticly,  I  think,  for  themnelves,  threw  dilliciilties 
in  the  way  ;  and  they  looked  that  way  for  no  other  reason  than  because  they  could 
glide  quietly  down  the  stream,  without  considering,  perhaps,  the  dilliciilties  of  the 
voyage  back  again  and  the  time  necessary  to  perform  it,  and  because  they  had  no 
other  means  of  coming  to  us  but  bv  land  transportation  and  unimproved  roads. 
These  causes  have  hitherto  cheeked  the  iiwlustry  of  the  present  settlerN  ;  for,  except 
the  demand  ibr  provisions  occasioneil  by  the  increase  of  ]iopulation,  and  the  little 
flour  which  the  necessities  of  the  Spani.irds  compel  them  to  Imy,  they  have  no  in 
citement  to  labor.  Hut  smooth  the  road  and  make  easy  the  way  for  them,  and  then 
Bee  what  an  intlux  of  articles  will  be  ])oured  tipfin  us.  how  amazingly  our  exjiorts 
will  increase,  and  how  amply  we  shall  bu  couipeusutcd  fur  any  trouble  and  expense 
we  may  encounter  to  elfect  it." 

A  charter  was  obtained  from  the  States  of  Virginia  and  Maryland,  and  Washing- 
ton became  the  lirst  president  of  the  Transportation  ComiMiny.  Afterwards,  in  l'V2, 
General  Schuyler  initiated  the  constrnction  of  artilicial  water-ways  in  this  State  in 
the  territory  traversed  by  Washington,  as  tirst  mentioned,  and  it  may  be  said  that 
from  this  work  sprang  the  general  system  of  canals  in  this  State,  t-ulmiuatiug,  in 
1825,  in  the  wonderful  and  blessed  accomplishment  of  the  Erie  Canal. 


STATEMENT  OF  F.  B.  THURBER. 

Mr.  F.  B.  Thurber,  of  Thurber,  Wyland  &  Co.,  wholesale  grocers 
of  New  York,  addressed  the  committee  as  follows  : 

Upon  the  question  which  this  committee  is  investijratinfr  as  to  the 
competition  of  Canadian  railways  with  those  of  the  rnited  States  and 
the  workings  of  the  interstate  commerce  law,  I  would  say  that  it 
seems  to  me,  in  justice  to  our  American  railroads,  that  comiieting  Cana- 
dian roads  should  be  placed  under  similar  restrictions  to  those  of  our 
own  roads,  and  if  this  can  not  be  done  then  our  own  roads  should  be 
relieved  from  these  restrictions  to  an  extent  which  would  enable  thom  to 
compete  with  Canadian  roads. 


THE    UNITED    STATES   AND    CANADA.  307 

The  intent  of  the  interstate  commerce  law  is  to  secure  justice  alike  for 
carriers  and  shippers.  Prior  to  the  enactment  of  that  law  railroad  man- 
agers, following  the  line  of  least  resistance  and  consulting  their  own 
convenience,  often  yielded  to  the  importunities  of  large  shippers  to  the 
detriment  of  the  small  ones,  and  under  the  form  of  special  rates,  re- 
bates, and  drawbacks,  so  much  injustice  was  done  to  the  smaller  ship- 
per that  the  interstate  commerce  law  was  enacted  to  prevent  its  con- 
tinuance. It  is  a  curious  ftict,  however,  that  the  railroads  immediately 
adopted  a  system  which  in  many  cases  resulted  in  greater  discrimina- 
tion and  injustice  to  the  small  shipper  than  had  been  previously  perpe- 
trated under  the  guise  of  special  rates,  rebates,  and  drawbacks. 

This  was  accomplished  under  the  guise  of  "  classiftcatiou ; "  under 
the  pretense  of  simplifying  and  making  more  uniform  the  classification 
of  freight,  which  object  everybody  recognized  as  desirable,  and  which 
has  constantly  been  urged  by  the  Interstate  Commerce  Commissioners. 
The  managers  of  the  east  and  west  trunk  lines  between  Chicago  and 
the  sea-board  arranged  a  classification  by  which  several  hundred  articles 
which  had,  previous  to  the  enactment  of  the  interstate  commerce  law, 
been  carried  at  the  same  rate,  without  regard  to  quantity,  were  rated, 
in  less  than  car-load  quantities,  in  higher  classifications  than  in  car- 
loads, the  difference  thus  established  ranging  from  25  to  100  per  cent, 
of  the  rates  charged  for  transportation.  This  discriminated  against  the 
farmer  or  small  dealer  to  a  greater  extent  than  the  special  rates  and 
other  devices  employed  to  favor  large  shippers  did  prior  to  the  en- 
actment of  the  interstate-commerce  law.  Doubtless  the  convenience 
of  railroad  executives  had  something  to  do  with  this,  as  well  as  yield- 
ing to  the  desires  of  the  large  shippers  they  had  formerly  protected  in 
another  manner;  for  it  is  unquestionably  less  trouble  for  freight  clerks 
to  receive,  bill,  and  deliver  a  given  quantity  of  goods  to  one  shipper 
than  it  is  to  a  number  of  shippers. 

It  may  also  be  said  that  i  his  was  done  openly,  which  is  preferable  to 
secret  discriminations,  and  that  anj'  person  shipping  in  car  load  quan- 
tities could  avail  themselves  of  the  same  privilege. 

This  is  true,  but  it  is  equally  true  that  the  intent  of  the  interstate 
commerce  law  to  prevent  the  smaller  shippers  from  being  unjustly  dis- 
criminated against  is  evaded  as  eflectually  under  the  guise  of  ''  classifi- 
cation" as  under  the  previous  system  which  it  was  designed  to  remedy, 

At  present  it  is  practically  impossible  for  a  farmer  to  choose  in  what 
market  he  will  buy  his  agricultural  implements  or  where  he  will  sell 
his  produce.  He  is  compelled  to  deal  with  and  pay  tribute  to  his  near- 
est middle  man,  who  is  fortunate  enough  to  be  able  to  ship  in  such 
quantities. 

The  same  is  true  of  the  thousands  of  small  merchants  scattered 
throughout  the  country.  They  can  not  buy  in  car-load  quantities,  and 
the  diflerence  in  freight  between  car-loads  and  less  than  car-loads  is  so 
large  as  to  be  prohibitory  on  many  articles.  lie  may  prefer  to  deal  in  a 
distant  market  on  account  of  better  quality  or  variety  of  goods,  but  is 
forced  to  deal  with  the  nearest  dealer  who  can  buy  and  ship  in  car-load 
quantities.  He  can  not,  as  formerly,  choose  in  what  market  he  will  buy 
his  goods.  He  is  deprived  of  the  benefits  of  competition  for  his  patron- 
age, which  would  result  if  he  had  free  access  to  all  m..rkets. 

A  privileged  class  is  created  in  the  use  of  our  high  ways,  and  thesmall 
shipper  is  prevented  from  ever  being  a  large  one.  That  this  is  against 
public  policy  and  public  right  can  not  be  doubted.  The  vote  of  the 
small  shipper  had  as  much  to  do  in  conferring  the  franchises  under 
which  railroads  are  operated  as  the  vote  of  the  large  shipper,  and  th© 


308  TRANSPORTATION  INTERESTS  OF 

ri^lit  of  tlie.  citizen  on  tlie  highway  slionld  comp  in  to  limit  tlie  applica- 
tion of  the  law  of  wholesale  and  retail  which  applies  toau  unlimited  ex- 
tent in  i)urely  private  business. 

The  question  of  classification  ^oes  to  the  very  bottom  of  the  rato- 
making  power.  If  it  be  true  that  he  who  makes  the  son^^s  of  a  country 
may  care  little  who  makes  its  laws.it  is  doubly  true  that  if  railroad 
manajjers  bave  the  power  to  make  the  classifications,  they  need  care  but 
little  for  laws  prohibiting  them  from  favoring  large  shippers  by  means 
of  special  rates,  rebates,  etc. 

In  the  i)resent  case  they  have  actually  used  the  pretense  of  simplify- 
in<x  and  makinj;  more  uniform,  to  make  in  some  respects  a  more  compli- 
cated classifieation,  inasmuch  as  they  have  established  two  classes 
accordiii<;  to  cpiantity  for  several  hundred  articles  that  under  the  old 
trunk-line  classification  were  in  (»n<'  class,  without  rejjard  to  (plant ity. 

Their  arfiument  that  it  costs  more  to  ship  in  small  quantities  is  evi- 
dently only  a  subterfu;;e,  because  tor  many  vears  prior  to  the  enactment 
of  the  interstate  commerce  law  they  made  no  such  (pi;intity  discrimination 
in  classification,  and  while  the  present  classification  does  extend  over  a 
wide  area  vast  of  Chicajro,  fiom  Ciiicaj^o  west  to  the  Missouri  Kiver  a 
ditleient  classification  is  in  force,  which  do«>s  not  on  many  impoitant 
stajdes  make  moie  than  fuu'-third  the  discrimination  ajiainst  less  tlian 
carloads  that  the  classilicati«ui  east  of  (Miii'a;;o  makes,  while  the  great 
Southern  lines  have  made  no  change  in  their  classification  since  the  en- 
actment of  the  interstate  comnnrce  law^  and  carry  small  (]uaiititics  at 
the  same  rate  per  1(K)  pounds  as  they  do  large  (piantitics,  exc«'pt  in  the 
case  of  sj>ecial  commodities  that  naturally  take  carload  rates,  and  this 
brings  up  a  very  inqxirtant  distiiurtion 

lOast-bound  traflic;,  which  is  conqioscd  jirincipally  of  the  ])roducts  of 
our  fields,  forests,  and  iniiics,  naturally  takes  a  trar  load  unit,  wliile 
west  bound  tJatlic,  wiiich  is  largely  couqjoscd  of  manufactuied  goods, 
for  which  the  natural  unit  is  a  comnuMcial  package  complete  in  itself 
and  easily  handled,  should  not  be  subje(;ted  to  the  same  rules  of  classi- 
fication which  might  possinlv  be  <leemed  reasonable  on  east-bound 
traflic. 

The  farmer  who  may  want  to  buy  a  melodeon  or  cultivator  of  a  par- 
ticidar  jtattern  or  make,  under  tin*  present  classification  is  charged  an 
enormous  price  for  fieigiit  if  he  tries  to  purchase  from  an  eastern  manu- 
facturer. The  small  merchant  in  the  \\'cst.  who  wishes  to  buy  a  few 
packages  of  sugar,  coffee,  or  canned  good.>^  of  a  particular  kind  in  some 
sea  lH)ard  market,  is  charged  40  per  cent.,  by  the  present  classification, 
more  than  if  he  purchased  a  car  load,  while  on  many  other  articles  still 
greater  ditVerences  are' charged  on  less  that  car  load  lots. 

A  case  has  been  ma<le  up  ami  aigued  before  the  Intt'rstate  Commerce 
Commission  in  behalf-of  retail  merchants  in  tlie  interior  and  wholesale 
merchants  on  the  sea  board,  ami  has  now  been  pending  before  the  board 
for  several  months. 

The  length  of  tiuu^  taken  by  the  I)oard  to  consider  this  matter  indi- 
cates its  iuqK)rtance,  and  the  embarrassment  they  feel  between  the  oj)- 
l)osing  interests  of  large  siiippers  and  the  genera"l  public. 

It  docs  not  seem  i»os.sible,  in  view  of  other  decisions  made  by  the 
board,  notably  the  New  lOngland  coal  cases,  where  the  rights  of  the 
general  i»ul)lic  were  sustaineci,  that  they  can  decide  otherwise  than  in 
favorof  the  broad  princiides  of  equity  I  have  mentioned;  but  if  they 
do  not,  it  is  certain  that  further  legislation  will  be  necessary  if  the  in- 
terest of  the  small  shipper  is  to  be  i)rotecte<l,  as  contemplated  by  thoso 
who  enacted  the  interstate  commerce  law. 


THE   UNITED   STATES   AND   CANADA.  300 

As  regards  tlie  long-  and  short  haul  feature  of  the  interstate  com 
merce  law,  it  might,  perhaps,  be  proper  to  make  it  somewhat  more  elas 
tic  than  it  now  is,  so  as  to  enable  the  railroads  to  meet  water  competi- 
tion, notably  between  the  Paciiic  and  Atlantic  coasts,  and,  indeed, 
wherever  similar  conditions  prevail. 

So  far  as  the  prohibition  of  pooling  is  concerned,  I  do  not  think  pool- 
ing is  detrimental  to  the  public,  providing  there  is  a  i)Ower  above  the 
railroads  to  decide  what  is  reasonable,  and  that  power  is  exercised.  If 
unjust  discriminations  are  prohibited  in  one  form  and  tlie  supervising 
power  permits  them  to  go  on  in  another,  as  in  the  classification  matter 
before  mentioned,  of  course  a  supervising  power  is  useless. 

It  is  also  impotent  without  a  sufficient  force  to  execute  the  law. 
Laws  without  a  police  force,  or  a  police  force  without  laws,  are  equally 
useless.  Probably  we  can  never  get  better  men  to  constitute  an  inter- 
state commerce  commission  than  those  who  now  comi)ose  it,  but  they 
have  been  sadly  crippled  for  want  of  fund^^.  It  costs  the  railroads 
more  to  maintain  Mr.  Fink's  office  in  New  York  than  Congress  appro- 
priates for  the  Interstate  Commerce  Commission.  If  the  latter  body 
is  to  be  at  all  efficient,  it  must  be  given  sufficient  funds  to  provide  au 
adequate  clerical  force  and  other  facilities  for  supervising  tlie  vast  in- 
terests it  is  supposed  to  control. 

No  tariff  of  rates  or  classification  sheet  should  be  operative  on  inter- 
state lines  until  examined  by  experts  in  the  interest  of  the  public  and 
approved  by  the  Interstate  Commerce  Commissioners.  Ilightly  man- 
aged and  properly  supported,  such  a  body  can  be  of  immense  use  alike 
to  the  railroads  and  the  public.  It  will  shield  the' former  from  the 
strikes  of  lobbyists  and  the  importunities  and  combinations  of  hirge 
shipiiers  who  may  be  in  collusion  with  railroad  executives,  while  on  the 
other  hand  it  can  protect  small  shippers  and  the  general  public;  against 
favoritism  and  tyranny,  in  which  large  organizations  are  oftentimes 
prone  to  indulge. 

Small  shippers  constitute  the  great  majority,  and  yet,  because  indi- 
vidually they  are  weak,  they  have  heretofore  had  but  little  considera- 
tion. Even  where  a  number  of  shippers  make  up  a  car-load,  they  are 
not  allowed  car-load  rates  under  the  present  trunk-line  classification, 
and  this  practice  of  discriminating  against  small  shippers  is  fast  build- 
ing up  the  larger  shippers  into  a  class  so  powerful  tbat  they  will  soon 
be  in  a  i^ositiou  to  dictate  terms  to  the  railroads  and  at  the  same  time 
forever  prevent  small  shippers  from  becoming  large  ones,  no  matter 
how  hard  and  long  they  may  work. 

At  1  o'clock  p.  m.  the  committee  adjourned  to  meet  in  Boston,  Mass., 
July  5,  1889. 


Boston,  Mass.,  July  5, 1889. 

The  committee  met  at  11  o'clock  a.  m.,  pursuant  to  adjournment. 

Present :  Senators  Cullom  (chairman),  Blair,  Hiscock,  Harris,  Gor- 
man, and  Eeagan. 

The  CHAIR3IAN.  The  Committee  on  Interstate  Commerce  of  the 
United  States  Senate  has  met  in  this  city  to-day  for  the  puri)ose  of  con- 
tinuing the  investigation  directed  by  resolution  of  the  Senate.  In  order 
that  the  gentlemen  who  have  come  before  us  may  understand  fully  the 
purport  or  our  investigation  and  the  authority  under  which  we  are  act- 
ing, the  clerk  will  read  the  Senate  resolution. 

Tbe  clerk  read  the  resolution. 

6543-~21 


310  TRANSPORTATION   INTERESTS   OF 


STATEMENT  OF  WILLIAM  BLISS. 

Mr.  William  Bliss,  president  of  tbe  Boston  and  Albany  Railroad 
Company,  appeared. 

Tbe  Chairman.  Wbat  is  your  full  name,  ^Jr.  Bliss? 

Mr.  Bliss.  William  Bliss. 

Tbe  Chairman.  Wbere  do  you  reside? 

Mr.  Bliss.  In  Boston. 

Tbe  Chairman.  You  are  president  of  a  railroad  tbat  baa  a  terminal 
in  tbis  city,  are  you  not  ! 

]Mr.  Bliss.  Yes,  sir;  tbo  Boston  and  All>any. 

Tbe  Chairman.  Wbat  nro  tbe  termini  of  tbat  roa<lt 

j\Ir.  Bliss.  Boston  and  Albany  and  Hudson. 

Tbe  Chairman.  Wbat  are  its  conne<-tions? 

]\Ir.  Bliss.  Tbe  New  York  Central  llaihvay. 

Tbe  Chairman.  To  tbe  West  t 

Mr.  Bliss.  To  tbe  West. 

Tbe  Chairman.  Has  it  any  otber  connection  T 

Mr.  Bliss.  No  otber  connection  out  of  tbe  State. 

Tbe  Chairman.  Have  you  any  business  relations  witb  tbe  Grand 
Trunk  Kailroad  of  Canada? 

Mr.  Bliss.  None  wbatevcr. 

Tbe  Chairman.  Have  you  never  bad  ? 

Mr.  Bliss.  Never  bad. 

Tbe  Chairman.  You  are  familiar  witb  tbe  scojie  of  tbe  resolution 
under  -wbifb  tbe  committee  is  cluu  <,'ed  witb  tbis  investigation.  IMease 
proceed  in  your  own  way  to  j^ive  your  general  views  on  tbe  subject  as 
atlecting  your  railroad,  or  tbe  interests  of  New  Englaml,  or  15oston,  or 
tbe  country  generally. 

Mr.  Bliss.  It  is  a  pretty  large  inquiry,  an<l  I  scarcely  know  wbere 
to  begin. 

regulation  of  the  Canadian  roads. 

I  am  not  of  tbose  wlio  tbink  that  tbe  Grand  Trunk  and  tbe  Canadian 
Pacilic  sbould  be  restricted  from  doing  busiiu'ss  witb  tbis  country  at 
tbis  late  day.  I  take  it,  bowever,  tbat  tbe  Cnited  States  sbould  |>n)- 
tect  tbe  carriers  by  land  in  tbis  country  against  tbe  <-unii)etition  of  for- 
eign corporations  in  tbe  same  way  tbat  protcetion  is  afforded  to  our 
coastwise  sbips  as  against  foreign  sbips.  Nevertbeless  tbese  roads  are 
here,  and  tbey  bavebeen  doing  business  for  many  years,  and  tbe  peoi)le 
in  nortbern  New  England  tbink  tbey  are  bt-nelited  by  llu-se  connec- 
tions wbicb  tbey  bave  tbrougb  Canada.  lUit  I  tbink  tbat  foreign  lines 
ougbt  to  be  subject  to  all  tbe  rules  and  regulations  to  wbicb  tbe  United 
States  roads  are  subject,  botb  witb  respect  to  Canadian  business  and 
interstate  business. 

Tbe  Ciiaii.:man.  You  tbink,  as  an  original  proposition,  tbcre  ougbt  to 
bave  been  tbe  same  restrictions  i)laced  upon  tbese  foreign  carriers  as 
tbere  is  in  regard  to  tbe  coastwise  tra<le. 

Mr.  Bliss.  If  it  were  wise  in  one  <.'ase,  wby  not  in  tbe  otber? 

Tbe  Chairman.  Wbat  do  you  tbink  of  tin-  ijuestion  of  wbetber  it  was 
wise  to  restrict  tbe  coastwise  trade  i 

]\rr.  Bliss.  I  tbink  it  was.  Otberwise  f»ur  coastwise  trade  would  bo 
in  a!)out  tbe  same  condition  as  our  foreign  traile  is  by  water. 

Tbe  Chairman.  But  you  tbink  tliat  in;ismucb  as  tln-se  roads  bavo 
been  built  and  commercial  relations  establisbeil,  one  country  with  tbe 


THE  UNITED  STATES  AND  CANADA.  311 

other,  that  it  would  be  uuwise  at  this  late  day  to  depart  from  the  pol- 
icy that  has  been  followed  up  to  this  time? 

Mr.  Bliss.  Unwise,  provided  they  are  subject  to  the  regulations  of 
the  interstate  commerce  act  and  all  laws  of  the  United  States  in  rela- 
tion to  the  carriage  of  merchandise. 

The  Chairman.  Do  you  know  whether  or  not  the  Canadian  roads  are 
complying  with  our  rules  or  regulations  now  *? 

Mr.  Bliss.  I  can  not  speak,  of  my  own  knowledge. 

The  Chairman.  What  is  the  general  understanding? 

Mr.  Bliss.  The  general  opinion  is  that  they  are  making  reduced 
rates. 

The  Chairman.  Is  that  contrary  to  the  interstate  commerce  law,  or 
contrary  to  what  is  proper  in  doing  the  business? 

Mr.  Bliss.  For  them  to  make  reduced  rates  to  individuals  and  not  to 
the  public,  I  should  say  yes,  decidedly. 

The  Chairman.  That  is  not  right. " 

Mr.  Bliss.  I  should  say  not. 

The  Chairman.  Suppose  the  Grand  Trunk  Line  of  Canada  or  the 
Canadian  Paciiic  should  observe  the  interstate  commerce  law  so  far  as 
they  do  business  in  the  United  States  in  part,  or  in  whole,  just  as  our 
own  roads  do,  would  there  be  any  objection  to  their  doing  business? 

Mr.  Bliss.  Certainly  not.    That  is  my  opinion,  at  least. 

The  Chairman.  The  general  manager  of  the  Grand  Trunk  road,  who 
was  before  us  in  New  York  City,  stated  that  his  company  was  observ- 
ing the  interstate  commerce  act,  and  regarding  it  as  binding  upon  them 
in  all  transactions  in  connection  with  transportation  where  it  originated 
in  the  United  States  or  came  into  the  United  States  from  Canada,  or 
originated  in  the  United  States  and  went  into  Canada  and  back  into 
the  United  States  again.  An  observance  of  the  law  in  all  that  class  of 
business  would  be  all  that  would  be  necessary-,  would  it? 

Mr.  Bliss.  I  should  think  not.  There  is  no  pretense,  I  suppose,  on 
his  part  that  he  must  reduce  his  Canadian  rate  at  the  same  time  he 
reduces  his  interstate  rate. 

The  Chairman.  No,  sir. 

Mr.  Bliss.  Then  he  should  be  prevented  from  makiug  a  less  rate  on 
his  interstate  traffic  than  he  makes  on  his  intermediate  traffic,  whether 
interstate  or  Canadian.  There  is  no  protection  as  the  law  stands  now 
for  American  railways.  These  Canadian  lines  can  make  such  rates  as 
they  see  iit  on  interstate  tratlio  without  affecting  their  local  Canadian 
traffic,  while  the  American  roads  are  prevented  from  meeting  this  com- 
petition because  of  the  long  and  short  haul  clause  in  the  law,  which 
compels  them  to  reduce  their  rates  on  all  intermediate  business.  There 
is  nothing  in  the  law  to  prevent  the  Canadian  roads  making  such  rates 
as  they  see  fit  with  any  steam-ship  line  sailing  from  provincial  ports, 
and  taking  from  the  American  ports  a  large  business,  simply  because 
they  are  not  restricted  as  the  American  roads  are. 

The  Chairman.  So  that,  according  to  your  judgment  and  observa- 
tion, the  observance  of  the  interstate  commerce  law  that  would  simply 
apply  to  shipments  from  one  point  in  the  United  States  through  Canada 
to  another  point  in  the  United  States,  or  from  any  point  in  the  United 
States  to  any  point  in  Canada,  would  not  be  sufficient. 

Mr.  Bliss.  I  think  not. 

The  Chairman.  You  think  there  should  be  some  different  or  addi- 
tional regulation. 

Mr.  Bliss.  Some  different  or  wider  regulation. 

The  Chairman.  What, in  your  judgment,  ought  it  to  be? 


312  TKANSPORTAflOX   INTERESTS   OF 

Mr.  Bliss.  That  is  quite  a  difficult  questiou.  I  am  sure  I  do  not 
see  bow  you  are  to  meet  it.  It  seems  to  me  tliat  the  Canadian  roads 
mijjht  by  their  own  act  subject  themselves  to  the  control  of  the  Inter- 
state Commerce  Commission  and  all  their  books  be  open  to  its  inspec- 
tion, not  only  so  far  as  the  traffic  relates  to  the  United  States,  but  on 
all  business  in  Canada.  If  you  make  absolutely  the  same  regulations 
for  them  as  you  make  for  the  American  roads,  I  do  not  see  why  they 
should  be  restricted  from  doinj;  business  here.  They  have  done  busi- 
ness so  lonj;^  within  the  United  States  that  they  may,  ]ierhaps,  be  said 
to  have  acquired  a  prescriptive  rij;ht  here. 

The  Chairman.  Please  state  the  connections  with  this  city  or  with 
New  England  of  tlie  Cana<lian  Pacific  and  tlie  Crand  Trunk. 

Mr.  IjLISS.  They  come  in  by  the  P)Oston  ;ind  Maine,  and  possibly  by 
the  Pitchburg.  The  bulk  of  their  business,  however,  is  done  over  the 
Boston  and  Maine. 

The  Chairman.  So  far  as  Boston  is  concerned. 

Mr.  Bliss.  So  far  as  P>oston  is  concerned. 

The  Chairman.  W'hen  you  speak  of  the  Boston  and  Maine,  do  you 
include  in  that  line  the  Central  Vermont  Pailway  ? 

Mr.  Bliss.  Xo,  sir;  the  Boston  and  Maine  is  the  terminus  of  the 
Canadian  lines. 

The  Chairman.  The  eastern  terminus  f 

Mr.  Bliss.  Yes,  sir. 

The  Chairman.  Where  does  the  Boston  and  Maine  strike  the  ('.rand 
Trunk  ! 

Mr.  Bliss.  It  strikes  tlie  Central  Veiinont  at  Wliitf  Kivcr  Junction, 
and  at  Newi)ort,  1  tliiidc,  the  Canadian  Pacilic,  l)ut  I  am  not  sure  about 
that. 

The  Chairman.  Has  not  theCanadian  Pacihe  a  connection  that  leads 
it  toward  a  point  in  Nova  Scotia  ? 

Mr.  Bliss.  At  Mattawandceaj;  the  main  lines  connect  with  the  Maine 
Central  east  of  Pianjjor. 

The  Chairman.  What  do  you  think  will  be  the  elfect  tii>on  commerce 
if  the  Canaiban  Pa«'ific  Kaihvay  completes  a  line  throu;4h  the  State  of 
Maine,  in  view  of  the  subsidies  ^[ranled  by  the  D(»minion  (^rovernment 
to  that  road,  which  amount,  as  I  understand  it,  to  one  hundred  and 
five  million  dollars  in  jjitts,  and  one  hundred  and  ten  million  dollars  in 
guaranties  of  securities,  making  a  total  of  two  hundred  and  lifteeii 
millions,  with  one  hun<lred  and  eighty  six  thousand  dollars  a  year,  for 
twenty  years,  to  the  line  running  through  the  State  of  Maine,  and  a 
subsidy  of  a  half  million  dollars  a  year  to  a  line  running  Irom  St.  John, 
New  P.runswick,  or  from  Halifax  to  Kun»pe  f  What  will  be  the  «lfect 
of  that  on  the  bus)ness  of  Boston  .' 

Mr.  Bliss.  So  far  as  it  diverted  trade  from  here  it  would  br  an  injury, 
of  course. 

The  Chairman.  What  would  be  the  eifect? 

Mr.  Bliss.  In  the  present  state  of  the  law  I  fancy  that  they  will  be 
able  to  make  such  rates  through  the  State  of  Maine  to  and  fnun  Cana- 
dian ports  as  will  enable  them  to  divert  a  large  share  of  the  business 
now  done  through  Boston. 

The  Chairman.  In  view  of  the  encninous  aid  given  to  the  Canadian 
PaciQc  by  the  Dominion  (Tovernment,  and  in  view  of  the  subsidized 
steam-ship  liiu\s,  would  it  not  be  a  fact  that  in  the  natural  course  of  tra<le 
they  would  necessarily  t.ike  away  from  P.oston  a  large  volume  of  busi- 
ness that  Boston  now  gets  from  that  direction  ? 

Mr,  Bliss.  Yes,  to  the  extent  of  tilling  the  ships  sailing  from  Cauadiau 
ports. 


THE    UNITED   STATES   AND   CANADA.  313 

The  Chairman.  That  would  be  the  operation  of  it? 

Mr.  Bliss.  Yes,  sir. 

The  Chairman.  With  the  subsidies  that  our  roads  have  received  from 
this  country  and  the  subsidies  given  the  Canadian  Pacihc  especially  by 
the  Dominion  Government,  is  it  possible  for  the  American  roads  to 
compete  with  it  successfully  ? 

Mr.  Bliss.  I  do  not  see  why  not,  provided  the  Canadian  roads  are 
obliged  to  couform  to  all  the  laws  and  regulations  to  which  the  Ameri- 
can roads  are  compelled  to  conform.  As  it  is  now  the  rate  on  their  local 
Canadian  traffic  is  not  affected  in  any  way  by  the  rate  made  on  American 
traffic.  Assuming  that  the  wear  and  constant  expense  be  the  same 
whether  the  road  does  $2,000,000  of  business  or  $10,000,000  of  business, 
then  the  only  question  these  people  would  have  to  determine  is  the  ab- 
solute cost  of  doing  the  American  business,  while  the  American  roads 
must  consider  the  eftect  of  reduced  rates  upon  all  intermediate  traffic. 

The  Chairman.  What  is  the  amount  of  business  over  the  Boston  and 
Albany  in  tonnage  ? 

Mr.  Bliss.  I  think  somewhere  about  three  millions  or  three  millions 
and  a  half  tons  a  year. 

The  Chairman.  You  are  probably  not  familiar  with  the  tonnage  of 
other  roads  running  in  here. 

Mr.  Bliss.  No,  sir;  but  you  will  doubtless  find  it  in  the  report  of  the 
Massachusetts  Railroad  Commissioners. 

The  Chairman.  How  much  of  your  tonnage  is  through  business  ? 

Mr.  Bliss.  About  40  per  cent,  of  it. 

The  Chairman.  From  Boston  to  where  ? 

Mr.  Bliss.  Between  Boston  a«d  Albany. 

The  Chairman.  For  how  long  has  your  road  been  in  operation? 

Mr.  Bliss.  Since  1835  it  has  been  in  operation  as  far  as  Springfield, 
and  to  Albany  since  1841. 

The  Chairman.  Up  to  the  time  your  road  was  built  Boston  was 
somewhat  at  a  disadvantage,  and  verj^  largely  so  as  between  it  and 
New  York,  was  it  not  ? 

Mr.  Bliss.  Very  much  so. 

The  Chairman.  What  is  the  situation  now  ? 

Mr.  Bliss.  Boston  is  still  at  a  disadvantage.  There  are  the  canal  and 
river  at  New  York,  with  which  no  railway  can  compete.  Not  even  the 
New  York  Central  Railroad  with  its  low  grades  and  great  equipment 
can  compete  snccessfully  with  the  canal. 

The  Chairman.  The  construction  of  your  road  and  the  improved 
methods  of  loading  and  unloading  at  the  terminus  have  relieved  Bos- 
ton's disadvantage  very  considerably,  have  they  not  ? 

Mr.  Bliss.  It  has  enabled  the  Boston  shippers  to  do  a  little  more  of 
the  foreign  business,  from  the  fact  that  the  roads  west  of  us  make  the 
same  rate  to  Boston  as  to  New  York  on  traffic  destined  for  the  foreign 
market;  but  still,  in  the  summer  season,  with  the  canal  in  oi)eration, 
this  is  not  wholly  effective.  Last  year  grain  was  taken  by  the  sliii)s  for 
almost  nothing.  If  the  market  is  against  them  tliey  have  to  take  grain 
for  anything  they  can  get,  but  still  they  keep  up  their  sailings  because 
in  the  winter  they  are  able  to  get  better  rates. 

The  Chairman.  When  was  the  bridge  at  Albany  built? 

Mr.  Bliss.  In  1865.  There  are  two  bridges  there  now.  The  upper 
one  was  built  in  1865,  and  the  other  one,  I  think,  in  1871  or  1872. 

The  Chairman.  The  chief  embarrassment  under  v.iiicli  Boston  has 
labored  has  been  from  the  fact  that  it  is  larther  from  the  producing 
center  of  the  West  and  has  not  had  the  Erie  Canal  to  aid  it  in  the  mat- 


314  TRANSPORTATION   INTERESTS    OF 

ter  of  transportation.  How  do  you  do  now ;  are  you  using  the  canal  at 
all? 

Mr.  Bliss.  Not  at  all.  The  rates  to  Albany  are  about  the  same  as 
to  NewYork,  and  then  the  business  must  be  carried  two  hundred  miles 
by  rail.  East-bound  business  can  be  carried  to  better  advantage  by 
lake  and  rail  than  by  canal  and  rail.  In  the  winter  Boston  gets  exactly 
the  same  rate  on  all  foreign  shipments  as  New  York.  In  the  summer, 
or  during  eight  months  of  the  year,  Boston  gets  it  so  far  as  the  rail 
lines  can  meet  the  rates  of  the  canal  and  river  to  New  York. 

The  Chairman.  What  is  the  method  now  in  vogue  among  you  gen- 
tlemen as  to  transporting  grain,  for  instance,  or  cotton  from  the  South 
for  foreign  shipment ;  do  you  make  one  rate  from  the  West  to  Liverpool, 
or  do  you  divide  it  ? 

Mr.  Bliss.  The  through  rate  is  the  sum  of  the  inland  rate  to  New 
York  and  the  ship's  charge  from  Boston  to  Liveri)o<)l.  Through  bills 
of  lading  are  given.  The  Grand  Trunk,  I  believe,  has  a  percentage  rate 
with  its  ships,  so  that  its  inland  rate  tluctuates  constantly. 

The  Chairman.  Do  you  understand  that  they  have  that  sort  of  an 
arrangement? 

Mr.  Bliss.  Yes,  sir. 

Senator  lIiscocK.  How  do  you  know  that? 

Mr.  Bliss.  As  a  matter  of  <-ommon  report. 

Senator  IHscocK.  You  only  know  it  by  rei)ort  f 

Mr.  Bliss.  That  is  all. 

The  Chairman.  Your  own  arrangement  is,  however,  an  ab.solute  rate 
fixed  and  published,  just  as  you  do  with  shipments  for  home  consump- 
tion. 

Mr.  Bliss.  Exactly. 

The  Chairman.  You  publish  the  rate  from  the  i)lace  of  shipment  to 
Boston  at  so  much  and  then  to  that  amount  the  sleam.ship  rate  is 
added? 

Mr.  Bliss.  Yes,  we  add  the  ship  rate  to  the  inland  rate. 

The  Chairman.  Is  that  of  any  jiarticular  inconvenience  to  the  ship- 
per ? 

i\Ir.  Bliss.  Not  that  1  am  aware  of 

The  Chairman.  Is  it  of  anv  particular  inconvenience  to  the  rail- 
road ? 

.Mr.  Bliss.  Not  that  I  am  aware  of. 

Senator  Blair.  Is  not  the  real  dilliculty  that  the  Cana<lian  roads 
carry  the  greater  distance  more  cheaply  than  the  other  lines,  and  they 
are  able  to  do  so  ? 

Mr.  Bliss.  They  do  carry  more  cheaply,  but  whether  thry  are  more 
able  to  is  another  question.  I  do  not  know  why  a  railroacl  can  carry 
twelve  hundred  miles  cheaper  than  it  can  carry  a  thousand  miles. 

Senator  Blair.  Your  position  is  that  the  c(jnsumcis  shall  be  put  in 
a  situation  to  be  obliged  to  pay  more  than  they  now  pay  for  their  trans- 
portation going  over  the  Canadian  roads  ? 

Mr.  Bliss.  My  position  is  that  the  Canatlian  roads  bi-  subject  to  the 
same  regulations  as  our  roads,  and  then  let  tiiem  make  such  rates  as 
they  have  a  mind  to. 

Senat<u'  Blair.  The  effect  of  it  nnist  be  that  those  who  have  occasion 
to  pay  for  transportation  must  pay  more  than  tlu'v  now  do  over  the 
Canadian  roads. 

Tilr.  Bliss.  That  would  depend  ujjou  whetlu'r  the  Canadian  roads 
charged  more  than  they  do  now.  If  they  saw  lit  to  charge  more  they 
would  have  to  change  all  their  rates  in  proportion. 


THte   tJNiTED   Sl^ATES   AND   CANADA.  315 

Senator  Blair.  But  there  would  be  no  advantage  to  the  American 
roads  m  their  competition  with  the  Canadian  roads  unless  in  someway 
something  would  be  done  which  would  cause  the  Canadian  roads  to 
charge  more  than  they  do  now,  would  there  ? 

Mr.  Bliss.  We  should  hope  that  would  be  the  effect  of  it. 

Senator  Blair.  Then  the  substance  of  it  all  is  this  :  that  you  insist 
upon  something  being  done,  by  the  application  of  the  interstate  com- 
merce law  outside  of  our  own  political  jurisdiction,  which  would  make 
the  people  pay  more  for  transportation  than  they  do  now. 

Mr.  Bliss.  We  ask  to  have  all  lines  made  equal.  The  carriers  by 
water  are  wholly  unrestricted  by  law,  and  the  Canadian  railways  have 
very  nearly  the  same  privileges. 

Senator  Blair.  You  might  argue  that  the  American  lines  should  be 
liberated  from  any  inequitable  conditions  which  American  legislation 
places  upon  them.  You  might  argue  that  that  which  would  have  the 
effect  of  enabling  you  to  charge  less  than  now  be  provided  in  order  that 
you  might  meet  Canadian  competition ;  but  do  you  not  reverse  it  ? 

Mr.  Bliss.  I  think  it  a  most  excellent  thing  to  have  the  American 
roads  regulated. 

Senator  Blair.  If  the  effect  of  it  should  be  to  make  the  people  pay 
more  ? 

Mr.  Bliss.  No  matter  what  the  effect  of  it  be,  they  should  be  regulated, 
and  if  regulated  it  seems  to  me  that  any  roads  that  come  in  competition 
with  the  American  roads  should  also  be  regulated. 

Senator  Blair.  If  the  effect  of  the  regulating  should  be  to  make  the 
cost  greater  to  those  who  pay  for  the  transportation,  would  that  be  an 
advantage  to  the  American  lines'? 

Mr.  Bliss.  Whether  the  cost  would  be  greater  or  less  is  a  matter 
not  worthy  of  consideration.  We  have  to  compete  with  the  lakes 
and  canals,  and  where  water  comes  in  immediate  competition  unless 
we  reduce  rates  to  meet  the  water  lines  we  can  get  none  of  the  traffic, 
and  if  we  do  reduce  we  must  also  reduce  the  rates  on  all  intermediate 
business  affected  by  the  through  rate.  We  are  confronted  with  that 
disadvantage,  while  you  let  the  Canadian  lines  come  in  and  compete 
with  the  water  lines  and  railroad  lines  without  restriction. 

Senator  Blair.  The  evil  is  the  same  now  as  between  the  American 
railroads  as  it  is  between  the  Canadian  lines ! 

Mr.  Bliss.  Yes,  sir;  only  worse  because  it  reaches  more  points. 

Senator  Blair.  Now,  to  remove  the  real  evil,  do  you  not  begin  at 
the  wrong  end  ?  Would  you  not  say  that  the  American  railroads  be  at 
liberty  to  compete  with  the  water  lines,  or  else  the  water  lines  be  put 
under  the  same  restrictions  as  the  land  lines'? 

Mr.  Bliss.  I  do  not. 

Senator  Blair.  That  is  because  you  do  not  want  to  attack  American 
legislation. 

Mr.  Bliss.  I  think  it  a  very  good  plan  to  hav^e  the  railroads  regulated. 
I  think  it  equally  well  as  a  principle  that  the  shorter  haul  should  pay 
no  more  than  the  longer  haul,  but  I  can  not  conceive  of  any  condition 
of  affairs  under  which  a  foreign  corporation  should  be  allowed  to  come 
into  the  United  States  and  make  such  rates  as  they  see  fit  while  the 
American  roads  are  tied  hand  and  foot. 

Senator  Blair.  What  you  ask  for  here  is  that  such  conditions  be 
placed  upon  the  Canadian  people,  who  have  always  done  business 
through  our  country  and  for  our  people,  as  will  oblige  them  to  charge 
our  people  more  than  they  now  do. 

Mr.  Bliss.  I  do  not  say  that ;  I  do  not  ask  that.     I  do  not  know  what 


316  TRANSPORTATION   INTERESTS   OF 

the  efiect  would  be  of  placing  these  foreign  roads  under  the  same  regu- 
lation as  the  LTuited  States  roads.  If  they  were  obliged  to  conform  to 
the  United  States  law  in  every  jjartic  tihir  1  think  the  ellect  wonhl  be  to 
make  the  rates  more  stable  all  over  the  country.  No  coniinunity  can  be 
benefited  by  rebates  paid  to  individual  shipiicrs.  If  rates  are  to  be  re- 
duced they  should  be  reduced  to  all  aliko. 

Senator  Blaiii.  Suppose  that  should  be  prevented,  then  how  would 
you  stand? 

Mr.  Bliss.  If  the  Canadian  roads  were  subject  to  the  same  regulations 
both  as  to  American  and  Canadian  business  that  the  American  roads 
are  on  interstate  traffic  then  we  should  be  on  an  equal  footing,  but  if 
their  traffi<!  from  the  United  States  to  Canadian  ports  is  unrestricted 
what  is  to  i)revent  their  i)aying  rebates  arid  diverting  to  Canadian  i)orts 
a  large  amount  of  business  which  would  naturally  go  through  the 
United  States  ?  If  these  Canadian  lines  arc  not  in  a  ]»osition  to  offer 
inducements  to  shippers,  how  does  it  hajipen  that  the  proportion  of 
traflic  going  over  the  Canadian  loads  has  increased  so  largely  since  the 
interstate  commerce  act  went  into  effect  ? 

Senator  Blaiu.  That  is  a  conundrum,  and  the  answer  s<'ems  to  be 
l^retty  i)lain.  But  suppose  discrimination  as  between  individuals  be 
prohibited,  and  be  efiect ually  |»rohibite<l  on  the  part  of  the  Canadian 
roads,  and  there  should  be  nothing  but  the  application  of  this  long  and 
short  haul  i)rin(iple,  ln»w  would  that  be? 

jMr.  IjLISS.  Then  how  are  you  going  to  jtreveut  the  Canadian  roads 
making  up  their  losses  on  througli  business  by  recouping  on  the  local 
business  ? 

Senator  Blaik.  I  do  not  expect  to  imtvide  away  by  which  they 
sliould  not.  1  was  about  to  ask  you,  as  a  railroad  man,lniw  to  cure  tlu' 
dilliculty. 

Mr.  Bliss.  I  could  not. 

Senator  r.LAin.  Suppose  discrimination  as  between  individuals  be 
effectually  prohibited  1 

i\Ir.  Bliss.  Then  you  have  the  geographical  adva;itage. 

Senator  Blatii.  Is  it  not  by  leason  of  that  ge«)graphical  a<lvantage 
that  these  Canadian  roads  are  doing  the  business  cheaper  than  the 
American  roads? 

Mr.  Bllss,  I  mean  to  say  that  a  large  part  of  this  territory  is  exempt 
from  the  operation  of  the  interstate  commerce  law.  The  leal  geograph- 
ical advantage  is  that  wi-  have  the  shorter  line  fiom  Chicago  to  Bos- 
ton and  to  New  York. 

Senator  Blair.  And  fiom  St.  Paul .' 

Mr.  Bliss.  Yes,  and  from  St.  Paul.  Take  the  "Soo"  route  and  it 
would  not  be  far  difl'ercnt.  1  In  lieve  fliey  make  the  same  rates  from 
St.  Paul  as  we  do  from  Chicago. 

Senator  Blair.  If  you  ai)])ly  the  prim  iph'  of  the  interstate  commerce 
law  to  these  Canadian  lines  in  order  that  the  Amerii-an  lines  may  be- 
come better  off  the  cost  of  transportation  to  the  man  who  pays  it  must 
be  increased,  must  it  not? 

Mr.  Bliss.  That  is  not  the  (piestiou  which  rules  the  American  lines. 

Senator  Blair.  Suppose  yoji  answer  that  cpu'stion. 

Mr.  Bliss.  I  do  not  know  that  I  am  able  to  nnswer  that.  1  have  no 
means  of  knowing  wliat  the  Canadian  lines  ])roi)ose  to  do.  Ifthe.se 
foreign  roads  are  ]iut  under  the  same  restrictions  as  we  are,  and  then 
secure  thetrade,  I  do  nottliink  t!ie  Ameiican  loads  can  complain.  If,  on 
theotherhand,  these  foreign  comiietitors  are  not  put  upon  the  same  basis 
with  us  by  some  regulation  we  have  a  right  to  complain  of  this  unfair 
competition. 


THE    UNITED    STATES    AND    CANADA.  317 

Senator  Blair.  Has  the  business  of  your  line  been  injured  bj-  the 
existing  condition  ;  the  presence  of  this  Canadian  coniiietitioii  ? 

Mr.  Bliss.  If  you  refer  to  the  Boston  and  Albany,  I  do  not  think 
there  is  any  money  in  this  through  business  at  all.  Doubtless  it  is 
being  taken  away. 

Senator  Blair.  Do  you  think  Canadian  competition  does  that  ? 

Mr.  Bliss.  Yes,  sir. 

Senator  Blair.  That  is  you  mean  to  say  a  condition  has  now  been 
reached  by  which  the  shorter  American  lines  are  unable  to  do  the  through 
business  at  a  pro  tit  ? 

Mr.  Bliss.  Not  all  of  them. 

Senator  Blair.  Well,  take  your  road,  then. 

Mr.  Bliss.  I  am  speaking  of  my  own  road. 

Senator  Blair.  Your  road  is  the  same  as  the  New  York  Central? 

Mr.  Bliss.  Far  from  it.  Our  coal  costs  us  twice  as  much  as  does  the 
coal  of  the  New  York  Central,  and  we  pull  about  two-thirds  of  the  train 
they  do.     We  are  almost  an  infant  compared  with  it. 

Senator  Blair.  The  conditions  are  such  that  the  New  Y^ork  Cen- 
tral can  allow  you  enough  out  of  the  joint  freight  rate  from  the  western 
point  to  Boston  so  that  jou  can  afford  to  do  the  business? 

Mr.  Bliss.  We  do  it. 

Senator  Blair.  Y^ou  think  that  business  is  of  no  value  to  you? 

Mr.  Bliss.  I  think  it  is  valueless. 

Senator  Blair.  And  if  it  were  not  for  some  existing  cause  you  would 
charge  more  for  it,  or  else  you  would  not  do  the  business  if  you  did  not 
receive  a  higher  rate  than  you  now  get? 

Mr.  Bliss.  I  think  we  should. 

Senator  Blair.  Y^ou  hardly  do  business  for  nothing,  do  you  ? 

Mr.  Bliss.  1  do  not  know  about  that.  I  do  not  know  but  what  a  road 
has  to  do  some  of  its  business  for  nothing. 

Senator  Blair.  But  you  do  this  through  business? 

Mr.  Bliss.  I  think  a  railroad  chartered  by  a  State  has  a  public  duty 
as  well  as  corporate  rights.  I  think  it  has  functions  to  perform  aside 
from  the  endeavor  to  get  money  into  its  treasury.  I  think  it  owes  a 
duty  to  the  public  and  the  public  owes  a  duty  to  it.  I  do  not  think 
foreign  roads  should  be  allowed  to  come  into  this  country  and  compete 
with  the  United  States  roads,  even  if  the  foreign  road  does  the  business 
at  a  loss,  so  long  as  the  roads  in  the  [Jnited  States  are  under  restric- 
tions that  are  not  imposed  upon  the  foreign  competitor.  We  are  com- 
pelled under  the  present  condition  of  affairs  to  do  a  proportion  of  our 
business  at  a  loss,  and  we  complain  that  the  foreign  competitor  is  not 
under  the  same  regulations  that  we  are. 

Senator  Blair.  Unless  you  charge  more  for  what  you  do  you  could 
hardly  get  more  for  your  services,  could  you  ? 

Mr.  Bliss.  I  do  not  say  that  we  would  charge  more  if  the  Canadian 
lines  were  put  under  the  same  regulations. 

Senator  Blair.  But  all  that  keeps  you  from  charging  more  is  this 
Canadian  competition,  is  it  not"? 

Mr.  Bliss.  I  do  not  know.  It  may  be  that  the  competition  by  lake 
and  canal  prevents  us  from  charging  higher  rates.  There  are  a  thou- 
sand and  one  things  that  go  into  the  making  of  rates.  For  example, 
ten  years  or  eight  years  or  nine  years  ago  when  tolls  Avere  charged  on 
the  canal  we  then  made  what  we  thought  would  be  a  low  rate  to  meet 
that  competition,  and  then  in  the  winter  we  could  recoui),  and  now  comes 
a  route  by  way  of  the  Mississippi  Elver  and  New  Orleans,  and  thatcou- 


318  TRANSPORTATION    INTERESTS    OF 

trols  tlie  Kansas  rate,  aiul  the  summer  and  winter  rates  are  nearly  the 
same. 

Senator  Blair.  Therefore  you  would  have  the  water-ways  put  under 
the  same  rejrulations  as  the  railways  in  order  to  protect  you? 

Mr.  Bliss.    I  do  not  know  as  to  that.     1  do  not  say  that. 

Senator  Blair.  There  is  a  point  where  there  are  causes  that  you 
cannot  reach  and  regulate  by  legislation  ? 

Mr.  Bliss.   Yes. 

Senator  Blair.  We  are  dealing  with  a  difficult  subject  and  we  are  in 
the  same  fix  that  you  are.  If  you  do  not  give  us  any  light  on  the  sub- 
ject we  can  not  deal  with  it.  The  main  jjoint,  however,  that  I  would  like 
to  have  answered  is  this:  Whether,  in  order  to  relieve  American  rail- 
roads so  far  as  Canadian  competition  is  concerned,  it  is  not  necessary 
that  something  be  done  which  will  increase  the  charges  for  transporta- 
tion over  the  Canadian  roa«ls  ? 

Mr.  Bliss.  I  do  not  think  1  ought  to  answer  that  question  differently 
from  what  I  have.  I  do  not  .see  liow  I  can  give  any  other  answer.  I 
say  it  is  unjust  to  i»erinit  these  foreign  corporations  to  come  in  here  atid 
prey  upon  this  business  wholly  unrestricted.  This  is  a  community 
wholly  given  over  to  the  doctrint'  of  a  jirotective  tarilf,  but  they  <lo  not. 
hesitate  to  ask  that  the  Canadian  roads  may  be  allowed  to  compete  with 
the  American  lines  without  restriction.  There  wouUl  be  a  loud  out«'rv 
against  the  GoveinnuMit  if  if  should  permit  a  foreign  manulactur»'r  to 
bring  in  his  building  material  for  the  construction  of  his  mill  without 
duty,  and  then  to  (ill  it  with  machinery  brought  in  free,  and  finally  per- 
mit him  to  do  business  without  taxation.  Under  this  condition  of 
aifairs  the  time  would  not  be  long  before  the  American  mills  would  be 
driven  out  of  their  own  market.  Under  the  i)re.sent  law  the  Canadian 
railways  bear  about  the  same  relation  to  the  American  roads  that  the 
foreign  manuf;icturer  would  to  the  American  manufacturer.  These 
Canadian  railways  pay  no  tribute  to  the  (leiieial  (loveriinuMit  nor  to 
the  States.  Their  rolling-stock  is  built  in  Canada,  if  it  pleases  them  s(> 
to  do,  and  their  ears  are  permitted  to  j»ass  as  freely  to  and  from  the 
United  States  as  if  they  were  built  on  this  side  of  the  bonier.  If,  in 
addition  to  all  these  advantages,  they  are  permitted  to  eomi)ete  for 
American  business  without  control  it  will  not  be  long  before  serious 
injury  will  be  done,  not  only  to  the  railroads  of  this  country,  but  to  its 
business  as  well,  by  diversion  of  its  domestic  trade  to  a  foreign  stiite. 

Senator  Blair.  If  this  Canadian  competition  is  not  <loing  you  an  in- 
jury, have  you  any  reason  to  complain  ? 

Mr.  Bliss.  We  think  it  is  doing  us  an  injury. 

Senator  Blair.  And  you  will  not  lessen  your  charges! 

Mr.  Bliss.  That  depends.  The  rate  may  go  so  low  that  they  would 
abandon  the  business.  I  do  not  think  the  Canadian  roads  are  doing 
the  business  to  please  the  American  merchant,  but  for  a  profit,  and 
wherever  the  American  roads  put  the  rate  the  Canadian  road  follows 
just  up  to  a  i)oint  to  get  the  business  away  from  the  American  roads, 
and  they  will  go  down  to  a  ])rice  which  will  take  the  business  as  long 
as  it  pays  any  profit  at  all. 

Senator  Blair.  The  further  down  they  go  the  less  it  costs  the  man 
who  has  to  pay  for  the  transportation  ? 

Mr.  Bliss.  1  do  not  know  that  it  is  beneficial  to  a  community  to  have 
low,  but  unequal,  rates.  I  think  it  is  better  to  have  the  rates  steady 
and  uniform,  and  I  think  that  if  the  rates  were  not  changed  more  than 
once  a  year  it  would  be  better  all  arounil. 

Senator  Blair.  You  refer  now  to  fluctuating  charges  t 


THE    UNITED    STATES    AND    CANADA  319 

Mr.  Bliss.  Yes,  sir. 

Senator  Blair.  I  was  not  referring  to  that. 

Mr.  Bliss.  The  merchant  may  pay  less  to-day  by  reason  of  the  com- 
petition of  the  Canadian  railroads,  bnt  suppose  he  pays  less  than  his 
neighbor  or  one  steam-ship  line  gets  alower  rate  than  another,  is  that 
for  the  benefit  of  the  American  community  ?  I  should  say  no.  I  think 
it  is  a  benefit  to  the  individual  and  a  benefit  to  the  Canadian  line,  if 
they  both  profit  by  it. 

Senator  Blair.  What  practicable  way  occurs  to  your  mind  of  sub- 
jecting the  Canadian  road  in  Canadian  jurisdiction  to  the  operation  of 
the  American  statutes  ? 

Mr.  Bliss.  That  is  a  question  of  statesmanship. 

Senator  Blair.  You  think  the  condition  ought  to  be  imposed  that 
they  should  conform  to  our  law  or  else  that  they  should  not  do  business 
for  the  American  people  ? 

Mr.  Bliss.  I  should  think  so. 

Senator  HiscocK.  You  do  not  know  any  reason  why  the  trunk  lines 
of  Canada  should  be  allowed  to  be  outside  of  the  provisions  of  the  in- 
terstate commerce  law  any  more  than  the  trunk  lines  of  the  United 
States,  do  you  ? 

Mr.  Bliss.  No,  sir. 

EFFECT   OF   THE   INTERSTATE  COMMERCE  LAW. 

Senator  Gorman.  I  understood  you  to  say  that  as  a  rule  you  think 
the  regulation  by  law  of  the  common  carriers,  as  is  now  done,  is  a  wise 
provision  ! 

Mr.  Bliss.  I  do,  indeed. 

Senator  Gorman.  Outside  of  the  competition  of  the  Canadian  roads 
has  the  law  oi)erated  to  the  disadvantage  of  the  railroads  at  all  ? 

Mr.  Bliss.  So  many  disagree  with  me  on  that  question  that  I  really 
do  not  know  how  to  answer.  As  far  as  it  relates  to  our  own  road,  I 
think  the  law  has  not  operated  to  our  disadvantage.  I  should  dislike 
very  much  to  go  back  to  that  condition  of  chaos  in  which  we  were  prior 
to  the  passage  of  the  interstate  law. 

Senator  Gorman.  What  has  been  the  effect  of  the  interstate  com- 
merce act  ? 

Mr.  Bliss.  It  has  equalized  rates.  The  railroads  are  better  con- 
ducted throughout  the  land. 

Senator  Gorman.  Is  that  so  with  respect  to  through  freight  from 
Chicago  and  other  western  points  to  Boston,  for  instance  ? 

Mr.  Bliss.  I  think  so.  Merchants  here  will  doubtless  be  able  to  tell 
you  more  definitely  than  I  can  what  the  effect  is  on  their  rates.  I 
think,  too,  it  has  tended  to  stop  personal  discrimination.  I  have  no 
doubt  discriminations  still  go  on  to  a  limited  extent  in  the  United 
States.  I  have  no  doubt  discriminations  are  made  by  Canadian  lines 
to-day. 

Senator  Gorman.  But  I  am  now  speaking  of  our  own  country.  So 
far  as  you  are  concerned  here  has  the  law  had  that  effect  ? 

Mr.  Bliss.  I  think  so. 

Senator  Gorman.  Therefore,  as  an  American  railroad  man,  you 
would  not  have  the  provisions  of  the  law  changed  ? 

Mr.  Bliss.  No,  sir;  but  I  would  have  them  enforced. 

The  Chairman.  Have  the  provisions  of  the  law  enforced  ? 

Mr.  Bliss.  Yes,  sir. 

The  Chairman.  That  is  what  we  are  trying  to  do  now. 


320  TEANSPORTATION    INTERESTS    OF 

Senator  Gorman.  Are  3011  of  the  opinion  that  any  additional  pro- 
visions should  be  added  to  the  present  law  to  make  it  more  rij,nd  ? 

Mr.  Bliss.  I  think  the  law  should  be  amended  so  as  to  embrace  this 
Canadian  business. 

Senator  Gorman.  I  mean  outside  of  that. 

Mr.  Bliss.  Well,  the  law  has  not  been  enforced  as  yet.  The  penal- 
ties of  the  law  have  not  been  enforced  in  but  one  cise,  and  I  am  not 
sure  that  they  were  enforced  in  that.  After  the  law  has  had  a  fair 
trial  it  will  be  time  enouj^h  to  amend  it. 

The  Chairman.  Do  you  think  the  amendments  which  were  lately 
put  in  the  bill  weie  opportune? 

]\Ir.  Bliss.  T  think  so;  but  they  are  like  all  other  amendments.  If 
your  law  is  dead  the  amendments  are  of  no  use. 

Senator  Gorman.  1  take  it  for  ;,'ran ted  you  have  complied  with  the 
law  pretty  },'enerally  as  to  tlu*  throu;,di  businrss  on  your  road. 

Mr,  Bliss.  Not  ''  fjenerally,"  but  absolutely. 

Senator  Gorman.  What  eftect  has  the  law  had  on  the  Canadian 
roads  ? 

Mr.  Bliss.  I  think  it  has  increased  their  business. 

Senator  (iORMAN.  To  what  extent  has  it  increased  tln'ir  business  ? 

Mr.  Bliss.  1  tiiink  it  liasdoulded  their  shipments  from  (Miica-^o. 

Senator  GoKMAN.  How  has  llu'  law  aftected  your  road  ;  has  y«»ur  ton- 
najje  fallen  oil"  or  increased  *. 

Mr.  Bliss.  The  tonna^^e  increases  naturally  every  year,  but  there 
has  been  no  phen'ouienal  inereas*'. 

Senator  Gorman.  Vou  think  the  Camnlian  roads  oujrht  to  be  subject 
to  the  same  re^iulations  [)re('isely  as  are  the  Auu*rican  roads  if  they  are 
permitted  to  d(>  business  in  this  country  f 

Mr.  liLiss.  Yes,  sir;  I  do. 

Senator  Gorman.  Suppose  such  an  arrangement  <*an  not  be  brought 
about,  what  wt)uld  be  your  remedy  f 

Mr.  Bliss.  I  would  not  let  thecals  pass  ofl"  the  Canadian  roads  into 
the  territory  of  the  Knited  States  except  on  payment  ot duties. 

The  Chairman.  Unless  the  Canadian  roads  are  subject  to  the  same 
regulation  as  the  American  roads,  is  that  your  i<lea  f 

Mr.  Bliss.  Yes. 

Senator  Bkaoan.  What  is  the  distance,  by  the  shortest  route  ou  the 
American  side,  l)etween  (Miicago  and  Boston  ? 

Mr.  Bliss.   I  think  it  is  1,(KM  luiles. 

Senator  Ueaoan.  What  is  the  <listance  by  the  Cana<lian  roads f 

Mr.  Bliss.  1  think  it  about  I'tO  mil«*s  more. 

Senator  Ukagan.  I  will  ask  you  a  question  which  we  all  understand, 
but  do  so  simply  for  the  juirpose  of  allowing  it  to  go  into  the  record. 
What  is  the  relative  amount  of  business  and  i)opulation  along  the  two 
lines  I 

Mr.  Bliss.  I  can  not  answer  that. 

Senator  Keagan.  Is  there  not  much  more  business  and  larger  popu- 
lation along  the  lines  in  the  United  States  than  along  the  Canadian 
lines? 

Mr.  Bliss,  Yes. 

Senator  Beagan.  Then,  considering  the  greater  length  of  tlie  line 
through  Canada  and  the  fact  that  they  have  to  cross  the  river  at  Detroit, 
the  sparseness  of  i)opulation,  and  the  suiall  amount  of  business  along 
the  line,  if  the  law  which  a|)plies  to  United  States  roads  could  be  ap- 
l>lied  to  the  Canadian  roads  would  it  not  so  increase  the  business  of  your 


THE  UNITED  STATES  AND  CANADA.  321 

road,  for  instance,  and  the  roads  on  the  American  side,  as  to  enable 
tbein  to  do  business  more  cheaplj'  than  they  now  do  ? 

Mr.  Bliss.  I  suppose,  Senator,  that  all  railway  managers  recognize 
the  fact  that  the  poor  lines  must  do  some  business ;  they  can  not  be  en- 
tirely dried  up.  Pooling  is  prohibited  under  the  law,'and  differential 
rates  have  taken  the  place  of  the  pool.  If  a  railway  is  found  entirely 
without  business  it  becomes  dangerous  both  to  the  other  roads  and  to 
the  shippers. 

Senator  Reagan.  My  question  was  whether,  considering  the  greater 
length  of  the  line  through  Canada,  the  crossing  of  the  river  at  Detroit,the 
sparseness  of  population  along  the  line,  and  the  small  amount  of  busi- 
ness, if  the  law  was  fairly  enforced  on  both  sides,  so  as  to  apply  to  both 
American  and  Canadian  roads,  and  each  one  honestly  obeyed  it — 
whether  you  can  not  carry  freight  to  and  from  Boston,  from  the  West, 
cheaper  than  you  now  do,  and  as  cheaply  as  the  Canadian  roads  can, 
and  cheaper  ? 

Mr.  Bliss.  Yes,  sir ;  cheaper  than  we  now  can. 

The  Chairman.  There  was  a  case  before  the  Interstate  Commerce 
Commission  some  time  ago  involving  the  question  of  relative  rates  as 
between  New  York  and  Boston,  was  there  not  ? 

Mr.  Bliss.  Yes,  there  was. 

The  Chairman.  What  was  that  founded  upon,  do  you  remember  ? 

Mr.  Bliss.  The  ground  of  complaint  was  that  the  rate  per  ton  per 
mile  from  the  West  to  Boston  was  greater  than  the  rate  i)er  ton  per 
mile  from  the  West  to  New  York. 

The  Chairman.  Who  made  the  complaint  ? 

Mr.  Bliss.  The  Chamber  of  Commerce,  I  think. 

The  Chairman.  What  was  the  decision  of  the  Commission? 

Mr.  Bliss.  A  decision  adverse  to  the  petitioners  was  rendered. 

STATEMENT  OF  CHARLES  F.  CHOATE. 

Mr.  Charles  F.  Choate,  president  of  the  Old  Colony  Railroad, 
api)eared. 

The  Chairman.  You  are  president  of  a  railroad,  I  bflieve. 

Mr.  Choate.  Yes,  sir;  I  am  president  of  the  Old  Colony  Railroad. 

The  Chairman,  How  long  have  you  been  president  of  that  road  ? 

Mr.  Choate.  For  ten  or  twelve  years. 

The  Chairman.  You  have  been  before  this  committee  on  a  former 
occasion,  I  believe,  and  as  you  are  familiar  with  the  purport  of  the  reso- 
lution of  the  Senate  of  the'^United  States  under  which  the  committee  is 
acting,  we  will  be  pleased  to  have  you  proceed  and  give  your  views 
upon  the  subject  generally. 

Mr.  Choate.  Mr.  Chairman,  I  am  president  of  a  local  road,  practi- 
cally. We  have  nearly  one-third  of  the  mileage  of  the  State  of  Massa- 
chusetts, and  we  have  an  exclusive  mileage.  We  have  the  whole  south- 
eastern part  of  the  State. 

The  Chairman.  You  say  you  have  no  competition  ? 

Mr.  Choate.  Yes,  sir;  no  competition.  Our  road  is  managed  as  a 
local  road.  We  have  a  connection  to  New  York  by  boat,  and  in  that 
way  we  make  a  Boston  rate  over  the  greater  portion  of  the  Old  Colony 
Railroad. 

WHAT  the   CANADIAN  ROADS  HAVE  DONE. 

The  only  question  in  which  I  feel  any  particular  interest  in  this  in- 
vestigation  is  the  proposition  to  cut  off  the  Canadian  roads  entirely 

6543 21 


322  TRANSPORTATION    INTERESTS    OF 

from  doing  business  in  the  United  States.  I  am  clearly  of  the  opinion 
that  the  Canadian  lines  in  the  i)ast  have  exerted  a  very  important  part 
with  respect  to  all  business  to  and  from  New  Enjiland.  It  has  simply 
been  through  the  competition  of  the  Canadian  lines  that  rates  to  and 
from  New  England  have  been  reduced.  The  Canadian  roads  have  made 
manufacturing  more  jjossible  and  more  prolitablo  in  New  England  than 
it  ever  was  before.  All  the  heavy  freight  brought  here  is  brought  at 
much  lower  rates  since  the  Canadian  roads  have  entered  into  this  busi- 
ness, and  the  products  of  New  England  have  been  carried  cheaper  than 
they  ever  were. 

The  best  statement  I  have  seen  in  regard  to  the  eflectof  the  competi- 
tion of  the  Canadian  roads  is  one  made  by  Mr.  Adams,  made  when  he 
was  railroad  commissioner,  and  it  is  as  true  now  as  it  was  then.  I  read 
from  the  report  made  in  1871.  The  Boston  and  Lowell  Railroad  was 
the  terminus  of  that  line,  and  they  formed  a  connection  with  it. 

The  CIIAIRMA^'.  Of  what  line  ? 

Mr.  CiiuATE.  Of  what  was  ealled  then  the  Northern  Lino,  and  it  has 
continued  to  be  the  Northern  Line  since  then. 

Senator  Gorman.  You  mean  the  (J rand  Truidv  Line. 

Mr.  CiiOATE.  Yes,  sir;  the  Grand  Trunk  Line. 

Mr.  Adams  states  it  in  this  way,  and  I  think  he  states  it  very  well: 

Next  to  the  Boston  and  All)iiny,  the  Boston  and  Lowell  is  the  Massachnsetts  cori»o- 
ration  most  actively  (!oncern<'il  in  the  lar;je  rnilioad  roniliinations.  The  jtosition  of 
and  the  resnlts  aceoniidislu'd  hy  thlH  corporation  are,  tin- coniniisisioners  lulieve,  with- 
ont  a  i)arallfl.  0\vniii;,Mn  all  lint -Jd  inilesof  road,  operating;  alto^jetlier  l>nt  12,')  niihs, 
and  repiesentinfi  hnt  j;'i,(K)l>,(X)0  of  capital,  this  apparently  in»if;nifuant  eonii)any, 
through  tin'  energy  and  ahility  of  its  nuinagenn-nt,  ha«  of  late  exercisi-d  a  niost  i)er- 
ceptihle  iutlnenee,  on  the  whole  railroa<l  system  of  the  country,  inclnding  tlie  lar^jest 
and  most  iiowerfnl  of  its  coinliinalions.  Tlie  corporation  has  two  direct  and  close 
connections  with  the  West,  one  by  way  of  t)gdensl>nrgii  and  the  lakes  and  tlio  other 
by  way  of  Montreal,  the  Dominion,  and  Detroit.  Through  these  it  has,  dnring  tlio 
hist  year,  kept  np  a  direct  competition  with  the  more  sonthern  rontes  between  Chicago 
and  the  JOast,  and,  in  spite  <if  the  greater  distance  traversed,  being  the  equivalent  of 
15  per  cent,  of  the  whole,  this  competition  has  been  bo  effective  tliat  it  has  kept  tlio 
rates  to  and  from  Boston  and  the  West  always  as  favorable,  and  oft«'n  more  so,  than 
those  to  and  from  New  York.  This  combination  mainly  operates  for  thnnigh  business 
throngh  the  '' National  Car  Company,"  a  Veriii<mt  eorjxiration,  which  furnishes  to 
the  several  roads  iVil)  cars  with  a<ljiistjible  axles.  During  the  ton  months  ending 
October  :n,  l:>70,  U),^!,")  tons  of  out  ward  and  liJjMKi  tons  of  inward  freiglit  have  been 
moved  in  those  cars  at  rates  sometimes  as  low  as  (!  mills,  but  generally  varying  at 
from  1  to  2  cents  per  mile,  while  to  and  from  Ogdensbiirgh  large  amounts  have  been 
moved  at  S!2.f)0  \wr  ton,  or  6  mills  per  mile.  Meanwhile  this  combination,  so  important 
an  element  in  the  jtrosperity  of  the  Commonwealth,  though  it  controls  40fl  miles  of 
road  to  Ogdeu.->biirgh  and  1,17)0  to  Chicago,  though  it  hiis  more  than  l,00tt  adiiilional 
miles  of  road  contributory  to  it  or  fed  by  it,  though  it  emjiloys  some  G.OCH)  freight 
cars  in  doing  its  work  of  transportation  in  New  England,  yet  has  only  (>8  miles  of  it 
within  the  jurisdiction  or  subject  to  the  laws  of  Miissachusetts,  not  oue-tweutieth 
part  of  the  whole. 

The  fact  is  that  this  Canadian  line  is  naturally  a  competing  line.  It 
has  all  the  elements  of  a  comi)eting  line,  aii<l  1  think  it  always  will  have. 
It  is  a  longer  line,  and  that  is  one  evidence  that  it  c;in  not  get  business 
unless  it  can  compete.     It  is  not  com])elled  to  ])ay  <lividends. 

The  Chairman.  Who  is  not  compelled  to  pay  dividends? 

Mr.  Choate.  The  Grand  Trunk  and  the  Veriuont  Central. 

The  Chairman.  How  is  that  ? 

Mr.  Choate.  They  never  have  paid  divi<lends.  1  do  not  know  why. 
This  side  of  Wbite  River  Junction  has  been  a  dividend-paying  road, 
and  they  have  taken  a  part  of  this  business,  but  it  lias  been  done  at  a 
very  low  rate. 

The  Chairman.  Y^ou  meau  that  the  Government  is  supporting  tho 


THE    UNITED    STATES   AND  ■  CANADA.  323 

road— that  it  is  a  military  or  political  route  rather  than  a  commercial 
oue! 

Mr.  Choate.  I  do  not  mean  that.  The  Vermont  Central  has  been 
through  all  sorts  of  vicissitudes.  It  has  been  broken  down  two  or  three 
times  and  then  reorganized,  and  they  have  never  paid  auy  dividends. 
The  Grand  Trunk  has  never  paid  any  dividends. 

The  Chairman.  What  is  the  fact,  if  you  know,  as  to  the  aid  received 
by  the  Canadian  roads  from  the  Canadian  Government  ? 

Mr.  Choate.  The  Canadian  Pacific  and  the  Grand  Trunk  have  both 
been  subsidized,  certainly. 

The  Chairman.  The  purport  of  the  report  of  Mr.  Adams,  from  which 
you  have  just  read,  is  to  the  effect  that  the  Canadian  roads  have  been 
valuable  aids  to  business  in  this  section  of  the  country  in  reducing  rates 
to  manufacturers,  etc. 

Mr.  Choate.  There  is  no  doubt  about  it. 

The  Chairman.  Of  course  that  is  to  the  advantage  of  the  business 
people  of  Boston  and  of  any  other  locality  that  the  Canadian  roads 
touch.  Do  you  think  that  that  competition  should  be  allowed  to  go  on 
unrestrained  by  any  law  to  which  our  own  roads  are  subject! 

Mr.  Choate.  That  is  a  question  I  do  not  know  whether  I  can  answer 
or  not.  I  do  not  believe  you  can  restrain  them.  No  law  has  ever  re- 
strained them  heretofore. 

The  Chairman.  Do  you  think  that  they  ought  to  be  restrained'? 

Mr.  Choate.  I  think  that  the  American  roads  should  be  allowed  to 
compete  on  equal  terms. 

The  Chairman.  The  general  manager  of  the  Grand  Trunk  testified 
that  in  all  American  business,  business  which  touches  the  United  States 
in  any  way,  they  regard  themselves  as  subject  to  the  interstate  com- 
merce law,  and  act  accordingly.     If  that  is  true,  is  that  sufficient  ! 

Mr.  Choate.  I  understand  it  was  so  stated  before  your  committee. 

The  Chairman.  Now,  as  a  matter  of  fact,  with  the  sparsely  settled 
territory  through  which  the  Canadian  Pacific  runs,  and  the  Grand 
Trunk,  too,  in  part,  do  you  think  they  can  recoup  very  much  on  their 
local  business  without  breaking  down  the  business  in  their  own  country  I 

Mr.  Choate.  I  should  not  suppose  they  could. 

The  Chairman.  I  believe  they  say  that  practically  they  do  not  re- 
coup at  all.  Now,  if  they  do  not  recoup,  and  are  obeying  the  law,  they 
are  giving  the  people  of  this  section  and  other  sections  cheaper  rates 
of  freight,  and  are  on  the  same  basis,  so  far  as  regulations  are  concerned, 
as  our  roads  are ;  and  you  can  not  ask  anything  more  than  that,  can 
you? 

Mr.  Choate.  Well,  restrictions  are,  to  a  certain  extent,  placed  uj)on 
the  American  roads,  and  if  you  are  going  to  endeavor  to  make  a  fair 
field  between  the  two  the  restrictions  ought  to  be  applied  equally,  if  it 
can  be  done.     How  it  can  be  done  I  can  not  say. 

The  Chairman.  Yon  have  not  undertaken  to  work  out  that  problem  1 

Mr.  Choate.  No,  sir. 

The  Chairman.  I  suppose  it  could  not  be  done  by  ordinary  legis- 
lation. 

Mr.  Choate.  I  think  not. 

The  Chairman.  Could  it  be  done,  in  your  judgment,  by  treaty  stip- 
ulations between  the  two  Governments? 

Mr.  Choate.  If  the  Canadian  Government  applied  the  same  regu- 
lations to  their  roads  as  the  American  Congress  does  to  our  roads,  1 
think  that  would  settle  it. 


•324  TRANSPORTATION    INTERESTS    OF 

The  Chairman.  There  is  do  reason  why  the  two  Governineuts  could 
not  make  such  an  arrangement,  if  they  were  disposed  to  do  so,  is  there ! 

OPERATIONS  OF  THE  OLD  COLONY  ROAD. 

Mr.  Choate.  I  think  not. 

The  Chairman.  Your  own  road  is  practically  a  local  road.  I  have 
forgotten  whether  you  stated  your  road  had  a  western  connection. 

Mr.  Choate.  We  have  a  western  connt'ction  with  all  the  roads,  but 
we  do  not  do  a  great  amount  of  western  business.  The  wh(»U»  sojith- 
eastern  part  of  Massachusetts  is  dependent  upon  us.  We  run  through 
a  very  large  manufacturing  district,  and  we  (;arry  a  gn-at  tlcal  of  cot- 
ton.    I  8up})ose  we  are  the  largest  cotton  carrier  in  the  United  States. 

The  Chairman.  From  wlierc  does  the  cotton  come  ? 

Mr.  Choate.  From  all  over  the  South  ;  it  comes  in  all  sorts  of  ways. 
We  connect  at  Lowell  with  the  Xorthrrn  line,  and  some  cotton  is  brought 
that  way,  via  the  Caiuulian  liiu'.  We  connect  at  Fitchburgh  with  tlie 
Hoosac  Tunnel  line,  at  Framingham  with  the  Boston  and  Albany,  at 
Walpole  with  the  New  York  and  New  England,  and  we  have  our  own 
boat  line  to  New  York,  and  we  can  connect  with  the  Pennsylvania  Rail- 
road. 

The  Chairman.  Do  you  receive  freight  from  these  roads  you  have 
mentioned  on  through  bills  «»f  lading? 

Mr.  Choate.  Wc  have  a  thmugli  bill  of  lading.  We  have  a  specific 
car-load  rate  upon  cotton  from  all  these  jwints. 

The  Chairman.  So  that  your  local  rate  is  not  the  same  to  the  people 
all  along  the  line  as  you  give  to  the  shipment  that  goes  south  and  w«'st? 

Mr.  Choate.  The  rat<'S  that  we  get  on  tin*  through  business  arc  gen- 
erally lower  than  the  local  rates,  but  not  the  same  dispro|K)rtion  as 
there  is  on  roads  generally.  We  have  an  arrangement  with  the  Penn- 
sylvania Railroad  by  which  they  deliver  cotton  at  all  points  at  IJoston 
rates,  and  the  other  roads  have  all  conformed  to  it,  I  think,  an<l  pay  us 
our  local  charge. 

The  Chairman.  You  have  very  little  occasion,  except  in  regard  to 
this  through  business  of  cotton  antl  grain  and  beef,  etc.,  of  i»aying  anj' 
attention  to  the  interstate  ('omuM-rce  a<*t,  have  you  ? 

Mr.  Choate.  Very  little.  1  suppose  oui-  business  is  less  aflFected  by 
the  interstate  commerce  act  than  tliat  of  any  cori)oration  in  the  rnite<l 
States. 

The  Chairman.  1  sui)])OvSed  that  was  tnu'  from  my  knowledge  of  the 
road.  So  that  you  have  lu)  special  suggestions  to  make  in  reference  to 
the  interstate  commerce  act,  or  have  you  t 

Mr.  Choate.  No,  sir;  1  have  not. ' 

The  Chairman.  While  you  admit  and  believe  that  these  Canadian 
roads,  in  con)petition  with  the  American  roads,  are  an  a<lvantage  to 
your  people  in  respect  to  bringing  your  products  here  at  cheaper  rates, 
yet  you  still  believe,  do  you,  or  do  you  not,  that  they  ought  to  be  regu- 
lated in  the  same  way  as  are  the  AnuTican  roads,  if  it  can  be  done? 

Mr.  Choate.  1  think  so.  I  have  no  doubt  the  business  of  the  Cana- 
dian roads  to  and  from  New  England  has  been  very  largely  increased 
since  the  i)as8age  of  the  interstate  commerce  law. 

The  Chairman.  Would  it  not  have  been  increased  whether  tiie  law 
was  passed  or  not  ? 

31r.  Choate.  1  do  not  think  it  would.  As  a  rule,  I  think,  in  respect 
of  the  greater  part  of  the  business,  the  Canadian  roa«ls  were  at  a  disad- 
vantage prior  to  the  passage  of  the  interstate  law,  and  could  oidy  do 
.business  at  a  lower  rate. 


THE   UNITED   STATES   AND   CANADA.  325 

INCREASE   OF  TRAFFIC   OVER  CANADIAN  ROADS. 

Senator  Gorman.  When  you  say  the  business  of  the  Canadian  roads 
bas  increased  very  much  since  the  passage  of  the  law,  do  you  mean  that 
they  have  got  an  undue  proportion  of  the  tonnage? 

Mr.  Choate.  I  have  no  doubt  of  it— in  certain  kinds  of  business.  I 
was  informed  the  other  day  that  all  the  business  of  the  Kew  England 
mills  to  and  from  China  is  carried  over  the  Canadian  roads. 

The  Chairman.  What  kind  of  trafiic  is  that? 

Mr.  Choate.  Cotton  goods,  and  so  on. 

The  Chairman.  From  New  England  mills? 

Mr.  Choate.  Yes,  sir ;  from  New  England  mills.  The  Canadian  Pa- 
cific run  a  car  into  the  mill-yard,  where  it  is  loaded  and  sent  to  the 
shipping  point,  and  then  the  goods  are  taken  by  English  steamers  to 
Victoria  or  Puget  Sound,  and  at  Victoria  or  Puget  Sound  they  are 
taken  by  English  steamers  to  China.     That  is  new  business. 

The  Chairman.  Would  that  be  so,  in  your  judgment,  if  there  were  no 
interstate  commerce  law  at  all  ? 

Mr.  Choate.  I  think  that  trafiic  would  go  on  other  roads.  I  think 
it  would  be  taken  by  American  roads. 

The  Chairman.  Why  should  it  be  taken  by  American  roads  if  there 
were  no  interstate  commerce  law  ?  Why  can  not  the  American  roads 
take  it  now  just  as  cheaply  as  the  Canadian  roads? 

Mr.  Choate.  They  can  not  afford  to  take  it.  All  their  intermediate 
business  is  affected  if  they  take  it,  and  of  course  they  can  not  do  it. 

The  Chairman.  The  interstate  commerce  law  only  provides  that  a 
road  shall  not  charge  more  for  a  short  haul  than  for  a  long  haul. 

Mr.  Choate.  They  would  probably  have  to  charge  less  for  the  long 
haul  than  for  the  short  haul  on  this  business,  or  else  sacrifice  the  whole 
intermediate  business  of  the  road. 

The  Chairman.  I  do  not  see  why  they  would  be  compelled  to  do  that. 
They  take  a  shipment,  for  instance,  from  a  New  England  mill  to  Puget 
Sound.  The  only  regulation  of  the  interstate  commerce  act  would  be 
that  they  should  not  take  a  shipment  from  any  place  between  these  two 
points  at  a  greater  rate  than  the  aggregate  rate  for  the  entire  distance. 
How  can  that  affect  the  business  of  the  American  roads? 

Mr.  Choate.  I  suppose  it  does,  or  else  they  would  take  the  business, 
not  to  Puget  Sound,  perhaps,  but  to  some  point  from  which  shipments 
could  be  made  to  China. 

The  Chairman.  I  am  unable  to  see,  myself,  how  these  long  through 
shipments  from  one  side  of  the  country  to  the  other  can  be  affected  ma- 
terially by  what  we  call  the  long  and  short-haul  clause  of  the  act.  Say 
a  shipment  is  made  from  Boston.  Suppose  you  go  500  milws  and  then 
make  a  shipment  from  there  to  San  Francisco.  It  would  certainly  be 
unreasonable  to  charge  more  from  the  poiut  where  you  stopped,  500 
miles  from  here,  to  San  Francisco  than  you  charge  from  here,  and  the 
same  rate  from  that  point  to  San  Francisco  as  from  here  certainly  ought 
not  to  interfere  with  the  American  roads. 

Mr.  Choate.  I  do  not  think  1  can  tell  you  why,  but  it  does. 

The  Chairman.  It  must  be  done,  if  it  is  done  at  all,  by  the  Canadian 
roads  either  charging  less  than  it  costs,  or  else  the  American  roads  want 
more  than  they  ought  to  have. 

Mr.  Choate.  I  do  not  think  that  would  follow,  Mr.  Chairman.  If  tlie 
Canadian  road  could  not  get  the  business  in  any  other  way  it  would  do 
it  for  a  very  small  profit.  The  American  road  would  not  be  wrling  to 
take  it  at  such  a  low  price.    Now,  if  the  Canadian  road  can  take  that 


326  TRANSPOKTATION    INTERESTS    OF 

business  and  can  get  a  little  profit  out  of  it,  of  tourse  they  tliiiik  it  is 
better  for  tliem  to  do  it. 

The  Chairman.  As  a  railroad  man,  which  you  are,  will  you  please 
explain  how  t\\e  competition  of  theC'ana<lian  roads  affects  the  American 
roads  under  tin-  interstate  commerce  law  f 

IVIr.  CiioATE.  I  do  not  know  how  it  is  done,  but  presume  it  is  done 
in  this  way,  that  tiie  Canadian  roads  do  business  at  cheaper  rates  than 
the  American  roads,  because  the  law  docs  not  afl'cct  the  iutennediate 
business  of  the  Canadian  roads  as  it  does  that  of  the  American  roads. 

The  Chairman.  How  does  it  art'ect  the  through  business  on  the 
American  roads  f 

Mr.  CiioATE.  I  suppose  the  rates  at  which  the  American  roa<l  wt)uld 
have  to  take  the  business  would  afVect  their  intermediate  busiin'ss. 

The  Chairman.  What  woidd  i)robabIy  he  the  cost  of  shii)ping  a  car- 
load of  cotton  goods  from  here  to  San  I'rancisco  ? 

IMr,  Choate  I  suppose  it  would  cost  as  low  as  a  half  a  cent  a  ton 
per  mile,  in  one  continuous  shipnuMit. 

The  Chairman.  What  would  be  the  aggregate  of  that  on  a  carload 
from  Boston  to  San  Francisco? 

Mr.  Choate.  One  hundn-d  and  fifty  dollars. 

The  Chairman.  Sujjpose  you  took  a  car  load  from  any  other  point 
half  way  between  Boston  and  San  I'rajicisco,  ^jf !.")()  woidd  Im'  all  you 
woidd  want — all  you  woidd  ])robably  charge,  or  more  ;  or  if  you  starte*! 
half  way  between  Boston  and  San  Francisco  and  haided  a  car  loa<l  of 
go<»ds  two  thirds  of  the  way  to  San  I'^rancisco  you  woidd  not  want  more 
than  >*15(>,  probaldy;  so  that  practically  what  I  was  trying  to  get  you 
to  explain  is  how  the  law  actually  affects  the  business  of  the  American 
roads. 

Mr.  Choate.  You  have  the  Grand  Trunk  at  one  end  and  the  Cana- 
<lian  Pacific  at  the  other.  Here  there  are  a  half  a  do/en  people  to  be 
consulted  about  the  rates  to  be  agreed  upon.  Of  course  the  local  ratCH 
have  got  to  be  considered.  Haifa  dozen  freiglit  agents  have  to  be  con- 
sulted, and  all  that.     That  is  one  reason,  probably. 

The  Chairman.  Who  owns  the  Central  Vermont  and  the  Maine 
Central  Kailway  f 

Mr.  CiioATE.  The  Elaine  Central  Railroad  is  very  largely  owimmI  by 
the  Boston  and  Maine.  The  Boston  and  Maine  is  a  local  road,  and  is 
owned  in  Massachusetts  and  New  Hampshire. 

The  Chairman.  What  1  desire  to  get  at  is,  what  the  fa<'t  is  with  ref- 
erence to  American  ownership  of  these  roads  that  conne(!t  with  tin'  Ca- 
nadian roads f 

Mr.  Choate.  Practically  there  is  no  foreign  ownership.  Tln-re  may 
be  a  little  smattering  of  foreign  ownershij),  hut  very  little.  Those  roads 
you  mentioned  are  practically  all  owned  by  parties  in  the  Unite<l  States. 

The  Chairman.  Is  there  any  Amerijan  capital  invested  in  any  of 
these  Canadian  roads? 

Mr.  Choate.  I  should  say  not  to  any  extent. 

The  Chairman.  What  do  you  know  about  the  subsidies  given  to 
these  Canadian  roads! 

Mr.  Choate.  1  do  not  know  anything  about  them. 

The  Chairman.  What  about  the  steam-shii)  lines  at  Halifax  or  iu 
that  neighborhood  f 

.■\Ir.  (iHOATE.  I  know  nothing  about  that. 

The  Chairman.  What  is  the  differential  given  now  by  the  American 
lines  to  the  Canadian  line? 

Mr.  Choate.  That  I  do  not  know. 


THE   UNITED   STATES   AND   CANADA.  327 

EFFECT   OF  EXCLUDING  CANADIAN  ROADS. 

Senator  Blair.  Do  you  see  any  remedy  for  the  American  roads  un- 
less they  are  to  get  higher  rates  for  what  they  do  ? 

Mr.  Choate.  I  do  not  know  that  there  is  any  remedy. 

Senator  Blair.  It  seems  to  your  mind,  then,  that  the  American  roads 
conhl  get  no  benefit  unless  they  got  more  income.  Is  there  any  doubt 
that  if  that  income  is  paid  it  must  be  paid  by  the  people? 

Mr.  Choate.  Of  course,  all  that  the  roads  get  comes  out  of  the  peo- 
ple and  out  of  the  business.  I  feel  then  that  the  country  we  represent, 
where  we  have  a  large  local  business,  is  benefited  by  what  has  resulted 
from  the  competition  of  the  Canadian  road,  and  in  that  way  I  have  the 
feeling,  not  as  a  railroad  man  but  as  to  the  whole  business'of  that  part 
of  the  State,  that  there  is  a  benefit  conferred  by  keeping  these  roads 
open.  I  have  no  doubt  that  the  portion  of  the  State  north  of  Boston 
is  benefited  to  a  much  greater  extent  than  that  part  of  the  State  south 
of  Boston.  For  instance,  Lowell  gets  the  Boston  rate  almost  entirely 
because  it  is  on  the  Northern  Line  which  goes  from  Boston  to  Lowell. 

Senator  Blair.  The  question  has  been  put  to  several  witnesses  by 
myself  and  others,  whether  there  would  be  any  other  way  of  subjecting 
the  Canadian  roads  to  the  operation  of  the  American  law  except  by  im- 
posing the  condition  that  they  shall  do  no  business  for  the  American 
people  unless  they  conform  to  that  law.  Assuming  then  that  we  make 
that  a  condition  and  they  do  not  conform  to  it,  what  would  be  the 
effect  of  the  exclusion  of  the  Canadian  railroad  element  from  American 
affairs — the  effect  upon  our  portion  of  the  country  especially. 

Mr.  Choate.  I  think  the  exclusion  of  the  Canadian-lines  from  New 
England  would  be  disastrous  to  New  England.  The  probability  is  that 
it  would  lead  to  an  increase  in  railroad  rates  to  and  from  the  West  and 
South  on  large  classes  of  goods.  It  would  increase  the  rates  on  grain 
and  on  oats  and  on  cotton  and  on  rough,  heavy  products  generally. 

Senator  Blair.  That,  then,  would  be  felt  by  the  manufacturers  of 
New  England  as  well  as  the  rural  j)opulation! 

Mr.  Choate.  Yes,  sir. 

Senator  Blair.  Is  there  any  class  of  business  that  would  not  be 
likely  to  be  prostrated  by  it  I 

Mr.  Choate.  I  do  not  think  prostrated,  but  I  think  all  would  be 
affected. 

Senator  Blair.  Seriously  ? 

Mr.  Choate.  I  think  it  is  important  to  New  England  to  keep  that 
avenue  open. 

Senator  Blair.  You  spoke  of  the  increase  of  Canadian  traffic  within 
the  period  covered  by  the  interstate  commerce  law — some  years  now. 
Is  it  not  a  fact  that  during  that  period  of  time  the  Grand  Trunk  has 
made  its  first  connection  with  Chicago,  and  during  the  same  period  of 
time  the  Canadian  Pacific  was  completed,  so  that  practically  these 
causes  are  wholly  independent  of  the  interstate  commerce  law  and  have 
during  these  two  years  been  brought  into  operation? 

Mr.  Choate.  The  Grand  Trunk  had  a  connection  to  Chicago,  but  I 
do  not  know  how  it  made  it  before.  Western  products  were  brought 
over  the  Grand  Trunk  for  a  great  many  years  coming  by  way  of  the 
Canada  Southern,  I  suppose,  and  Detroit. 

Senator  Blair.  And  the  connection  between  St.  Paul  via  the  Sault 
Ste.  Marie  has  been  made  within  this  period,  has  it  not  f 

Mr.  Choate.  That  line  always  had  the  business  and  we  always  got 
the  benefit  of  it  for  nothing.    I  have  had  some  business  there,  and  I 


328  TRANSPORTATION  INTERESTS  OP 

know  it  has  been  done  there  for  some  years  almost  without  profit.  Of 
course  the  local  business  of  these  roads  is  important  for  the  line  to 
maintain.  The  management  of  through  business  was  left  practically 
to  the  Central  Vermont  and  was  done  at  extremely  low  rates. 

Senator  Blair.  Would  it  not  be  necessary  in  addition  to  the  enforce- 
ment of  the  interstate  commerce  act  in  Canada,  to  comi)el  the  Central 
Vermont  to  charge  a  reasonable  protit  upon  the  capital  invested  in  roads 
that  do  business  for  less  than  what  would  be  a  fair  income  upon  that 
capital  ? 

Mr.  Choate.  I  do  not  know  that  that  would  be  at  all  necessary. 

Senator  Blair.  Would  you  not  be  obliged  to  increase  the  charges  on 
the  Central  Vermont  f 

Mr.  Choate.  That  is,  to  make  it  pay  dividends  on  its  cost,  do  you 
mean"? 

Senator  Blair.  Would  you  not  be  obliged  to  compel  it  in  some  way 
to  charge  more  to  the  people,  just  as  others  propose  to  make  the  Cana- 
dian roads  charge  m«)re  to  the  people,  in  order  to  afford  any  relief  to 
those  who  compete  with  them  f 

Mr.  Choate.  I  think  not. 

Senator  Blair.  What  is  the  object  of  imposing  the  conditions  of  the 
interstate  commerce  law  ui)on  Canadian  roads  if  it  be  not  to  increase 
the  charges  of  those  roads  ? 

Mr.  Choate.  The  sense  of  justice.  If  you  impose  such  conditions  un 
the  American  roads  you  ought  to  do  likewise  with  respect  to  the  Cana- 
dian roads. 

Senator  Blair.  After  all,  do  you  think  the  railroads  of  the  United 
States  are  making  this  outcry  against  Canadian  competition  in  order 
to  see  justice  administered,  or  that  they  may  have  an  opportunity 
to  compete  and  ge*^  more  money  out  of  the  business? 

Mr.  Choate.  1  have  not  heard  nuuh  outcry  about  this  matter.  The 
thing  has  not  been  discussed  mucli  here  among  the  railroads  or  the 
people  generally  until  the  question  was  raised,  whether  you  proposed 
to  shut  up  the  Canadian  roads. 

Senator  Blair.  Have  you  heard  any  other  reason  for  shutting  them 
up,  except  that  they  charge  less  than  the  American  roads  T 

Mr.  Choate.  That  they  are  taking  business  from  the  American  lines 
under  conditions  im])osed  by  the  law  which  prevent  the  American  roads 
from  competing.  That  is,  as  I  understand  it,  the  argument  which  is 
made. 

Senator  HiscocK.  You  say  that  a  sense  of  justice  would  dictate  that 
our  own  trunk  lines  on  our  own  soil  should  haveecjual  advantages  with 
the  trunk  lines  on  foreign  soil  in  carrying  American  i)roi)erty.  In  other 
words,  that  we  should  not,  by  legislation,  discriminate  against  our  own 
domestic  corporations? 

Mr.  Choate.  1  think  so. 

new  ENGLAND  AND  THE  INTERSTATE  COMMERCE  LAW. 

Senator  IIiscocK.  And  of  course  as  there  is  always  a  struggle  on  the 
part  of  every  mercantile  and  manufacturing  community  to  get  the 
cheapest  rates  it  can,  would  not  New  England  be  better  satisfied  to 
bring  the  Canadian  trunk  lines  under  the  operations  of  the  inter- 
state commerce  law  than  to  strike  down  the  interstate  commerce  law  as 
it  applies  to  all  other  corporations — I  mean  to  American  corporations  f 
Su])posing  she  should  see  fit  to  abrogate  the  whole  system— the  whole 
law — or  else  bring  a  foreign  corporation  under  it.  Has  that  cpiestioii 
been  discussed  by  the  people  of  New  England? 


THE   UNITED   STATES   AND   CANADA.  329 

Mr.  Choate.  My  impression  is  that  the  general  feeling  in  New  Eu^^- 
land  IS  against  the  interstate  commerce  law.  It  has  been  of  no  ad- 
vantage to  New  England ;  or,  perhaps,  to  anybody  else. 

Senator  HiscocK.  If  New  England,  then,  could  have  her  choice,  she 
would  repeal  the  law  ? 

Mr.  Choate.  I  am  inclined  to  think  so.  If  1  recollect  aright,  New 
England  fought  against  the  law. 

The  Chairman.  Some  of  New  England  ;  not  all  of  it. 

Mr.  Choate.  I  think  ail  of  New  England  in  the  Senate  practically 
voted  against  the  law  ;  I  think  all  except  Senator  Edmuuds. 

Senator  Hiscock.  So  the  remedy  with  which  you  propose  to  correct 
this  evil,  if  an  evil  it  is,  is  to  repeal  the  interstate  commerce  law  ? 

Mr.  Choate.  I  do  not  know  that  1  recommend  tbat.  if  tliey  want 
to,  perhaps  it  is  well  enough  to  try  it.  I  do  not  believe  in  any  siu-h  leg- 
islation. I  think  the  only  good  effect  the  law  has  had  was  to  stop  the 
over  building  of  railroads. 

The  Chairman.  You  think  that  was  a  good  thing  to  do  I 

Mr.  Choate.  1  think  that  was  a  good  thing  to  do. 

Senator  Harris.  As  a  railroad  man,  have  you  any  doubt  if  we  should 
pass  some  act  requiring  the  Canadian  roads  to  conform  strictly  to  the 
provisions  of  the  interstate  commerce  act,  or  pay  duty  upon  every  car 
from  Canada  that  entered  the  United  States,  that  they  would  subject 
themselves  to  the  provisions  of  the  act  and  observe  it  ? 

Mr.  Choate.  I  think  they  would  agree  to;  1  do  not  believe  they 
would  observe  it ;  they  might  just  as  well,  so  far  as  New  England  busi- 
ness is  concerned,  give  up  the  business.  If  they  are  to  observe  all  its 
conditions  I  do  not  believe  they  could  do  any  business. 

Senator  Harris.  Senator  Gorman  suggests,  why  could  they  not  do 
business  ? 

Mr.  Choate.  They  are  at  a  disadvantage.  They  have  300  miles  more 
distance  to  traverse;  that  is,  taking  it  to  Boston.  The  fact  is,  tbat  as 
a  competing  road  it  is  of  value.  If  it  is  to  compete  on  equal  terms,  it 
practically  would  have  to  give  up  the  business. 

Senator  Harris.  By  reason  of  its  longer  line,  then,  it  could  do  no 
business  if  it  should  subject  itself  to  the  same  legislation  as  we  subject 
our  roads  to? 

Mr.  Choate.  I  should  think  so. 

Senator  Harris.  If  we  enforce  the  provisions  of  the  act  upon  our 
own  carriers,  do  you  not  think  justice  demands  that  we  should  compel 
the  Canadian  roads,  in  what  we  can,  to  conform  to  precisely  the  same 
regulatiaus  ? 

Mr.  Choate.  I  think,  in  answer  to  the  Chairman,  I  stated  that  I 
thought  justice  demanded  that  the  same  regulations  should  be  applied 
to  both  systems  of  roads.  If  you  regulate  one,  you  ought  to  regulate 
the  other. 

Senator  Harris.  I  understand  you  to  say  that  you  think  New  Eng- 
land, as  a  section,  was  opposed  to  the  interstate  commerce  act,  and  you 
favored  its  repeal  f 

Mr.  Choate.  I  think  the  general  feeling  in  New  England  is  that  there 
has  been  no  benefit,  in  New  England,  derived  from  it. 

Senator  Harris.  What  is  your  own  personal  opinion  as  to  the  effect 
of  the  regulations  imposed  by  the  interstate  commerce  act  upon  the 
business  of  the  carrier  and  the  people  generally  ? 

Mr.  Choate.  I  have  been  unable  to  see  any  benefit  to  anybody  from 
it.  I  will  say  this,  the  practical  requirements  of  the  interstate  com- 
merce act  have  been  almost  universally  observed  in  New  England.    I 


330  TRANSPORTATION    INTERESTS    OF 

do  not  think  the  jjiohibition  of  discrimination  has  been  evaded.  1  do 
not  think  we  discriminate  here  in  New  England,  and  never  did.  That 
is,  there  was  no  individual  discrimination. 

The  Chairman.  Before  the  passage  of  the  act? 

Mr.  Ghoate.  Before  the  act  was  passed.  I  can  not  conceive  why  there 
should  be.  What  object  has  a  railroad  man  in  discriminating  between 
individuals,  except  it  may  be  to  some  extent  in  passes,  which  is  rather 
an  incident  of  the  law  than  an  actual  part  of  it.  The  ruling  has  been 
and  the  railroad  men  all  agree  that  the  interstate  commerce  law  pro- 
hibits the  issuance  of  passes.  At  any  rat**,  they  were  all  ready  to  ac- 
cept that  as  a  result  of  the  law,  but  apart  Irom  that  I  think  there  was 
no  discrimination  here  in  New  Hngland. 

As  to  the  long  and  short  haul  clause,  we  have  had  a  State  law  rela- 
tive to  that  which  has  been  in  force  practically  for  souje  time.  The 
only  point  that  might  have  bern  atfected  was  tliat  in  relation  to  pool- 
ing. There  had  been  some  i)ooliiig  here  in  New  England,  and  there  I 
think  the  law  makes  a  great  nustake,  because  I  think  regulated  pools 
do  more  for  the  people  and  the  railroads  than  anything  else. 

Senator  Harris.  Then  I  understand  you  as  saying  that  the  New 
England  carriers  were  observing  the  prinei[de  upon  which  the  interstate 
commerce  act  is  based  prior  to  the  i)assage  of  the  Jict. 

Mr.  Choate.  I  think  practically  they  were. 

Senator  Harris.  Then  if  New  England  was  conforming  to  the  same 
principles  and  the  same  regulations  before  the  ]>assage  of  the  act  a,s  now, 
why  should  they  oppose  an  act  imposing  exactly  the  same  iides  through- 
out the  whole  country  ! 

Mr.  CiiOATE.  J  think  the  ojtinion  in  New  Englatid  is  that  western 
rates  on  New  England  goods  have  been  increased  rather  than  dimin- 
ished. 

Senator  Harris.  Has  not  the  effect  been  to  give  greater  stability  to 
rates  ? 

Mr.  Choate.  Yes,  I  think  it  has,  on  through  freights. 

Senator  Harris.  Is  not  that  a  benetit  to  the  public  as  well  as  to  the 
carrier  ? 

Mr.  Choate.  Undoubtedly.  I  think,  however,you  could  get  greater 
stability  of  rates  by  a  regulated  jhx)!  than  in  any  other  way. 

The  Chairman.  You  did  not  get  much  stability  by  an  unregulated 
pool,  did  you  f 

Mr.  Choate.  An  unregulated  pool  amounts  to  nothing. 

Senator  Hiscook.  Is  not  that  now  practically  reached  I »y  differential 
rates  ? 

Mr.  Choate.  No,  sir;  I  do  not  think  you  can  rciich  it  in  any  other 
way. 

Senator  Harris.  Upon  what  j)rinciple  would  you  divide  the  trathc ; 
in  given  ])roportions  between  the  competing  lines,  or  would  you  pay 
differences  in  money  1 

Mr.  Choate.  Probably  to  settle  in  money  would  be  a  better  way. 

Senator  Harris.  And  when  you  do  that,  do  you  not  pay  to  one  car- 
rier money  that  he  has  not  earned — money  for  which  he  has  not  per- 
formed any  service  whatever! 

Mr.  Choate.  Probably. 

Senator  Harris.  Do  you  think  the  commerce  of  the  country  should 
be  so  taxed  ? 

Mr.  Choate.  I  think  it  is  the  only  solution  of  the  difficulty.  Either 
that  or  the  consolidation  of  the  roads. 

Senator  Harris.  Is  not  the  same  object  substantially  accomplished 


THE  UNITED  STATES  AND  CANADA.  331 

by  the  right  to  fix  and  publish  their  rates  and  to  agree  111)011  and  -ive 
differentials,  which  are  recogoized  by  all  our  trunk  lines  now  ?        '^ 

Mr.  Choate.  I  do  not  know  so  much  about  the  through  business 
but  the  difficulty  is  that  such  a  law  never  will  be  enforced.     It  never 
has  been,  and,  in  my  judgment,  never  will  be.     You  might  just  as  well 
legislate  that  tbe  Mississippi  Eiver  should  not  run  down. 

Senator  Harris.  Can  there  be  any  objection  to  it,  if  it  could  be  en- 
forced ?    Would  it  not  be  advantageous,  if  enforced  ? 

Mr.  Choate.  1  do  not  think  it  would. 

Senatcr  Harris.  Then  you  think  the  abolition  of  the  law  and  allow- 
ing carriers  to  coinp.  te  as  before  the  act  was  passed  would  be  a  better 
condition  of  things  than  we  now  have  under  the  law  ? 

Mr.  Choate.  I  think  the  western  railroad  troubles  have  been  aggra- 
vated by  the  interstate  commerce  law.  I  think  that  the  regulation  of 
this  competing  business  by  pooling  is  what  ought  to  be  sought  for,  and 
I  do  not  think  there  is  any  other  remedy  for  it. 

THE  REGULATION  OF   THE   CANADIAN  LINES. 

Senator  Gorman.  I  understand  your  proposition  is,  that  the  opera- 
tion of  these  Canadian  roads  has  been  of  great  benefit  to  New  England  ? 

Mr.  Choate.  1  have  no  question  it  has,  and  is  now  a  great  benefit 
to  New  England. 

Senator  Gorman.  What  proportion  of  the  through  traffic  to  and  from 
New  England  has  been  carried  over  these  Canadian  roads  ? 

Mr.  Choate.  I  think  it  has  been  comparatively  small.  It  has  not 
been  the  amount  of  business  done,  but  the  effect  on  the  whole. 

Senator  Gorman.  In  regulating  charges  1 

Mr.  Choate.  They  have  had  the  effect  of  doing  exactly  what  Mr. 
Adams  says,  of  reducing  rates  to  and  from  New  England,  and  of  mak- 
ing the  rates  very  nearlv,  if  not  entirely,  as  low  as  to  and  from  New 
York. 

Senator  Gorman.  They  have  been  able  to  do  that  because  they  have 
no  dividends  to  pay,  as  I  understand  you  ? 

Mr.  Chaote.  That  is  one  of  the  reasons. 

Senator  Gorman.  Is  not  tbat  the  main  reason? 

Mr.  Choate.  Probably. 

Senator  Gorman.  Now,  as  an  American,  embracing  the  whole  coun- 
try, is  it  a  proper  business  relation  for  this  country  to  permit  one  or 
two  bankrupt  foreign  railroads,  roads  which  are  not  compelled  to  pay 
dividends,  to  make  unrestricted  competition  with  American  capital  ? 

Mr.  Choate.  I  am  not  answering  it  i)olitically.  I  answered  as  a  rail- 
road man  as  to  what  the  effect  of  the  operation  of  the  Canadian  roads 
has  been.  What  remedies  are  to  be  applied  is  a  question  for  you  to 
consider. 

Senator  Gorman.  But  what  we  are  after  is  to  get  the  opinion  of  such 
gentlemen  as  yourself,  who  are  familiar  with  the  question  from  a  busi- 
ness standpoint.  That  is  the  gist  of  our  inquiry,  and  I  should  like  very 
much  to  have  your  opinion  on  that  point. 

Mr.  Choate.  I  think  if  the  Canadian  roads  are  allowed  to  compete 
with  the  American  roads  they  should  be  required  to  do  so  on  equal 
terms. 

Senator  Gorman.  So  far  as  the  interstate  commerce  law  is  concerned. 

Mr.  Choate.  Yes,  sir. 

Senator  Gorman.  Would  you  go  beyond  that?  As  I  understand  it, 
we  permit  the  Canadian  roads  to  enter  our  territory  at  any  convenient 
point,  pick  up  the  products  of  this  country  and  take  them  through 


332  TRANSPORTATION   INTERESTS   OP 

Cauada  and  back  into  onr  country  again.  A\'oaId  you  allow  tliat  tiallic 
to  go  on  ? 

Mr.  C  HO  ATE.  I  am  inclined  to  think  I  would.  Canada  conies  down, 
practically,  between  iSTew  England  and  the  West,  and  I  think  New 
England  should  be  allowed  the  advantage  of  a  straight  line  across  the 
countrv.     I  do  not  think  any  obstacle  shonhl  be  put  in  the  way. 

Senator  Gorman.  You  would  permit  that  trade  to  flow  as  freely  as 
if  it  went  entirely  through  onr  own  territory  t 

Mr.  Choate.  Yes,  sir;  I  think  so. 

Senator  GoRMAN.  Would  yon  insist,  on  the  other  hand,  that  our 
American  vessels,  landing  at  Canadian  ports,  should  have  the  right  to 
discharge  their  cargoes  an«l  siiip  through  to  Boston  with  the  same  free- 
dom f 

Mr.  Choate.  I  think  they  should  be  allowed  to  do  so. 

Senator  Gorman.  Would  it  not  be  wise,  then,  to  insist  that  if  we  con- 
tinue to  allow  the  Canadian  roads  to  enjoy  these  privileges,  such  as 
they  have  to  day,  that  the  same  rights  should  be  extended  to  our  peo- 
ple in  resi)ect  of  our  American  fishing  vessels? 

Mr.  Choate.  I  think  it  is  perfectly  just  to  ask  it.  Whether  you 
could  get  it  or  not  1  do  not  know. 

Senator  Gorman.  In  your  judgment  would  it  be  wise,  if  this  privi- 
lege is  not  extended  to  our  lishing  vessels,  for  us  to  exclude  the  cars 
of  the  Canadian  roads  ? 

Mr.  Choate.  Tiie  exclusion  of  Canadian  cars  would  be  a  great  iu- 
teference  with  the  business  of  the  country. 

The  Chairman.  You  wouhl  theretore  let  this  system  go  on  ami  grow  ? 

Mr.  Choate.  I  would  try  to  arrange  the  matter  without  going  to 
that  extreme  end. 

Senator  Gorman.  But  if  it  became  necessary,  would  it  not  be  fair  to 
say  to  Canada,  "  Unless  you  permit  our  fisiiing'vessels  to  land  at  your 
ports,  discharge  their  tish,  and  semi  them  to  lioston,  we  will  stop  the 
running  of  Canadian  cars  in  this  country?" 

Mr.  Choate.  I  su|)|iose  it  would  be  fair  enough,  but  would  it  pay? 
When  this  Canadian  territory  jiimi)s  down  into  the  United  States,  as  it 
does,  it  is  a  very  great  convenience  to  tiie  peojjle  of  New  Eilgland  and 
other  parts  of  the  country  to  have  their  goods  taken  on  a  straight  line 
to  the  other  end  of  the  country,  which  means  through  Canada,  without 
paying  duties  and  without  interference.  It  is  a  (piestion  in  my  mind, 
if  you  went  to  that  extent,  whether  you  would  not  imi)ose  a  greater 
burden  upon  the  Americans  than  you  would  ui)on  the  Canadians.  How- 
ever, as  to  how  that  would  be  I  am  unable  to  say. 

Senator  Gorman.  But  do  you  not  think  it  would  be  a  fair  proposition 
that  precisely  the  same  rule  should  apply  on  both  sides  ? 

Mr.  Choate.  Yes,  sir. 

Senator  IliscocK.  Would  you  say  that,  provided  there  were  ten 
millions  of  people  or  six  millions  of  people  interested  in  one  thing  being 
done,  and  only  one  million  interested  in  the  other  thing  being  done? 

Mr.  Choate.  I  do  not  think  the  mere  fact  that  there  are  ten  million 
people  on  one  side  and  only  one  million  on  the  other  would  be  a  great 
factor.  1  think  the  opening  of  the  Canadian  rotwls  has  been  much  more 
important  to  the  people  of  New  England  than  it  has  been  to  the  owimts 
of  those  roads.  1  do  not  think  the  owners  of  those  roads  have  got  very 
much  money  out  of  the  New  England  business.  What  business  has 
been  done  has  been  done  at  extremely  low  rates. 

Senator  Gorman.  Do  you  regard  the  Canadian  Pacific  as  a  political 
or  military  road  ? 


THE    UNITED    STATES   AND   CANADA.  333 

Mr.  Choate.  The  Cauadiau  Pacific  never  eiiten-d  very  umch  into 
the  observations  I  made.  I  simply  alluded  to  Canada  as  a  route  to  the 
West.  That  is  what  Mr.  Adams  referred  to.  The  Canadian  Pacific 
brings  a  new  element  into  the  question. 

Senator  Gorman.  In  the  light  of  the  day,  do  you  not  regard  the  Ca- 
nadian Pacific  as  a  political  or  military  enterprise  rather  than  a  com- 
mercial one  ? 

Mr.  Choate.  I  suppose  so.  The  Canadian  Government  is  trying  to 
make  it  a  great  military  success. 

Senator  Reagan.  You  stated  that  the  business  of  the  Canadian 
roads  has  increased  very  largely  since  the  adoption  of  the  interstate 
commerce  law  by  Congress.     Will  you  please  explain  that  f 

Mr.  Choate.  Well,  I  have  no  certain  information  about  that.  It  is 
a  matter  of  common  report  that  the  business  of  the  Canadian  roads  has 
increased  very  much. 

Senator  Reagan.  We  can  assume  I  think  from  the  testimony  we  have 
heard  that  there  has  been  an  unusually  large  increase  in  the  business 
ot  the  Canadian  Pacific  in  that  time,  and  when  we  consider  that  they 
have  to  cross  the  Detroit  River,  that  their  line  runs  through  a  sparsely 
settled  country,  with  a  great  deal  less  local  business  than  along  our 
lines,  is  it  not  a  necessary  conclusion  that  they  have  adopted  rates  be- 
low what  our  roads  could  carry  for,  in  order  to  increase  their  business 
to  the  extent  they  have  f 

Mr.  Choate.  They  would  not  have  gotten  the  business  unless  at 
rates  cheaper  than  the  American  roads  cliarged. 

Senator  Reagan.  Would  it  not  be  proper  for  the  United  States 
Government  to  insist  that  its  capital  should  not  be  discriminated  against 
in  that  way  ? 

Mr.  Choate.  I  do  not  think  you  could  legislate  to  prevent  that. 

Senator  Reagan.  Could  not  prevent  the  Canadian  roads  from  tak- 
ing freight  at  lower  rates  ? 

Mr.  Choate.  Yes,  sir. 

Senator  Reagan.  Is  it  not  an  unjust  discrimination  against  Amer- 
ican roads  and  American  capital  to  permit  the  Canadian  roads  to  take 
the  business  awaj'  from  the  American  roads  1 

Mr.  Choate.  I  think  it  is  an  unfortunate  condition  of  things  that  the 
Canadian  roads  should  be  allowed  to  compete  nntranniieled,  without 
any  sort  of  condition,  with  the  American  roads  whose  hands,  toa  certain 
extent,  are  tied.  It  is  not  fair  competition,  and  the  American  roads 
should  not  be  subjected  to  it. 

Senator  Reagan.  You  suggested  awhile  ago  that  it  was  advantageous 
for  New  England  and  the  West  to  have  a  passageway  across  Canada 
by  this  Canadian  road.  You  understand  there  is  no  objection  to  that 
if  the  Canadian  roads  come  under  the  same  regulations  as  the  Ameri 
can  roads,  and  if  they  carry  in  fair  competition  with  the  American 
roads.  Is  there  any  objection  to  compelling  them  to  carry  in  fair  com- 
petition with  the  American  roads  ? 

Mr.  Choate.  No,  sir ;  not  if  you  can  succeed.  If  you  can  not  do  it 
some  other  scheme  ought  to  be  adopted. 

operation  of  the  interstate  commerce  law. 

Senator  Reagan.  Did  I  understand  you  to  say  that  the  interstate 
commerce  law  could  not  be  enforced  in  the  United  States  ? 

Mr.  Choate.  I  said  I  did  not  believe  it  ever  will  be  enforced. 

Senator  Reagan.  What  is  your  reason  for  believing  that  it  never 
will  be  enforced  ? 


334  TRANSPORTATION    INTERESTS    OP 

Mr.  Choate.  Because  it  has  not  been  enforced  so  far. 

Senator  Reagan.  I  will  ask  you  a  few  questions  in  detail  arising 
under  the  interstate  commerce  law. 

When  the  law  provides  that  there  shall  be  no  discrimination  in  rates, 
but  that  they  shall  be  lair  and  equal,  is  that  an  unjust  law  * 

Mr.  Choate.  Not  at  all.  We  have  always  observed  the  law,  aud  are 
endeavoriiifj  to  observe  it  here. 

Senator  IvEAGAN.  Is  your  opinion  not  based  on  the  fact  that  under 
the  action  of  your  railroad  commission  in  Massachusetts — and  it  is  so 
in  other  New  En<,dand  States,  but  I  will  speak  of  it — that  you  were 
complying  substantially  with  the  terms  of  the  interstate  commerce  law 
before  it  was  passed? 

Mr.  Choate.  Do  you  mean  the  present  condition  of  the  railroads 
here  depends  upon  the  action  of  the  State  railroad  commission  in  the 
past  1 

Senator  Reagan.  I  asked  whether  your  opinion  did  not  rest  upon 
the  fact  that  you  were  substantially  complying  with  the  terms  of  the 
interstate  commerce  act  before  it  was  pjissed. 

Mr.  Choatj:.  No,  sir.  I  think  the  long  and  short  haul  clause  of  the 
act  has  had  an  injurious  ett'ect. 

Senator  IvEAGAN.  Do  you  think  it  is  right  to  charge  one  man  more 
than  another  lor  the  same  charact<*r  of  goo<ls  over  the  same  road  and 
carried  the  same  distance? 

Mr.  Choate.  1  think  there  are  circumstances  unch'r  which  it  is  bet 
ter  lor  the  railroad  and  better  for  the  community  to  charge  less  for  the 
longer  haul. 

Senator  Reagan.  Could  you  specify  a  caset 

Mr.  Choate.  Take,  for  instance,  our  road  from  Bo.ston  to  Province- 
town.  It  is  120  miles.  It  is  36  miles  across  by  water.  I  would  niiike 
a  lower  rate  to  Provincetown  than  1  would  to  a  i)oint  h;ilf  way  be 
tween  Boston  and  Provincetown. 

The  Chairman.  You  have  a  law  that  prevents  that. 

Mr.  Choate.  Yes,  sir;  and  I  think  that  is  wrong. 

Senator  Reagan.  Do  you  think  that  law  has  the  same  effect  a«  the 
interstate  commerce  law  ♦ 

Mr.  Choate.  Yes;  we  can  not  diarge  any  less  to  Provincetown  than 
we  can  to  a  point  half  way  between  Boston  and  Provincetown. 

Senator  Reagan.  The  Commission  has  deci<le<l  that  you  can  do  it. 

The  Chairman.  The  State  coraaiission  deci«led  ditferently. 

Senator  Reagan.  I  am  sim|)ly  si>eaking  of  the  interstate  commerce 
law  as  interpreted  by  the  Coinnwssion.  The  law  provides  that  there 
shall  be  no  secret  rebates  and  drawbacks. 

Mr.  Choate.  That  is  right  i:i  every  way. 

The  Chairman.  You  do  not  like  the  law  generally,  but  specifically 
and  in  detail  you  do.     (Laughter.) 

Mr.  Choate.  There  are  some  objections  to  the  law  that  1  think  are 
enough  to  condemn  it  as  a  whole. 

Senator  IIiscoCK.  I  suppose  you  regard  the  provision  that  rates 
shall  be  reasonable  and  just  as  very  detiuite  ?     (Laughter). 

Mr.  Choate.  Yes,  sir;  very  definite. 

Senator  Blair.  That  is  simply  the  common  law  from  time  inmiemo- 
rial. 

Mr.  Choate.  I  think  so. 

Senator  Blair.  The  feature  you  find  fault  with,  an<l  the  only  one,  is 
the  long  and  short  haul  clause,  is  it  not  f 


THE    UNITED    STATES   AND    CANADA.  335 

Mr.  Choate.  There  is  one  provision  which  is  worse  than  the  long  and 
short  haul  chiuse. 

Senator  Blair.  What  is  it  1 

Mr.  Choate.  The  prohibition  of  pooling.  I  think  the  prohibition  of 
pooling  is  enough  to  condemn  the  whole  law. 

Senator  Blair.  Do  any  other  features  occur  to  you  to  which  you 
object  ? 

Mr.  Choate.  No,  sir. 

The  Chairman.  Then  you  believe  that  a  legalized  pool  is  the  proper 
solution  of  this  problem  ? 

Mr.  Choate.  Yes,  sir.  The  very  best  thing  that  could  be  done  for 
the  business  of  the  country  would  be  to  legalize  pooling  under  the 
supervision  of  the  Interstate  Commerce  Commission,  or  some  other 
body. 

At  1  o'clock  p.  m.  the  committee  took  a  recess  until  2  o'clock. 

At  the  expiration  of  the  recess  the  committee  resumed  its  session. 

STATEMENT  OF  JOHN  WHITMORE. 

John  Whitmore,  general  traflBc  manager  of  the  Fitchburg  Kailroad, 
appeared. 

The  Chairman.  Are  you  engaged  in  railroading  ? 

Mr.  Whitmore.  Yes,  sir. 

The  Chairman.  What  is  your  position  ? 

Mr.  Whitmore.  I  am  general  traffic  manager  of  the  Fitchburg 
Eailroad. 

The  Chairman.  Where  does  that  run  from  and  to  ? 

Mr.  Whitmore.  It  runs  from  Boston  to  Eotterdam,  N.  Y.,  where  it 
connects  with  the  West  Shore  Railroad,  and  to  Mechanicsville,  N.  Y., 
connecting  with  the  Delaware  and  Hudson,  and  thence  to  the  Erie  and 
Lackawanna,  and  also  down  to  Fitchburg,  where  it  connects  with  the 
Old  Colony ;  also  to  a  point  where  it  connects  with  the  Cheshire  Kail- 
road,  and  then  up  to  the  Central  Vermont  and  the  Canadian  Pacilic. 

The  Chairman.  Do  you  have  connection  with  the  Citnadian  Pacific? 

Mr.  Whitmore.  We  do,  but  we  do  not  do  a  great  deal  of  business 
with  them ;  we  do  a  little  business  with  them. 

The  Chairman.  What  is  the  amount  of  tonnage  on  your  road  that  is 
interchanged  by  reason  of  this  connection  with  the  Canadian  Pacific  ? 

Mr.  Whitmore.  In  connection  with  them  it  is  very  light  indeed. 

The  Chairman.  What  proportion  of  it  is  through  business  probably ! 

Mr.  Whitmore.  I  should  think  half  of  it  is  through  business. 

The  Chairman.  What  is  your  total  business ! 

Mr.  Whitmore.  Five  or  six  million  tons  a  .year. 

The  Chairman.  What  is  it  in  money  value? 

Mr.  Whitmore.  To  us  ? 

The  Chairman.  Y^es  ;  and  the  value  in  merchandise  as  well ! 

Mr.  Whitmore.  A  quarter  of  a  million  dollais  a  month  I  should  say. 

The  Chairman.  To  you  I 

Mr.  Whitmore.  Yes,  sir ;  that  is  including  the  entire  business. 

The  Chairman.  Have  you  with  you  a  statement  of  the  total  value  of 
the  traffic  ? 

Mr.  Whitmore.  Ko,  sir. 

The  Chairmam.  Have  you  any  definite  views  in  reference  to  this 
question  before  the  committee,  especially  with  respect  to  tlie  suggestion 
relative  to  these  Canadian  roads  and  our  own! 


336  TRANSPORTATION    INTERESTS    OF 

Mr.  Whitmore.  It  is  a  matter  in  which  we  as  a  road  are  not  very 
much  interested.  We  connect  with  them  to  a  small  extent  and  we  com- 
I)ete  with  them  so  far  as  we  are  concerned  to  a  considerable  extent.  I 
think  they  should  certainly  be  regulated  in  some  way  so  that  what 
they  do  may  be  controlled.  It  certainly  can  not  be  fair  that  they  should 
imperil  so  much  money  as  is  invested  in  the  United  States  railroads 
without  some  restriction. 

The  Chairman.  Do  the  Canadian  roads  seriously  interfere  with  your 
business  ? 

Mr.  WniTMORE.  Xo,  sir;  not  with  ours. 

The  Chairman.  Are  they  not  of  very  jj^reat  value  to  the  people  of 
Kew  England  ?  Suppose  the  Canadian  roads  were  not  in  existence, 
how  would  tlie  New  I'^ngland  people  get  along! 

Mr.  Whitmore.  I  think  north  of  a  line  drawn  east  and  west  through 
Portland  the  New  England  i)eo|)le  are  considerably  benefited  by  the 
Canadian  roads,  but  I  should  say  south  of  that  they  are  very  well 
served  by  the  United  States  roads. 

The  Chairman.  Do  .vou  think  the  i)eople  of  Boston,  and  New  Eng- 
land  people  generally,  are  getting  the  transportation  from  the  West 
very  much  cheaper  because  of  conipetition  between  these  lines! 

Mr.  Whitmore.  I  do  not  think  Boston  is. 

The  Chairman.  You  think  Boston  could  get  along  as  well  without 
the  Canadian  roads  as  with  Iheni  ? 

Mr.  Whitmore.  As  far  as  Boston  is  coneerned,  I  shouhl  say  so.  Tlie 
northern  routes  have  not  been  i)artieularly  in  favor  of  low  rates,  but 
only  a  little  lower  rates.  They  do  not  care  how  high  they  are  so  that 
their  rates  are  just  so  jnuch  lower  as  to  enable  tlu'in  to  get  tlu'  business. 

The  Chairman.  Do  they  act  so  as  to  get  their  rates  a  little  lower 
that  the  rates  of  the  American  roads! 

Mr.  Whitmore.  Yes,  sir. 

The  Chairman.  So  that  if  they  were  not  in  existence  transportation 
on  American  roa<ls  would  be  higher,  would  it  not? 

Mr.  AViiiTMOKE.  1  do  not  see  why.  1  think  the  competition  between 
the  American  roads  themselves  and  with  the  canal  and  water  routes 
would  keep  the  rates  down. 

The  Chairman.  South  of  this  line  you  have  referred  to  ! 

Mr.  Whitmore.  Yes;  south  of  a  line  drawn  through  Portland  and 
White  River  Junetion. 

The  Chairman.  And  you  think  south  of  that  line  the  i)eople  of  New 
England,  including  those  of  the  city  of  Boston,  are  not  i)articularly 
benetited  \)y  those  foreign  roads  ? 

Mr.  Whitmore.  1  think  that  is  the  case. 

The  Chairman.  With  the  subsidies  said  to  be  given  to  the  Canadian 
Pacific  Kailroad  and  to  the  road  across  the  State  of  Maine,  an<l  with 
the  subsidizing  of  a  steam-ship  line  to  Europe,  is  not  Jioston  and  this 
section  of  New  England  liable  to  be  injured  rather  than  benefiled  by 
the  Canadian  line! 

Mr.  Whitmore.  I  should  think  it  would.  They  would  be  liable  to 
take  business  at  Halifax  and  direct  to  Puget  Sound. 

The  Chairman.  Boston  is  quite  a  large  port  for  foreign  shipment,  is 
it  not  ? 

Mr.  Whitmore.  It  is. 

The  Chairman.  And  you  think  that  the  connection  of  the  Canadian 
Pacific  with  Nova  Scotia  and  some  of  those  ])orts  in  that  direction  is 
calculated  to  draw  business  away  from  Boston  rather  than  bring  trade 
to  it. 


THE  UNITED  STATES  AND  CANADA.  337 

Mr.  Whitmore.  Unquestionably  so,  and  not  only  from  Boston  but 
a^so  from  otber  Atlantic  ports. 

The  Chairman.  But  from  Boston  principally. 

Mr.  WiiiTMORE.  Yes,  and  from  New  York,  too. 

The  Chairman.  Then  tbe  substance  of  what  you  say  is  this,  that 
this  section  of  country  would  get  just  as  cheap  transportation  without 
those  Canadian  roads  as  with  them  ? 

Mr.  Whitmore.  I  should  say  they  would. 

The  Chairman.  How  many  roads  are  there  that  afford  transporta- 
tion facilities  to  Boston  and  this  section  of  New  England  aside  from 
these  Cttnadian  roads? 

Mr.  Whitmore.  There  are  the  Boston  and  Albany,  with  the  New 
York  Central  connection,  the  New  York  and  New  England,  with  the 
Erie  and  Pennsylvania,  and  our  road  with  the  Erie  and  West  Shore  and 
Lackawanna  and  Erie  Eailroads. 

The  Chairman.  You  mean  the  Erie  Canal  ? 

Mr.  Whitmore.  Yes,  sir.     We  connect  with  them. 

The  Chairman.  In  your  shipments  east  and  west  you  have  to  trans- 
fer from  the  car  to  the  canal  one  way  and  from  the  canal  to  the  car  the 
other  way. 

Mr.  Whitmore,  So  far  we  have  only  done  a  grain  business  with  them. 
We  have  not  taken  anything  west-bound.  We  only  commenced  that 
last  year. 

The  Chairman.  You  are  doing  a  grain  business  jpainly  from  west  to 
east. 

Mr.  Whitmore.  Yes,  sir. 

The  Chairman.  And  you  have  to  load  in  the  cars  from  the  canal. 

Mr.  Whitmore.  Yes,  sir;  through  the  elevator. 

The  Chairman.  Is  that  very  expensive  ? 

Mr.  Whitmore.  No;  the  charge  is  a  half  a  cent  a  bushel. 

The  Chairman.  How  much  do  you  charge  per  car-load  for  graiirfrom 
Chicago  to  Boston  ? 

Mr.  Whitmore.  From  Chicago  to  Boston,  all  rail,  would  be  30  cents 
a  hundred. 

The  Chairman.  Is  that  the  rate  charged  by  all  the  roads  ? 

Mr.  Whitmore.  Yes,  sir;  unless  the  northern  routes  are  charging 
more.  Eecently  I  believe  the  Baltimore  and  Ohio— although  1  am  not 
very  well  posted  on  that — made  a  lower  rate  on  east-bound  business. 
Our  competitors  in  the  West,  or  I  believe  the  Baltimore  and  Ohio,  made 
a  lower  rate. 

The  Chairman.  It  is  now  down  to  17  cents,  is  it  not  1 

Mr.  Whitmore.  Something  like  that.  The  Lackawanna,  I  believe, 
made  a  rate  of  17^  cents. 

The  Chairman.  Is  your  rate  of  30  cents  charged  if  the  grain  is  ship- 
ped partly  by  rail  and  partly  by  water  ? 

Mr.  Whitmore.  The  all-rail  rate  would  be  30  cents. 

The  Chairman.  What  is  your  rate  if  the  grain  is  shipped  by  the 
lakes  to  the  canal  and  then  the  cargo  transferred  to  your  cars  from  the 
canal  at  the  point  where  you  connect? 

Mr.  Whitmore.  I  do  not  have  anything  to  say  as  to  the  rates  over 
the  canal  and  lakes. 

The  Chairman.  Are  shipments  not  made  from  Chicago,  and  the  rate 
given  for  the  full  distance  ])er  hundred  pounds. 

Mr.  Whitmore.  Yes.  I  should  think  it  was  about  Scents  a  bushel 
as  far  as  liotterdam,  and  from  thepce  up  to  about  9  cents  a  bushel 
through. 

6543 23 


338  TRANSPORTATION   INTERESTS    OF 

The  Chairman.  From  Chicago  to  Boston  ? 

Mr.  Whitmore.  Yes,  sir;  about  that. 

The  Chairman.  It  must  be  more  thau  that  if  you  charge  30  cents  for 
the  total  haul. 

Mr.  Whitmore.  That  is  all  rail. 

The  Chairman.  Uow  many  pounds  are  there  in  a  bu.shel  ? 

Mr.  Whitmore.  Fifty  six  poumls.  I  think  it  runs  about  10  cents  a 
bushel. 

The  Chairman.  So  then  it  is  probably  in  the  neijjhborhoo<l  of  20  cents 
where  it  is  part  rail  and  part  water  ? 

Mr.  Whitmore.  Yes,  sir. 

The  Chairman.  Do  you  know  what  the  Grand  Trunk  is  now  charg- 
ing from  Chicago  to  Boston,  or  to  Portland  ? 

Mr.  Whitmore.  About  the  same. 

The  Chairman.  They  are  getting  a  differential  on  some  traffic,  are 
they  not  ? 

Mr.  Whitmore.  On  westlwnnd  business  they  are. 

The  Chairman.  And  not  on  east  l>ouud  tratlic  1 

Mr.  Whitmore.  On  east  bound  tratlic  too,  I  think;  but  there  are 
gentlemen  in  the  room  who  later  will  tell  you  as  to  that. 

The  Chairman.    What  is  the  length  of  your  line  1 

Mr.  Whitmore.  We  are  2V2  miles  to  Rotterdam. 

The  Chairman.  That  is  on  the  Erie  Canal  f 

Mr.  Whitmore.  Yes,  sir,  and  it  connects  with  the  West  Shore  there. 

the  regulation  of  the  CANADIAN  ROADS. 

The  Chairman.  Do  you  think  there  ought  to  be  any  diftcnMice  in 
the  situation  from  that  existing  now  in  reference  to  the  Canadian  linrs, 
in  the  regulation  of  them,  etc? 

Mr^  Whitmore.  1  think  there  must  br.  or  else  there  will  bedisaster 
to  the  larger  sysrems  in  this  country.  1  am  sure,  fr«)m  the  litth'  I  know 
of  it,  that  the  American  roiuls  are  being  seriously  injured  by  the  com- 
petition of  the  Canadian  I'acilic. 

Tlie  Chairman.  You  really  think  that  they  are  being  st^riously  in- 
jured ? 

Mr.  Whitmore.  I  have  no  doubt  of  it. 

The  Chairman.  What  evidence  have  ycm  of  it  T 

Mr.  V^'hitmore.  Part  of  it  is  common  hearsay.  I  have  no  doubt  of 
it  at  all. 

The  Chairman.  Do  you  think  you  would  be  i)rote<ted  as  much  as 
you  ought  to  l)e  if  the  Canadian  roads  were  put  under  the  same  regula- 
tion as  are  the  American  roa<ls? 

Mr.  Whitmore.  1  doubt  if  we  would. 

The  Chairman.  Why ! 

Mr.  Whitmore.  Take  the  United  States  lines.  I  <loubt  if  any  rail- 
road would  be  i)roperly  protected  by  the  present  law  if  the  GoveniuuMit 
subsequently  built  alougside  of  it  a  roa<l  at  ]>ublic  exi)ense  and  cliarge<l 
almost  any  rate  to  take  the  business.  Such  an  aided  road  would  be 
sure  to  injure  seriously  the  road  that  wiis  Jlrst  built. 

The  Chairman.  That  would  be  so  if  there  were  any  interstate  law  or 
not,  would  it  not? 

]\Ir.  Whitmore.  Yes. 

Tlie  Chairman.  Then,  does  the  law  make  any  difterencet 

Mr.  Whitmoke.  1  thiidv  the  law  is  defective  in  this  respect,  it  is  not 
only  defective  in  regard  to  the  Canadian  roads,  but  the  baihliugof 


THE    UNITED    STATES   AND    CANADA.  339 

in  this  country  is  not  sufficiently  restricted.  I  believe  it  to  be  a  fact 
that  you  could  not  get  a  charter  to  build  a  railroad  in  some  States  un- 
less you  proved  to  a  local  committee  the  railroad  would  pay. 

The  Chairman.  You  are  aware  that  uuder  our  Constitution  Con- 
gress has  no  right  to  interfere  with  State  charters? 

Mr.  Whitmore.  That  would  be  the  trouble,  it  seems  to  me. 

The  Chairman.  And  the  only  restriction  would  be  by  State  a(;tion? 

Mr.  Whitmore.  Yes. 

The  Chairman.  And  that,  you  thiuk,  is  the  only  difficulty  in  the 
premises  ? 

Mr.  *Vhitmore.  It  seems  to  me  the  great  one. 

The  Chairman.  Do  you  think  the  interstate  commerce  law  itself  in 
its  operation  is  having  very  much  to  do  with  the  question  of  your 
dividing  the  traffic  with  the  Canadian  roads  ? 

Mr.  Whitmore.  Will  you  please  repeat  that  question  ? 

The  Chairman.  Do  you  think  if  the  interstate  commerce  act  were 
repealed  that  the  situation  would  very  much  differ  from  what  it  is  as 
between  the  American  lines  and  the  Canadian  lines  ?  Would  they  not 
go  on  as  they  have,  and  strengthen  their  roads  and  prei)are  themselves 
for  securing  business,  and  would  they  not  then  be  just  as  likely  to  In- 
terfere with  the  American  roads  as  they  now  are  ? 

Mr.  Whitmore.  I  thiuk  the  situation  would  be  worse,  if  anything. 

The  Chairman.  You  think  it  would  be  worse  if  the  law  were  re- 
pealed !  y 

Mr.  Whitmore.  I  think  so. 

The  Chairman.  Will  you  give  your  reason  % 

Mr.  Whitmore.  JMainly  because  rates  could  then  be  made  without 
being  published. 

The  Chairman.  By  the  Canadian  lines  % 

Mr.  Whitmore.  By  any  line ;  yes. 

The  Chairman.  Now  they  have  to  show  their  hands  as  far  as  their 
through  business  is  concerned  by  publishing  their  rates  as  our  roads 
do. 

Mr.  Whitmore.  Yes  ;  but  the  fact  of  being  subsidized  allows  them 
to  come  forward  and  compel  their  associated  competitors  to  make  as 
low  rates  as  they  do,  and  which  they  are  i^ermitted  to  do  by  law. 

The  Chairman.  So  whatever  business  the  Canadian  roads  are  get- 
ting over  the  American  roads  is  the  result  of  the  fact  that  the  British 
Government  has  aided  largely  the  construction  of  these  foreign  roads, 
and  they  are  able  to  transport  products  from  one  side  of  the  country  to 
the  other  at  the  mere  cost  of  transportation,  or  less,  while  railroads  in 
the  United  States  are  not. 

Mr.  Whitmore.  I  think  that  is  the  great  trouble. 

THE   question   OF  POOLING. 

The  Chairman.  Have  you  any  suggestions  to  make  as  to  amend- 
ments of  the  interstate  commerce  act  as  applied  to  our  relations  with 
Canadian  roads,  or  among  ourselves  ! 

Mr.  Whitmore.  I  think  the  only  chance  to  possibly  give  the  Ameri- 
can roads  the  slightest  show  to  earn  anything  at  all  for  tlicir  investors, 
is  to  allow  them  to  do  the  best  they  can  among  themselves  in  the  way 
of  pooling.  It  seems  as  if  every  interest  in  this  country  except  the 
transportation  interest  is  permitted  to  be  protected,  and  the  invest- 
ment in  the  transportation  service  in  this  country  runs  up  to  i)retty 
nearly  ten  thousand  millions  of  dollars.    At  present  the  law  does  not 


340  TRANSPORTATION    INTERESTS    OF 

provide  for  the  protection  of  the  investor  in  the  transportation  service, 
while  it  docs  for  the  shipj)cr. 

The  Chairman.  J)o  you  tiiink  that  poolinjj;  did  you  any  jjood  when 
it  existed? 

Mr.  Whitmore.  Not  a  great  deal,  because  it  was  unaccompanied 
by  the  other  requirements,  the  other  provisions  of  the  interstate  com- 
merce act  which  are  good,  such  as  the  publication  ot  rates. 

The  Chairman.  So  that  yon  would  favor  the  anuMidment  of  the  in- 
terstate commerce  act  by  ]>roviding  that  railroads  should  be  allowed  to 
make  contracts  amongst  and  between  themselves  involving  some  feat- 
ures of  the  i)Ool,  subject  to  the  approval  of  the  Interstate  Commerce 
Commission,  would  you  ? 

Mr.  Whitmore.  Yes,  sir,  decidedly.  I  tli ink,  too,  the  long  and  short 
haul  clause  is  not  right. 

The  Chairman.  Why  ? 

Mr.  Whitmore.  For  instance,  suppose  the  rate  for  l,(l(K)  miles  was 
a  dollar.  Under  the  law  you  would  i>e  i)ermitted  to  make  the  rate  a 
dollar  and  a  half  for  1,001  miles,  and  you  would  not  be  permitted  to 
make  the  rate  one  dollar  and  one  cent  for  9!)0  miles. 

The  Chairman.  You  would  not  b«>  permitted  to  mahe  either  rate  if 
it  were  shown  that  either  was  extortionate. 

Mr.  Whitmore.  You  would  not;  but  if  you  leave  it  without  that 
re8tri(;tion,  so  as  to  say  reasonable  and  just,  I  fancy  that  would  (uner 
the  subject  better,  although  it  does  not  affect  our  short  hauls  in  New 
England  so  much.     I  am  sure  in  some  sections  it  does  work  a  hardship. 

Tlu;  Chairman.  The  interstate  commercii  act  provides  that  no  ex- 
tortionate or  unreasonable  charge  shall  be  nuule. 

Mr.  Whitmore.  That  is  right. 

The  Chairman.  At  the  same  time  the  law  juovides  that  you  shall  not 
charge  more  for  the  shorter  than  for  the  longer  distance  in  the  same 
direction,  et<!.  That  declaration  that  you  shall  not  charge  more  for  the 
shorter  than  for  the  longer  distance  does  iu)t  give  the  railroad  the  right 
to  charge  as  much,  if  that  charge  be  unreasonable. 

Mr.  Whitmore.  That  is  true. 

The  Chairman.  Is  not  that  about  right  ? 

Mr.  Whitmore.  The  design  is  right,  but  1  am  sure  that  in  some 
cases — although  I  am  not  prepared  to  nanu'  tlu'in — it  does  not  work 
equitably'. 

Senator  liLAiR.  ]>o  you  think  of  any  h'gislation  (uan>  thing  that  can 
be  done  to  better  the  condition  ot  the  American  roads  in  com])etition 
with  the  Canadian  roads  which  will  not  increase  the  cost  to  the  Amer- 
ican i)eople,  or  to  that  i)ortion  of  the  American  ]>eople  which  is  supplied 
with  transjiortation  service  by  the  Canadian  roa<ls  ? 

Mr.  Whitmore.  No,  I  do  not  know  that  I  could;  but  I  think  there 
should  be  such  an  increase  as  should  be  necessary  to  make  the  trans- 
portation of  this  country  a  success,  whereas  now  it  isa  failure,  so  far  as 
the  investors  are  coucenu'd,  and  the  increase  would  be  so  slight  that  the 
shippers  would  not  feel  it  if  it  could  be  accom|)lished. 

Senator  IJi^AiK.  You  s])eak  of  legislation  for  I  he  i>rotection  of  the  in- 
vestor. 1  suppose  you  do  not  refer  mainly  to  Canadian  competition, 
but  to  other  causes,  do  you  not  ? 

Mr.  Whitmore.   To  iill  causes. 

THE  protection   OF  INVESTORS   IN   RAILWAYS. 

Senator  Blair.  What  would  be  some  of  the  suggestions  that  occur 
to  your  miud  iu  the  way  of  legislation  for  the  protection  of  investors  ? 


i 


THE    UNITED    STATES    AND    CANADA.  341 

Mr.  Whttmore.    Pooling  should  be  allowed. 

Senator  Blair.  Anything  else  ? 

Mr.  Whitmore.  The  long  and  short  haul  clause  done  away  with. 

Senator  Blair.  Anything  else  ? 

Mr.  Whitmore.  There  is  another  thing,  but  I  suppose  we  will  have 
to  wait  until  the  millennium  for  it. 

Senator  Blair.  What  is  it  ? 

Mr.  Whitmore.  Some  restriction  should  be  placed  upon  the  buildinf^ 
of  roads.  * 

Senator  Blair.  Boston,  you  might  say,  is  full  of  merchants  I 

Mr.  Whitmore.  Yes,  sir. 

Senator  Blair.  There  is  no  need  of  another  one  here  ! 

Mr.  Whitmore.  No,  sir. 

Senator  Blair.  Are  they  all  making  money  ? 

Mr.  Whitmore.  I  do  not  know,  I  am  sure ;  I  should  think  not. 

Senator  Blair.  We  see  it  stated  from  time  to  time  that  ninety-five 
out  of  every  hundred  merchants  fail  in  the  course  of  life-time.  Ought 
there  not  to  be  some  protection  for  those  who  invest  their  money  in 
trade  ? 

Mr.  Whitmore.  I  suppose  they  do  insure  it  all  they  can,  by  getting 
up  trusts,  such  as  the  sugar  trust.  They  get  together  and  protect 
themselves  all  they  can,  but  the  railroads  do  not  seem  to  be  protected 
at  all. 

Senator  Blair.  One  remedy  would  be  railroad  trusts  in  the  form  of 
pooling,  I  suppose. 

Mr.  Whitmore.  Something  of  that  kind  to  protect  proi)erty. 

Senator  Blair.  Prior  to  the  development  of  the  trust,  all  the  way 
from  the  earliest  stages  down,  the  merchants  have  had  this  same  ditli- 
culty.  Competition  has  come  in  and  eaten  up  the  great  proportion  of 
them.  Should  it  not  be  a  rule  of  business  of  mankind  that  a  man  who 
has  gone  into  business,  put  capital  into  it,  should  be  insured  the  right 
to  make  money  against  all  the  world "? 

Mr.  Whitmore.  I  suppose  it  should  be. 

Senator  Blair.  If  a  community  is  called  upon  to  do  that  it  ought  to 
have  something  to  say  about  who  shall  go  into  business. 

Mr.  Whitmore.  It  is  a  public  disadvantage  when  a  railroad  does  not 
earn  money.  The  present  state  of  perfection  on  the  railways  of  the 
country  has  come  from  the  fact  that  they  have  earned  money. 

Senator  Blair.  Is  this  not  true,  that  they  have  done  it  with  other 
peo])le's  money,  not  with  their  own  '? 

Mr.  Whitmore.  To  what  do  you  refer  ? 

Senator  Blair.  You  are  speaking  of  the  fact  that  the  railroad  people 
have  developed  the  country.  Have  they  not  done  so  with  other  people's 
money  rather  than  with  their  own "? 

Mr.  Whitmore.  I  did  not  mean  Uie  railroad  people.  I  meant  to  say 
the  people  who  had  their  money  invested  in  railroads. 

Senator  Blair.  Is  it  not  a  fact  that  the  money  invested  in  railroads 
has  been  made  by  people  engaged  in  other  occupations  ?  What  railroad 
man  has  put  his  fortune  into  additional  railroads,  as  a  rule  ! 

Mr.  Whitmore.  If  you  mean  by  a  "  railroad  man  "  a  railroad  officer, 
there  are  not  many  railroad  officers  who  have  had  money  to  disi)ose  of; 
but  if  you  take  such  investors  as  the  Vanderbilts  and  others,  they  are 
continually  doing  it. 

Senator  Blair.  They  are  simply  handing  over  the  fores  and  freights 
collected  from  the  people  and  putting  them  into  the  shape  of  railroads, 
are  they  not  ? 


342  TRANSPORTATION    INTERESTS    OV 

Mr.  Whitmore.  Wben  the  stock  is  distributed  it  is  sold  to  widows 
and  orphans  and  everybody  else. 

Senator  Blair.  But  tlie  widows  and  orphans  have  made  their  money 
in  some  other  pursuit  before  they  couUl  i)ut  into  the  raib'oad  1 

Mr.  Whitmore.  Un<iuestionably. 

Senator  Blair.  So  that  the  (k*mand  that  money  invested  in  railroads 
should  be  protected,  while  money  invested  in  any  other  business  should 
take  its  chances,  is  rather  ine(iuitable? 

Mr.  Whitmore.  I  say  that  if  trusts  are  permitted  in  commercial 
business,  the  same  sort  of  ])rotection  should  bt*  permitted  in  the  rail- 
road business.  If  a  railroad  docs  not  earn  a  fair  profit  the  result  is 
that  it  becomes  inefficient  and  positively  danj^erous,  and  it  is  therefore 
a  i)ublic  benefit  to  keep  the  railroads  of  the  country  as  cllicient  as  pos- 
sible. There  is  no  question  about  it  that  they  have  developed  this 
country  enormously,  and  have  been  of  greater  benefit  to  every  other 
business  than  their  own. 

Senator  Blair.  In  regard  to  the  practical  question  which  is  referre<l 
to  this  committee  of  endeavoriufj  to  learn  what  renu'dy  the  public  would 
desire  to  see  adoi)ted  as  aj,Minst  this  Cana<lian  (•onij)etition,  do  you 
think,  in  the  first  i)lace,  that  it  is  wronp:  for  the  six  or  eij^ht  or  ten  mill- 
ions of  people,  who  j;et  their  transportation  cheap»'r  by  reason  of  these 
Canadian  roads,  that  they  should  have  this  cheajter  trans]»ortation  f  In 
other  words,  put  it  in  this  way  :  Would  it  be  wronj;  for  ine  to  accejit 
the  gift  of  transportation  from  anybody  who  saw  fit  to  give  it  to  me  any 
more  than  it  wouUl  be  to  a(;<'ept  a  dollar  in  money  f 

Mr.  Whitmore.  Certainly  not.  It  is  not  very  loyal  to  a  man's  own 
country,  however. 

Senator  Blair.  Suppose  that  an  A  merican  road  saw  tit  to  do  the  same 
thing,  would  you  not  think  it  a  hardship  to  j>rohibitany  citizen  or  body 
of  citizens  from  accepting  that  benefit  which  the  cheaper  route  would 
confer! 

Mr.  WniTMORE.  I  think  it  would  be  acce])te<l  immediately. 

Senator  Blair.  Is  it  any  worse  to  accept  it  from  a  foreigner  than  from 
our  own  jm  ople  ? 

Mr.  Wiu'J'More.  I  do  not  see  that  it  is  wrong  in  either  case. 

Senator  Blair.  It  is  a  question,  then,  whether  you  are  to  say  to  the 
railroads  of  the  country  "We  will  protect  you  against  loss  by  taking 
money  out  of  the  pockets  of  the  American  citizens." 

Mr.  Whitmore.  That  is  the  point. 

Senator  Blair.  Your  position  is  this,  that  the  American  citizens 
should  pay  more  for  their  transportation  in  order  that  American  rail- 
roads may  be  saved  from  loss  ui)on  their  cai)ital. 

Mr.  Whitmore.  That  is  the  extreme  view.  I  think  that  the  railroa<l 
investment  should  be  protected  along  with  other  investments. 

legalizing  pooling. 

Senator  Harris.  Do  you  think  it  important  to  legalize  pooling,  and 
on  what  principle  would  you  base  the  ])ooliTjg  contract,  by  a  distril>ution 
of  the  freights  ac(!ording  to  agreed  proportions,  or  by  settling  balances 
in  money  as  between  the  contracting  ])artiesf 

Mr.  Whitmore.  I  think  the  money  pool  would  be  the  better  one,  but 
I  do  not  feel  myself  competent  to  give  an  opinion  on  that  subject. 

Senator  Harris.  Then,  if  the  money  pool  is  adojited,  would  it  not 
result  in  paying  that  railroad  which  fails  to  get  its  due  proportion  of 
the  traffic  nu)ney  for  which  it  has  performed  no  services  whatever  f 


THE    UNITED    STATES    AND    CANADA.  343 

Mr.  Whitmore.  No,  sir;  I  can  not  say  it  would  be  paid  money  lor  no 
services  whatever,  because  some  railroads  are  so  placed  that  in  order  to 
get  the  tonnage  they  will  tear  the  other  railroads  all  to  pieces. 

Take  the  Vermont  Central  Kailroad.  The  Vermont  Central  can  come 
up  to  us  by  the  Canadian  connections,  and  it  can  say  «  Give  us  a  share 
of  your  East  and  West  business ;  otherwise  we  will  tear  your  property 
to  pieces."    They  may  do  so. 

Senator  Harris.  What  service  has  the  railroad  ever  performed  for 
the  money  that  is  paid  it  upon  the  settlement  by  the  pool !  I  under- 
stand your  answer  a  moment  since  was  that  it  would  have  torn  the  com- 
peting road  up.  I  want  to  know  what  service  it  has  performed  to  the 
public  for  the  money  it  received  ? 

Mr.  Whitmore.  It  is  the  only  way  in  which  it  can  keep  up  its  track. 

Senator  Harris.  Has  it  performed  any  service  to  an  individual  or  the 
public  for  the  money  it  received  ? 

Mr.  Whitmore.  It  has  performed  its  daily  service  far  better  than  it 
otherwise  could. 

Senator  Harris.  In  what  respect? 

Mr.  Whitmore.  In  keeping  its  property  in  shape.  It  is  dangerous  to 
allow  roads  to  run  down  from  lack  of  revenue. 

Senator  Harris.  Has  it  carried  anything  for  anybody  for  the  money 
it  received  from  the  pooling  arrangement  ^ 

Mr.  Whitmore.  It  can  not,  unless  it  has  money  enough  to  keep  it  up. 

Senator  Harris.  This  committee  has  the  testimony  of  the  president 
of  a  railroad  which  runs  out  of  the  State  of  New  York.  During  the  ex- 
istence of  the  pool,  according  to  that  gentleman's  testimony,  the  one 
company  of  which  he  is  president  received  a  half  a  million  dollars  a  year 
for  doing  nothing,  for  which  it  did  not  carry  a  pound  of  freight  for  any- 
body. Do  you  think  that  the  commerce  of  the  country  ought  to  be  taxed 
to  pay  those  balances  to  railroads  for  doing  nothing? 

Mr.  Whitmore.  I  think  it  is  an  absolute  necessity  to  provide  that 
the  railroads  shall  be  kept  in  safe  condition,  and  I  do  not  believe  that 
the  railroad  you  refer  to  would  have  been  kept  in  safe  condirion  if  it 
had  not  received  this  money.    Otherwise  it  would  not  have  received  it. 

Senator  Harris.  The  railroads  that  paid  this  half  a  million  a  year  to 
the  weaker  road,  as  it  is  sometimes  called,  earned  it  in  the  carrying 
trade.  If  they  did  not  have  to  pay  that  half  a  million  dollars  to  a  rail- 
road which  was  doing  nothing  for  it,  could  they  not  have  aiforded  to 
render  the  services  which  they  rendered  to  the  public  for  a  half  a  million 
less  money  ? 

Mr.  Whitmore.  But  the  other  railroad  would  have  gone  to  pieces. 

Senator  Harris.  The  business  of  the  country  did  not  demand  its  serv- 
ices. According  to  your  theory,  you  would  compel  the  commerce  of  the 
country  to  keep  up  every  railroad,  whether  necessary  or  unnecessary 
to  the  business  of  the  country,  by  taxing  it  to  an  extent  necessary  to 
preserve  them  all. 

Mr.  Whitmore.  I  would  either  preserve  them,  or  I  would  have  them 
abolished. 

Senator  Harris.  Do  you  think  pooling  ought  to  be  legalized,  and  i  hut 
the  long  and  short  haul  clause  ought  to  be  repealed  ? 

Mr.  Whitmore.  I  think  so. 

Senator  Harris.  I  believe  you  stated  that  the  length  of  your  road  is 
212  miles  ? 

Mr.  Whitmore.  Yes,  sir ;  in  one  line. 

Senator  Harris.  Suppose  you  carry  a  car-load  of  freight,  of  a  given 
character,  from  this  end  of  your  line  to  the  other  end  of  it  for  a  hundred 


344  TRANSPORTATION  INTERESTS  OF 

dollars.  Can  you  find  a  reason  that  would  justify  3  on  in  charfjing  more 
than  a  hundred  dollars  for  carrying  a  car-load  of  exactly  the  same 
character  of  freight  from  a  half-way  station  to  the  other  end  of  your 
line  ? 

Mr.  Whitmore.  I  believe  I  said  that  I  was  not  ])repared  to  give 
instances,  and  that  our  distances  were  so  short  that  it  was  not  important 
for  New  England  to  have  that  clause  repealed,  I  gave  it  sinii)ly  as  an 
opinion  that  the  law  would  be  better  without  the  long  and  short  haul 
clause.  There  are  cases  where  the  long  and  short  haul  clause  works 
inequitably,  needlessly  so. 

Senator  Harris.  Take  the  route  from  lioston  to  San  Francisco.  As 
a  railroad  man,  can  you  give  a  reason  that  wouhl  Justify  the  carrier  in 
charging  more  than  a  hundred  dollars  from  a  point  half  way  between 
here  anil  San  Francisco  to  San  Francisco,  if  a  hundred  dollars  a  car-load 
for  the  same  character  of  freight  over  the  same  road  was  the  rat©  from 
Boston  to  San  Francisco  f 

Mr.  WniTMORE.  Take  the  case  of  the  Canadian  Pacific.  The  Cana- 
dian Pacific  is  charging  a  lower  rate  from  San  FraruMsco  to  Doston  than 
the  direct  roads.  The  direct  roads  are  charging  a  much  higher  rate. 
The  direct  roads  can  not  compete  with  the  Canadian  I'acitic,  and  the  re- 
sult is  that  the  traffic  of  the  Canadian  PaeiJic  is  constantly  increasing. 

Senator  Keagan.  What  road  is  that  ? 

Mr.  Whitmore.  The  Canadian  Pacific.  The  direct  roads  are  charg- 
ing more  from  San  Francisco  to  Boston  than  is  the  Canadian  Pacific. 

THE  COST  OP  TRANSPORTATION. 

Senator  IIarris.  Is  the  carrier  justified,  because  of  competition,  in 
carrying  through  freights  for  less  than  the  actual  cost  of  transj.orta- 
tionf 

Mr.  Whitmore.  It  is  hard  to  tell  what  the  actual  cost  is.  I  do  not 
believe  anybody  knows  what  is  the  cost  of  transportation  on  a  carload 
of  freight. 

Senator  Harris.  It  can  be  approximated,  I  should  think. 

Mr.  Whitmore.  I  do  not  know.  I  never  knew  any  one  who  could 
tell  what  the  cost  was. 

Senator  Harris.  You  have  no  approximate  idea  as  to  the  cost  of 
transportation  over  your  road  f 

Mr.  Whitmore.  No,  sir;  I  could  not  tell  you  what  it  is. 

Senator  Harris.  You  are  in  the  dark,  then,  when  you  take  freight 
as  to  whether  you  make  or  lose  money  on  it  f 

Mr.  Whitmore.  Yes,  sir. 

Senator  Harris.  That  being  so  I  will  not  press  the  question  further. 

Senator  Blair.  You  have  some  reason  tor  saying  that  tlic  cost  of 
transportation  can  not  be  ascertained.  Will  you  not  please,  as  a  rail- 
road man,  explain  your  reason  ? 

Mr.  Whitmore.  If  you  took  the  average  of  the  business  you  would 
take  the  total  money  and  total  tonnage  and  find  what  it  would  amount 
to.  The  rates  for  export  would  be  less,  and  what  that  is  1  «Io  not 
know. 

Senator  Blair.  On  what  principle  are  fares  and  freights  arrauge<l 
by  railroads? 

Mr.  Whitmore.  Competition  entirely,  I  think. 

Senator  Blair.  Is  not  competition  based  upon  causes! 

Mr.  Whitmore.  Upon  causes,  certainly. 

Senator  Blair.  Do  you  do  business  with  a  view  to  profit  on  the  in- 


THE   UNITED   STATES   AND   CANADA.  345 

vestment  and  make  that  one  of  tbe  conditions  or  considerations,  or  is  it 
merely  a  grasp  for  the  business  of  the  country  between  existing  roads' 

Mr.  Whitmoee.  That  is  what  it  is. 

Senator  Blair.  So  that  the  element  of  the  cost  to  the  road  disappears 
largely. 

Mr.  Whitmore.  Yes,  sir. 

Senator  Blair.  And  there  is  not  enough  for  them  all  to  eat? 

Mr.  Whitmore.  At  present  I  do  not  think  there  is. 

Senator  Blair.  And  it  is  a  question  who  shall  be  starved  out. 

Mr.  Whitmore.  Yes,  sir. 

Senator  Blair.  And  in  trying  to  get  enough  to  eat  they  endeavor 
to  satisfy  their  appetite  out  of  the  public  witliout  any  regard  whatever 
as  to  whether  they  put  money  in  their  investment  judiciously  or  not. 

Mr.  Whitmore.  I  think  there  are  a  great  many  investments  which 
are  made  injudiciously. 

Senator  Blair.  Is  it  fair  that  the  body  politic  should  be  bled  to  tlie 
extent  of  furnishing  a  life  current  to  these  carcases  which  never  should 
have  been  created? 

Mr.  Whitmore.  If  the  fact  were  not  that  the  rates  and  fares  in  this 
country  were  lower  than  in  any  other  country  I  think  that  would  be  a 
fair  inquiry;  but  the  fact  is  that  there  is  better  accommodation  here 
and  for  less  money  than  in  any  other  country. 

Senator  Blair.  Can  you  think  of  any  real  remedy  but  the  universal 
combination  of  all  the  roads  in  one — their  consolidation — and  thwi  a 
reasonable  distribution  of  charges  over  the  entire  surface  of  the  coun- 
try that  is  supplied  with  transportation  by  the  entire  body  of  combined 
roads. 

Mr.  Whitmore.  I  think  not. 

Senator  Blair.  It  seems  to  me  there  is  no  other  way. 

Mr.  Whitmore.  Ko,  sir. 

Senator  Blair,  That  comes  very  nearly  being  socialism,  does  it  not  ? 

Mr.  Whitmore.  Yes,  sir. 

Senator  ReaGtAN.  I  believe  I  understood  you  to  say  that  you  thought 
it  for  the  interests  of  the  railroads  that  a  pool  be  established — that  it 
would  be  advantageous  to  the  railroads. 

Mr.  Whitmore.  Yes,  and  advantageous  to  the  public  also,  I  think. 

Senator  Reagan.  Are  you  familiar  with  the  effect  of  pooling,  as  it 
has  been  carried  on  from  year  to  year  for  the  last  eight  or  ten  years,  by 
the  trunk  lines  ? 

Mr.  Whitmore.  I  can  not  say  that  I  am,  because  our  interests  have 
been  so  small,  compared  with  the  very  much  larger  interests  which  were 
concerned  in  the  pooling  question. 

Senator  Reagan.  Do  you  know  enough  about  it  to  answer  the  ques- 
tion whether  pooling  has  not  been  disastrous,  both  to  the  railroads  and 
the  people  I 

Mr.  Whitmore.  I  do  not  think  the  pool  was,  but  the  situation  was 
not  so  much  improved  before  the  interstate  law  went  into  effect  as  it  is 
now  with  the  provision  for  the  publication  of  rates. 

Senator  Reagan.  Is  there  any  reason  to  believe  that  men  will  act  ni 
any  better  faith  in  keeping  their  contracts  now  than  they  did  before  the 
act  was  passed  ? 

Mr.  Whitmore.  I  think  that  they  are  acting  better  now  than  before. 

Senator  Reagan.  I  mean  independently  of  the  law ;  if  you  give  them 
the  right  to  pool,  would  they  act  in  any  better  faith  than  before  the  law 
was  enacted  ? 


346  TRANSPORTATION    INTERESTS    OF 

Mr.  WniTMORE.  They  would,  because  tliis  law  provides  for  it.  I  do 
not  think  human  nature  has  improved  tlioujrli. 

Senator  Eeagan.  Suppose  we  allow  tbe  railroads  to  form  a  pool, 
what  protection  have  the  people  against  their  making  unjust  and  un- 
reasonable exactions  ? 

Mr.  Whitmore.  Well,  the  Mississippi  River  and  the  Erie  Canal  are 
two  enormous  regulators,  beside  the  immense  railroad  competition 
there  is. 

Senator  Reagan.  The  Erie  Canal  would  be  a  regulator  during  the 
summer  and  fall. 

Mr.  Whitmore.  And  largely  tlin)ugli  the  winter,  because  there  is 
such  an  enormous  carriage  in  the  summer  for  use  in  winter. 

Senator  Reagan.  Do  you  know  the  i)roportion  of  freight  carried  be- 
tween New  York  and  the  hikes  with  resi)ect  to  that  carried  by  the  rail- 
road and  that  carried  by  the  canal  f 

Mr,  Whitmore.  I  do  not. 

Senator  Reagan.  Is  not  the  proportion  infinitely  greater  by  the  rail- 
road than  by  the  canal  ? 

Mr.  Wuri'MORE.  it  is  a  goo<l  deal  larger,  but  the  canal  carries  enor- 
mously. 

Senator  Reagan.  What  is  your  judgment  as  to  what  would  be  the 
interest  of  the  general  i)nl)lic  in  the  freight  transported  and  the  inter- 
est of  the  road  in  it;  that  is  to  say,  tlaMlilVerence  between  tiie  value  of 
the  })roduct  and  the  cost  of  its  transportation  f 

Mr.  ^VIIITMt»KE.  What  is  it  now,  do  you  say  t 

Senator  Reagan.  At  any  time.  What  is  generally  the  difference 
between  the  value  of  tlie  i)roducts  and  the  cost  of  transjwrtation  ? 

Mr.  Whitmore.  1  could  not  say  exactly.  Take  corn  worth  50  cents 
a  bushel  and  it  wouhl  come  down  from  Ciiicago  for  10  cents  a  bushel. 

Senator  Reagan.  In  that  case  it  would  be  as  four  to  one. 

Mr.  Whitmore.  It  wouhl  be  onehfth. 

Senator  Reagan.  Are  not  the  lour  tilths  fully  as  much  entitled  to 
the  protection  of  the  hiw  as  the  one  lift h  interest  ? 

Mr.  Whitmore.  Yes;  I  shouUl  say  so,  decidedly. 

Senator  Reagan.  Do  y(>u  not  understand  that  the  purpose  of  pre- 
venting pooling  is  to  prevent  monopoly  and  to  prevent  any  unrestricted 
exactions  by  the  companies  ? 

Mr.  Whitmore.  Yes;  but  I  would  make  all  such  pooling  subject  to 
the  action  of  the  Interstate  Commerce  Commission.  It  should  all  be 
discussed  with  them,  and  then  I  think  such  increases  could  be  made  in 
the  revenues  of  the  different  companies  as  would  keep  their  property  in 
good  order  and  without  hurting  the  shipments  at  all.  It  can  not  be  in 
favor  of  commerce  to  restrict  shipments. 

Senator  Reagan.  You  think  that  if  pooling  were  permitted  it  ought 
to  be  under  the  sanction  of  the  Commission  and  the  law  ! 

Mr.  Whitmore.  Yes,  sir. 

Senator  Reagan.  I  do  not  know  whether  you  stated  the  reason  whj* 
you  opposed  the  provision  of  the  law  in  relation  to  the  long  and  short 
haul. 

Mr.  Whitmore.  Because  it  does  not  work,  under  all  circumstances, 
in  the  same  way.  It  permits  it  so  far  as  it  reaches  a  high  rate.  I  gave 
that  instance  before.  If  you  make  the  rate  ^l  for  1,(M)()  miles,  accord- 
ing to  that  proviso  you  can  make  it  $1.50  for  1,001  miles,  but  vou  can 
not  make  it  $1.01  for  999  miles. 

Senator  Reagan.  Are  you  aware  that  there  is  a  provision  of  law  that 
requires  rates  to  be  reasonable  f 


THE    UNITED    STATES   AND    CANADA.  347 

Mr.  Whitmoee.  That  I  would  leave  in. 

Senator  Ke  AG  AN.  Then,  if  you  charge  $1  for  1,000  miles  and  sl.oO 
for  1,001  miles,  would  not  that  be  met  by  the  provisions  of  the  law  which 
provide  that  the  rates  shall  not  be  unreasonable? 

Mr.  Whitmore.  ^es,  sir;  I  think  it  wouUl. 

Senator  Keagan.  Is  there  any  reason  except  water  competition  that 
justifies  the  charging  of  less  in  any  case  for  a  longer  haul  than  a  shorter 
haul '? 

Mr.  Whitmore.  I  think  there  may  be,  but  I  am  so  unacquainted  with 
the  circumstances  that  I  would  rather  not  say. 


STATEMENT  OF  C.  S.  MELLEN. 

Mr.  C.  S.  Mellen,  traflfic  manager  of  the  Union  Pacific  Railway 
Company,  appeared. 

The  Chairman.  State  with  what  road  you  are  connected  and  your 
relations  to  it. 

Mr.  Mellen.  I  am  connected  with  the  Union  Pacific,  and  am  its 
traffic  manager. 

The  Chairman.  I  will  say  to  the  committee  that  I  asked  Mr.  Adams 
to  have  the  traffic  manager  of  the  Union  Pacific  here.  He  would  prob- 
ably usually  be  at  Omaha  or  at  the  other  end  of  the  road,  and  Mr.  Adams 
politely  complied  with  our  request. 

Now,  Mr.  Mellen,  you  have  heard  the  resolution  read  this  morning, 
and  doubtless  heard  the  discussion  which  has  taken  place  here,  and  I 
wish  you  would,  in  your  own  way,  give  us  your  ideas  with  respect  to  the 
matter  under  consideration. 

Mr.  Mellen.  The  competition  that  the  Union  Pacific  feels  in  con- 
nection with  tlie  Canadian  lines  is,  of  course,  with  respect  to  transcon- 
tinental traffic.  That  traffic  is  regulated  by  agreements  between  the 
roads  through  an  association  known  as  the  Transcontinental  Associa- 
tion. The  Canadian  Pacific  has,  at  different  times,  had  ditferential  rates 
allowed  it  in  order  to  prevent  demoralization  of  tiie  tariffs  of  the  asso- 
ciation, and  something  over  a  year  since  was  admitted  as  a  nu'mber  of 
the  association,  the  differential  rates  allowed  it  being  a  condition  pre- 
cedent to  its  coming  in. 

The  Chairman.  You  speak  now  particularly  of  the  Canadian  Pa- 
cific 1 

Mr.  Mellen.  Yes,  the  Canadian  Pacific.  The  competition  of  the 
Grand  Trunk  road  is  not  a  factor  in  which  we  are  interested.  That  ai>- 
plies  to  lines  east  of  Chicago  and  not  the  lines  west  of  the  Missouri 
River.  I  have  in  my  hand  a  statement  prepared  by  the  Transconti- 
nental Association  wliich  shows  the  percentage  of  San  Francisco  traffic 
to  and  from  the  Atlantic  sea-board,  which  has  been  carried  since  Feb- 
ruary, 1888,  by  the  Canadian  Pacific  Railway. 

the   SAN  FRANCISCO   TRAFFIC. 

The  Chairman.  From  San  Francisco  to  where? 

Mr.  Mellen.  Atlantic  sea-board  points  like  Boston,  New  York.  Phil- 
adelphia, Baltimore,  etc.  I  would  like  to  hand  this  to  the  committee 
as  it  will  show  that  the  Canadian  Pacific  have  been  steadily  increasing 
their  amount  of  San  Francisco  business  until  to-day  they  are  one  of  the 
largest  transportation  lines  running  between  San  Francisco  and  the 


348 


TRANSPORTATION    INTERESTS    OP 


Atlantic  sea- board.  This  statement  shows  the  total  business  done  by 
one  single  line.    The  total  business  would  be  100  per  cent. 

Senator  Blair.  Between  what  dates! 

Mr.  Mellen.  From  February  to  June  1888,  tliey  did  lO^^o  of  the  to- 
tal San  Francisco  traffic,  about  90  per  cent,  being  done  by  the  other 
transcontinental  lines.  From  July  to  December,  1888,  they  did  llf=y\. 
of  the  total  San  Francisco  traffic.  In  January  1889,  they  did  1 1  i^^^o  V^^' 
cent,  of  the  total  San  Francisco  traffic,  and  in  February,  1889,  they  did 
25i^o-i,,  in  Msirch  29i^y^o,  and  in  April  37  j^if^,-  showing  that  that  line  to-day, 
or  in  the  month  of  April,  was  carrying  east-bound  over  33;^  per  cent,  of 
all  the  transcontinental  traffic  between  San  Francisco  and  the  Atlantic 
sea-board.     I  will  hand  you  the  statement  in  detail. 

The  statement  is  as  follows : 

Percentages  of  total  San  Francisco  tonnage  carried  by  Canadian  Pacific  liailwny  to  and 

from  the  Territories  noted. 

fPer  weekly  statenieiit«  Usned  by  the  cbairmau  <»f  the  TrauftcontiDciital  Associaiiuu.] 


East  bound. 

West  bound. 

Period. 

To  Atlantic 
aea-board. 

To  IJiiffalo 

and  Pitta- 

biiTKh. 

To 
Chicago. 

From  At- 
lantic sea- 
buurd. 

From 
BuU'alo. 

From 
CbicaKO. 

February  to  June.  1888 

July  10  DeombiT,  1888 

Jan'uarv  18>*9 

10.48 

11.87 
11.38. 
25.23 
29.  49 
37.77 

.15 

2.43 
39.09 

h'n 

20.70 

.83 
5.38 
15.11 

3*52' 

13.90 

1.93 
5.55 
4.72 
4.0G 

7.ra 
auo 

2.09 
6.11 
12.49 
10.07 
6.05 
7.67 

2.20 
3.  CO 

2.70 

Februiirv  IHHO 

l.:<2 

March    1«80 

3.40 

Ajtiil  1889 

0.07 

Total 

14.02 

3.49 

3.32 

4.47 

5.83 

3.38 

Diffe) entiala  allowed  Canadian  Pacific  Railway. 


1 

2 

3 

25 
23 

17 

4 

20 
18 
14 

5 

20 
18 
14 

A 

15 
14 
11 

B 

15 

14 
U 

c 

12 
11 
9 

D 

10 
9 

7 

£ 

40 
32 

25 

35 
27 
21 

!' 

7 

Senator  Gorman.  The  Canadian  Pacific  comes  ip  competition  with 
the  Union  Pacific  by  a  steam-ship  line  plying  between  San  Francisco 
and  Puget  Sound  i 

Mr.  Mellen.  Yes,  sir. 

Senator  Gorman.  Who  owns  that  steam-ship  company  t 

Mr.  Mellen.  It  is  owned  by  American  parties. 


DIFFERENTIALS   ALLOWED   THE   CANADIAN  PACIFIC. 

The  Chairman.  What  have  you  to  say    in  explanation  of  the  rapid 
increase  of  tonnage  carried  over  the  Canadian  Pacific  * 

Mr.  Mellen.  I  think  it  is  owing  to  the  diflerentials  allowed  the  Cana- 
dian Pacific  being  too  large. 

The  Chairman.  The  ditterentials  allowed  it  by  the  American  roads  t 

Mr.  Mellen.  Yes,  sir. 

The  Chairman.  Why  do  the  American  roads  allow  such  large  dilfei-en 
tials,  then  % 


\ 


•THE    UNITED    STATES   AND    CANADA.  349 

Mr.  Mellen.  In  order  to  preserve  the  existing  tarifiFs. 

Senator  Gorman.  State  the  differentials  in  1888  and  1889. 

Mr.  Mellen.  The  present  differential  on  first-class  freight  is  40 
cents  a  hundred. 

Senator  Gorman.  What  were  the  differentials  in  1888? 

Mr.  Mellen.  In  1888,  the  differentials  were  30  cents  per  hundred, 
25  cents  per  hundred,  20  cents  per  hundred,  15  cents  i)er  hundred, 
and  so  on.  Thirty  cents  per  hundred  as  against  40  cents  per  huiuhed 
now,  20  cents  as  against  25  cents,  and  so  on. 

Senator  Blair.  You  think  that  the  differentials  are  now  too  large, 
and  that  that  accounts  for  the  large  increase  of  trattic  on  the  Canadian 
Pacific? 

Mr.  Mellen.  Yes,  sir. 

Senator  Blair.  Do  you  not  mean  that  the  differentials  are  not  large 
enough  ? 

Mr.  Mellen.  I^o,  the  differentials  allowed  the  Canadian  Pacific  make 
their  rates  less  than  the  rates  agreed  upon  by  the  Trauscontincntal 
Association,  and  they  are  enabled  thereby  to  take  an  undue  proportion 
of  the  traffic.  The  (litterential  is  too  large.  A  differential  is  the  rate  a 
road  is  allowed  to  charge  less  than  its  competitors. 

In  this  connection  I  wish  to  state  that  the  Transcontinental  Associa- 
tion is  now  on  the  verge  of  disruption  by  the  notice  of  the  withdrawal 
of  the  Southern  Pacific  unless  these  differentials  allowed  the  Canadian 
Pacific  can  be  reduced,and  there  is  a  meeting  called  for  the  20tli  of  July, 
a  conference  of  all  the  lines  interested,  for  the  purpose  of  ascertaining 
whether  the  roads  can  preserve  the  association  and  the  tariffs.  Thus 
far  there  has  been  shown  no  intention  of  reducing  the  dillerentials. 
How  the  association  can  be  maintained  and  these  differentials  be  kept 
up  is  the  question. 

The  Chairman.  I  intended  to  ask  you  this  question  a  moment  ago^ 
but  was  interrupted.    Why  is  it  that  the  differentials  were  fixed  so  liigli  ? 

Mr.  Mellen.  There  was  a  great  deal  of  uncertainty,  and  the  Canadian 
Pacific  agreed  to  come  into  the  association  and  be  good  citizens  and 
behave  themselves  if  the  other  roads  would  allow  them  to  charge  so  much 
less  than  the  published  rates  of  the  association.  That  was  the  best  we 
could  do.    There  was  no  sentiment  about  it. 

The  Chairman.  What  would  be  the  effect  if  you  did  away  with  the 
association  ? 

Mr.  Mellen.  The  Canadian  Pacific  would  come  in  as  a  free  lance, 
and  make  business  unremunerative  for  us  all. 

The  Chairman.  You  say  they  would  make  business  unremunerative 
to  all  the  roads  ? 

Mr.  Mellen.  Yes,  sir.  They  can  stand  a  loss  better  than  we  can, 
perhaps. 

The  Chairman.  Why? 

Mr.  Mellen.  Because  the  Canadian  Government  backs  them. 

The  Chairman.  The  Government  helps  them  out  wheuever  they 
need  it  ? 

Mr.  Mellen.  It  has  helped  them  out  once  or  twice. 

The  Chairman.  What  do  you  actually  know  about  the  Canadian 
Government  assisting  the  Canadian  Pacific  road? 

Mr.  Mellen.  I  know-  nothing  but  from  common  report. 

The  Chairman.  Do  you  regard  the  Union  Pacific  as  having  lost  very 
seriously  by  the  competition  of  the  Canadian  Pacific? 

Mr.  Mellen.  The  Union  Pacific  ha$  been  losing;  it  has  not  been 
losing  very  seriously,  though, 


350  TRANSPORTATION  INTERESTS  OF 

The  Chairman.  Which  road  has  lost  the  most? 

Mr.  Mellen.  The  loss  has  been  (listril)nte(l  genierally  over  all  the 
roads  which  form  lines  reaching  from  the  DTth  meridian  to  Pacific  Coast 
terminals. 

The  Chairman.  Suppose  there  was  no  law  regulating  the  American 
roads,  would  there  be  a  different  situation,  in  your  opinion  ? 

Mr.  Mellen.  There  would,  in  all  probability,  be  a  pool  or  a  division 
of  traffic. 

The  Chairman.  You  would  have  to  give  the  Canadian  Pacific  the 
lion's  share  in  order  to  make  any  bargain  with  them. 

Mr.  Mellen.  Not  the  lion's  share;  but  more  than  they  were  enti- 
tled to. 

Tlie  Chairman.  What  difference  would  tlu'ie  be  between  giving  them 
more  than  tliey  were  entitled  to  and  wlmt  you  are  now  doing  ? 

Mr.  Mi:llen.  I  would  uof  so  much  object  to  these  differentials  if  I 
believed  the  Canadian  Pju-itic  did  their  business  on  them. 

The  Chairman.  Do  you  think  the  Canadian  Pacific  does  business  at 
a  still  lower  rate  than  they  are  allowed  to  by  tiiose  differentials  ? 

Mr.  Mellen.  That  is  a  dillicult  thing  to  prove,  as  any  railroad  man 
knows.  I  do  not  believe  that  all  of  the  business  the  Canadian  Pacific 
does  is  done  on  those  differentials. 

The  Chairman.  So  that  they  l>ecome  a  free  lance  any  way  ! 

Mr.  Mellen.  By  this  arrangement,  however,  we  ('heck  the  demoral- 
ization. We  do  not  entirely  prevent  it ;  I  <lo  not  believe  we  shall  en- 
tirely i>revent  it  until  the  millenium  comes.  It  is  che(;ked.  The  dif- 
ferential system  is  a  beiu'lit  to  that  extent. 

The  Chairman.  Tiu'i  point  I  want  to  get  at  is  whether  there  is  any 
situation,  any  condition,  pertaining  to  the  National  (JovernnuMit  that 
embarrasses  you  gentlemen  running  American  lines  in  this  competition 
with  the  Canadian  Pacific. 

Mr.  Mellen.  The  Canadian  Pacific  has  an  advantage  in  the  fact  that 
it  is  not  compelled  to  scale  its  intermediate  rates  to  meet  the  rates  it 
names  on  through  freight,  as  the  American  lines  are  com[)elled  to  do, 
and  thus  takes  it  away  from  the  American  roads. 

The  Chairman.  Do  you  sujjpose,  as  a  matter  of  fact,  that  the  Cana- 
dian Pacific  charges  more  for  half  the  distance  from  M<tntreal  t<>  San 
Francisco,  or  to  Puget  Sound,  the  terminus  of  tlieir  road,  than  they  do 
for  the  whole  distance  from  Montreal  to  San  I'rancisco,  or  Puget  S(Uind? 

I\Ir.  Mellen.  I  think  their  rates  from  I'oston  to  Vancouver  are 
higher  than  their  rates  from  Boston  to  San  Francisco.  1  think  that  is 
a  fact. 

The  Chairman.  I  suppose  the  Canadian  tariff's  are  not  on  file. 

Mr.  Mellen.  They  ought  to  be.  1  believe  that  the  rates  of  the 
Canadian  Pacific  from  their  ICastern  t«'niiinals  to  Puget  Sound  jmints 
are  higher  than  their  rates  from  Boston  to  San  l'ran(asco.  As  a  matter 
of  fiict,  the  differentials  that  are  granted  the  Canadian  Pacific  are  given 
purely  on  San  Francisco  business. 

The  Chairman.  If  the  Canadian  Pacific  comes  into  Tacoma,  which 
is  in  the  United  States,  and  so  is  Boston,  taking  a  shipment  from  Bos- 
ton to  some  Puget  Sound  point,  they  are  comixdled  to  obey  the  intesr- 
state  commerce  act  as  to  that  sliii;ment.  Is  not  that  v«)ur  understand- 
ing ? 

Mr.  Mellen.  I  never  knew  just  exactly  how  that  was. 

The  Chairman.  Has  not  the  Interstate  Commerce  Commission  de- 
cided that  such  shipments  are  under  the  interstate  law  t 

Mr.  Mellen.  1  do  not  know  as  to  that, 


THE  UNITED  STATES  AND  CANADA.  351 

The  Ohairman.  The  fact  is  that  Mr,  Hickson,  the  general  manager 
of  the  Grand  Trunk  Eailroad,  and  Mr.  Van  Home,  president  of  the 
Canadian  Pacific  Railway,  stated  before  our  committee  that  in  all 
business  touching  the  United  States  they  regarded  the  interstate  com- 
merce act  as  in  force. 

If  you  have  any  documents  with  you,  Mr.  Mellen,  that  you  wish  to 
insert  you  can  do  so. 

Mr.  Mellen.  I  have  merely  brought  some  figures  to  show  the  com- 
mittee that  the  Canadian  Pacific  is  continually  increasing  the  amount 
of  American  business  it  is  doing  in  competition  with  our  line,  through 
the  facilities  they  have,  whereas  we  are  under  restrictions ;  and  I  as- 
sume that  unless  there  is  some  change  made  that  that  increase  will  con- 
tinue until  eventually  all  this  business  will  be  absorbed  by  the  Cana- 
dian Pacific. 

The  Chairman.  Is  it  or  not  your  opinion  that  with  the  aid  given  to 
the  Canadian  Pacific  by  the  British  Government  that  state  of  facts  will 
prevail  without  reference  to  any  law  of  the  United  States  ? 

Mr.  Mellen.  To  an  extent,  but  not  to  so  great  an  extent. 

The  Chtarman.  Why  not?  Take  your  own  business,  for  instance. 
You  are  traffic  manager  of  the  Union  Pacific  road. 

Mr.  MelLen.  Yes,  sir. 

EFFECT  OF  THE   SHORT-HAUL   PROVISION. 

The  Chairman.  Do  you  find  the  interstate  commerce  act  seriously 
interfering  with  your  through  business  ? 

Mr.  Mellen.  I  do  not  think  it  does,  except  so  far  as  the  competition 
of  the  water  lines  and  of  the  Canadian  Pacific  forces  us  to  make  lower 
rates.  In  making  our  transcontinental  rates  we  do  not  observe  the 
short-haul  section  of  the  interstate  law.  We  understand  tbat  the  law 
allows  us  to  make  these  tariffs  in  the  way  we  have.  1  <lo  not  think,  al- 
together, that  the  Union  Pacific  has  suffered  very  seriously  by  reason 
of  tlie  competition  of  the  Canadian  Pacific. 

The  Chairman.  Is  not  that  the  same  construction  that  is  put  upon 
it  by  the  other  roads  ? 

Mr.  Mellen.  Yes,  sir. 

The  Chairman,  I  am  unable  to  see,  in  view  of  that  state  of  fa<;t8, 
how  legislation  affecting  American  interests  or  regulating  American 
railroads  interferes  with  your  right  to  compete  with  the  Canadian  Pa- 
cific, just  as  though  there  was  no  law  in  existence. 

Mr.  Mellen.  We  can  not  compete  except  at  greater  loss  than  the 
Canadian  Pacific.  If  you  construe  the  competition  of  the  Canadian 
Pacific  Railroad  as  authorizing  a  suspension  of  the  long  and  short  haul 
clause,  I  think  we  could  take  care  of  ourselves. 

The  Chairman.  Have  you  not  been  doing  that  ? 

Mr.  Mellen.  No,  only  so  far  as  water  competition  is  concerned.  The 
Canadian  Pacific  comes  in  and  takes  the  business  at  the  same  rates, 
less  the  agreed  differentials  which  we  have  given  them  as  an  induce- 
ment for  them  not  to  go  to  war. 

The  Chairman.  Have  you  not  been  operating  on  the  theory  tliat  as 
to  all  water  rates  on  through  shipments  the  interstate  commerce  short- 
haul  provision  did  not  apply  *? 

Mr.  Mellen.  Yes,  sir,  Now,  if  the  same  theory  should  be  applied 
to  the  Canadian  Pacific  that  is  applied  to  our  traffic,  so  far  as  the  scal- 
ing of  intermediate  rates  is  concerned,  it  would  be  a  certain  advantage 
to  the  American  lines. 


352  TRANSPORTATION    INTERESTS    OF 

The  Chairman.  I  do  not  know  whether  I  understood  your  hist  re- 
mark or  not.     Please  repent  it. 

Mr.  Mellen.  I  say  that  if  the  Canadian  ]*acific  were  obliged  every 
time  it  made  a  rate  to  a  western  point  to  scak-  all  its  intermediate  rates, 
so  that  there  should  be  no  intermediate  rates  higher  than  the  through 
rate,  then  there  would  bo  an  advantage  to  the  ^Vnierican  lines. 

The  Ciiaikman.  Do  you  observe  the  long  and  short  haul  provision 
and  decline  to  charge  more  for  any  intermediate  Bhipmeuts  tbaii  you 
charge  for  the  through  shii)mentf 

Mr.  Mellen.  We  do  not.  Uere  is  the  point.  The  Canadian  Pacific 
takes  business  around  by  way  of  Vancouver  into  an  eastern  terminus. 
They  get  an  advantage  tliere,  and  we  can  not  compete  with  them  on 
that  i)oint.  As  the  American  lines  go  inland  from  either  side  of  the 
continent  tlu'ir  rates  are  not  subject  to  water  cotnpctition  an«l  become 
subject  to  the  long  and  short  haul  i)rovision  of  the  interstate  law. 
This  is  not  the  case  with  the  Canadian  Pacific  and  is  an  advantage  to 
that  com]>any.  Again,  by  its  various  connections  by  both  water  and 
rail  it  draws  business  from  intermediate  points  in  the  American  lines 
to  it  at  various  junction  ])oints  and  is  not  obliged  to  apply  the  rates 
named  on  such  busniess  to  the  various  juunts  on  the  line  over  which 
such  business  goes  to  destination  although  the  same  are  intermediate 
and  would  under  the  law  on  an  American  line  take  the  same  or  a  lower 
rate. 

The  Chairman.  AVhen  you  go  away  from  the  water's  edge  you  have 
to  observe  the  long  and  short  haul  provision  ? 

Mr.  Mellen.  That  is  what  I  mean.  They  are  not  subject  to  the  same 
disadvantage.  More  than  all  that,  they  can — 1  will  not  say  they  <lo — 
pay  rebates  and  we  can  not  find  it  out. 

The  Chairman.  How  is  that  with  respect  to  your  road? 

Mr.  ]\1  ELLEN.  You  have  access  to  everything  we  have.  We  are  cer- 
tainly under  stric^t  orders  to  observe  the  law  in  every  way  we  can. 

The  Chairman.  I  am  not  intimating  that  there  is  any  disposition  to 
violate  the  law  secretly. 

Mr.  Mellen.  The  law  is  very  dillicult  to  ai)ply  in  all  cases,  and  it 
would  be  strange  if  we  did  not  make  slii)s  once  in  a  while. 

BUSINESS   ON   THE   UNION   rACIFIC. 

The  Chairman.  How  much  of  a  decrease  has  there  been  in  your  own 
transcontinental  trathc  within  the  last  two  or  three  years! 

Mr.  Mellen.  I  am  not  i»repareil  to  say,  but  I  sliould  not  think  it  is 
anything  worth  making  any  complaint  about. 

The  Chairman.  Nothing  very  serious  ? 

Mr.  Mellen.  No,  sir.  Our  road  is  i)eculiarly  situated  with  regard 
to  this  law.  We  are  a  short  line,  and  the  law,  if  it  is  a  benefit  to  any 
line,  is  a  benefit  to  the  short  line;  and  while  we  may  lose  some  round- 
about business  which  we  got  before  the  passage  of  the  interstate  law, 
we  i)robably  gain  in  direct  business,  which  more  than  ofisets  the  loss 
on  round-about  busiiu'ss. 

The  CiiAiioiAN.  The  business  of  your  road  is  increasing,  is  it  not? 

Mr.  Mellen.  The  business  of  our  road  has  been  falling  ofi  during  the 
early  part  of  this  year,  but  it  is  not  owing  to  the  oi)eration  of  the  inter- 
state commerce  law.  There  are  some  roads  touching  the  Canadian 
Pacific  and  running  down  into  the  United  States 

The  ChairjVIAN.  What  are  those  roads? 

Mr,  Mellen.  The  St.  Paul,  Minneapolis  and  Manitoba,  and  then 


TP^E    UNITED    STATES    AND    CANADA.  353 

they  connect  at  Dulutli  with  the  Duhith,  South  Shore  and  Atlantic,  and 
the  Sault  Ste.  Marie  and  Athintic. 

The  OnAiRMAN.  Does  much  traffic  drop  down  from  Winnipej;  into 
the  region  of  the  Union  Pacific  at  Omaha  and  other  i)oints  aloiijr  tlie 
line? 

Mr.  Mellen.  Nothing  worthy  of  consideration.  It  more  aflects  the 
business  in  Minnesota  and  Wisconsin. 

The  Chairman.  Whatever  does  come  and  is  switched  off  into  that 
region  and  comes  into  the  United  States,  does  the  Canadian  Pacific  carry 
it  from  the  western  point  and  bring  it  in  at  a  less  rate  than  any  of  our 
roads,  the  Northern  Pacific,  for  instance,  or  your  own  road? 

Mr.  Mellen.  The  differentials  do  not  apply  on  that  traffic;,  I  believe. 

The  Chairman.  What  do  you  know  about  the  Northern  Pacific  lino 
in  its  competition  with  the  Canadian  Pacific? 

Mr.  Mellen.  I  should  assume — I  have  not  personal  knowledge — that 
its  competition  with  the  Canadian  Pacific  is  greater  than  ours. 

The  Chairman.  Do  you  mean  that  the  Northern  Pacific  is  suffering 
more  than  your  road? 

Mr.  Mellen.  Yes,  sir. 

Senator  Blair.  Does  the  Northern  Pacific  take  any  traffic  from  San 
Francisco? 

Mr.  Mellen.  Yes,  sir. 

Senator  Blair.  It  has  steamers  as  well  as  the  other  lines? 

Mr.  Mellen.  Yes,  sir. 

PACIFIC   STEAM-SHIP  LINES. 

The  Chairman.  What  do  you  know  about  foreign  shipments  ? 

Mr.  Mellen.  We  have  a  large  business  from  China  and  Japan,  and 
are  interested  with  the  Southern  Pacific  in  the  ownership  of  one-half  of 
a  steam-ship  line  between  San  Francisco,  Y^okohama,  and  Hong  Kong. 

The  ChaixIMAN.  How  many  steamers  are  there  in  that  line? 

Mr.  Mellen.  The  line  is  composed  of  four  steam -ships. 

The  Chairman.  And  the  Union  Pacific  gets  all  the  traffic  that  comes 
over  on  that  line  of  steamers  ? 

Mr.  Mellen.  By  the  action  of  the  Canadian  Pacific  Steam  ship  Lino 
we  have  been  compelled  to  divide  the  traffic.  We  used  to  do  the  whole 
of  it,  but  now  we  do  but  60  per  cent,  of  it. 

The  Chairman.  The  Canadian  Pacific  has  a  line  of  steamers  also  ? 

Mr.  Mellen.  Yes,  sir.  We  assign  to  the  Canadian  Pacific  vessels 
and  sailing  vessels  40  per  cent,  of  the  traffic. 

The  Chairman.  How  does  your  steam-ship  line  compare  with  the 
Canadian  Pacific  Steam-ship  Line  ? 

Mr.  Mellen.  The  lines  are  about  the  same. 

The  Chairman.  Do  you  know  whether  the  Canadian  Pacific  Steam- 
ship Line  is  subsidized? 

Mr.  Mellen.  I  do  not  know  from  personal  knowledge.  I  have  un- 
derstood that  it  was. 

The  Chairman.  Y^our  steam-ship  line  is  not  subsidized,  is  it  ? 

Mr.  Mellen.  No,  sir. 

The  Chairman.  The  Canadian  Pacific  Steam-ship  Line,  as  you  under- 
stand  it,  gets  a  subsidy  from  the  Canadian  Government  ? 

Mr.  Mellen.  I  have  understood  it  was  given  a  subsidy.  1  have 
never  ])ai(l  anv  attention  to  it. 

The  Chairman.  Take  this  end  of  the  line,  do  you  get  your  due  pro- 
portion, as  you  think,  of  the  shipments  of  cotton  goods  and  everytliing 
tjlse  that  is  produced  here? 
0543 23 


354  TRANSPORTATION    INTERESTS    OF 

Mr.  Mellen.  We  do  not  pfet  very  iiiiRh  of  the  tians-racific  business. 
It  g^oes  mostly  h\  the  Canadian  Pacitic. 

The  Chairman.  Wii.v  is  that? 

Mr.  Mellen.  1  am  unable  to  say.  Manufacturing  towns  are  located 
U])on  lines  in  connection  nith  the  Canadian  racific.  and  tin*  division  <if 
the  through  rate  made  by  tlie  Canadian  Tacilic  would  naturally  lead 
those  lines  to  be  Tuore  partial  to  that  line  than  to  ours. 

The  Chairman.  !So  that  it  is  not  alloj;ether  the  interstate  commerce 
law,  in  >our  Judj,niient,  that  causes  the  shii»n)ents  from  these  mauulact- 
urin^  towns  to  drilt  around  to  theCamulian  l*acitic? 

Mi-.  Mei.i^en.  1  ha\e  never  claimed  that  it  w;is  entirely  the  interstate 
commerce  act.  I  think  the  act  bears  hard  upon  some  of  this  business, 
though. 

legislation  suggested. 

The  CHAimiAN.  You  think  that  the  interstate  commerce  act  imposes 
burdens  upon  \ou  which  put  ,\(»u  at  a  disad\  anta^'e  as  compared  with 
the  Canadian  roads.  NVhat  sutrgestioii  have  you  t(»  make  with  refer- 
ence to  ehan<^in<;  the  law  ? 

Mr.  ^I ELLEN.  I  am  n()t  a  practical  le^zislator,  but  it  would  seem  to 
me  but  mere  justice  to  mak»'  the  Canadian  ra<Mlic  come  Inlly  under  tlu' 
inti'istate  commerce  law  in  all  its  b'lsiiu-ss,  as  tlie  American  roads  aie 
com|)elU'd  to  do.  It  seems  to  mc  that  Coiijjress  should  n-quire  the  Ca- 
luulian  Pacitic  to  be  place<l  niuler  bonds,  to  juoilucc  its  books  ami  its 
ollicials  belbre  the  Inter>tate  Commerce  Citmniissiiui,  as  the  American 
roads  are  now  obli;r«'d  to  do,  and  tocompel  it,  under  heavy  penalties,  to 
observe  the  law.  It  seems  to  nu'  that  that  is  the  only  sensible  thinj;  to 
do — either  do  that,  or  relieve  the  burdens  that  are  now  placed  upon  the 
American  lines  in  compeiiiion  with  the  Canadian  Pacitic. 

The  CiiAiUMAN.  You  think  that  would  be  a  remedy  i)referable  to  a 
very  ra<lical  chan;,M'of  the  inteisiatc  commeice  act  itsi'lfT 

Mr.  Mellen.  I  should  personally  deplore  seeiuj;  the  act  re|)eale(l. 
1  believe  a  worse  condition  W(»uld  come  to  pass  in  case  of  the  repeal  «if 
the  law  than  even  to  have  ii  with  its  present  burdens  on  some  of  (nir 
railroads.'  1  think  the  law  has  ln-eiiofas  much  beiu  lit  to  the  com|)aiiy 
1  lepri'sent,  as  it  has  been  a  burden. 

The  Chairman.  And  the  proper  thin^  to  «lo  is  to  bring  the  Canadian 
roads  under  it,  do  you  think  f 

Mr.  Mellen.  Either  that  or  untie  our  hamls  so  that  we  cnu  meet 
their  competition,  it  seems  to  me  it  is  perteclly  feasil»lc  to  briu};  the 
Camulian  Pacitic  to  terms.  If  this  were  a  matter  betwet'ii  railroads,  1 
think  they  would  lind  a  way  of  a<ljustin;;  it,  and  I  think  the  Cnited 
States  Goveninicnl  on^^ht  to. 

Senator  Blaiu.  You  think  it  is  the  right  thing  for  the  Ciovernment 
to  so  conduct  this  matter  that  the  cost  of  tr.insportation  should  be 
come  greater  tt)  the  people  than  it  now  is. 

^Ir.  Mellen.  It  would  not  necessaiily  be  so  by  either  of  the  methods 
I  suggest;  certainly  not  by  the  second. 

Senator  Blair.  If  the  result  is  not  to  be  to  give  tlie  railroa<ls  more 
than  they  are  now  getting,  how  can  any  action  relieve  them  from  their 
embarrassnu'iit  ? 

Mr.  Mellen.  If  the  result  is  to  be  that  the  railroads  are  to  get  more 
money,  then  of  course  that  money  has  got  to  come  out  of  the  public; 
but  I  do  not  think  that  it  is  necessary  that  the  railroads  should  get 
more  money.  They  might  get  less  and  have  this  situation  made  just 
Hud  e(|ui table  as  between  the  parties. 


THE  UNITED  STATES  AND  CANADA.  355 

Senator  Blaie.  Do  you  know  of  any  way  of  reduciuj,^  the  char-cs, 
or  prices,  of  any  article  except  by  competition  between  those  wlio  liave 
it  to  sell  ? 

Mr.  Mellen.  But  yon  have  competition  in  all  this  transcontinental 
traflSc  by  water  and  by  the  American  lines.  It  is  not  necessary  that 
you  tie  the  hands  of  the  American  lines  and  have  them  bound'  hand 
and  foot  for  the  benefit  of  a  foreign  line  to  take  the  business  from 
them. 

Senator  Blair.  Do  j'ou  think  that  by  applying  the  provisions  of  the 
interstate  commerce  act  to  the  Canadian  roads,  the  cost  of  transporta- 
tion to  the  people  of  New  England  would  not  be  increased? 

Mr.  Mellen.  ]S'ot  necessarily. 

Senator  Blair.  And  would  the  competition  be  just  as  effective? 

Mr.  Mellen.  Just  the  same. 

Senator  Blair.  Would  it  be  just  as  effective  to  reduce  the  price  of 
transportation  then  as  it  now  is"^ 

Mr.  Mellen.  It  is  my  impression  that  the  effect  of  the  interstate 
commerce  act  is  to  increase  the  rates  charged  by  the  Transcontinental 
Association. 

Senator  Blair.  Even  in  this  country  ? 

Mr.  Mellen.  Yes,  and  it  would  not  be  difiScult  for  the  roads  in  the 
association  to  increase  their  rates  still  further  by  increasing  the  differ- 
entials of  the  Canadian  Pacific.  The  only  point  is  this,  they  will  get 
just  as  much  more  as  the  patience  of  the  American  railroads  will  enable 
them  to. 

legalizing  pooling. 

Senator  Blair.  Would  the  legalizing  of  pooling  enable  the  roads  to 
contract  with  each  other  as  one  solid  mass  and  enable  them  to  hold  each 
other  to  this  contract  and  then  put  up  prices? 

Mr.  Mellen.  That  is  what  they  are  doing  to-day,  except  there  is  no 
binding  force  to  the  contract.  That  is  what  the  Transcontinental  As- 
sociation aims  at,  that  certain  rates  shall  obtain  on  that  traflSc,  and  if 
that  agreement  is  observed  there  are  no  lower  rates  charged  by  the  Ca- 
nadian Pacific  than  by  any  other  transcontinental  line  except  the  lower 
rate  it  is  allowed  to  charge  by  the  agreement.  That  is  an  agreement 
for  the  maintenance  of  rates.  There  is  no  division  of  tratfic.  Now,  if 
the  Canadian  Pacific  is  put  under  the  law  and  pooling  is  legalized,  I 
am  in  favor  of  the  pool.  I  do  not  believe  in  a  money  pool ;  1  believe 
in  a  division  of  traffic.  I  believe  that  when  one  line  can  demoralize 
business,  instead  of  giving  it  money  it  would  seem  to  be  better  to  give 
it  its  proportion  of  business,  and  then  it  has  to  do  some  work  for  the 
money  it  gets.  I  do  not  believe  in  roads  earning  more  money  than 
they  are  entitled  to  and  then  being  compelled  to  pay  the  surplus  ovw 
to  a  road  that  does  nothing. 

Senator  Blair.  Is  that  anything  else  than  a  proposition  to  abolish 
competition  between  the  railroads  and  to  consolidate  them  in  one  mass 
according  to  law,  so  that  one  component  part  can  enforce  the  law  as 
against  the  whole  ? 

Mr.  Mellen.  That  is  the  substance  of  it. 

Senator  Blair.  Is  not  that  the  substance  of  what  it  would  be  to  the 
public  ? 

Mr.  Mellen.  It  would  have  the  effect  of  making  the  rates  stable. 

Senator  Blair.  At  the  will  of  the  railroads. 

Mr.  Mellen.  No;  that  depends  upon  the  provisions  of  law  by  which 
you  allow  the  pooling.    I  do  not  mean  an  unrestricted  pool.    My  pool 


356  TRANSPORTATION   INTERESTS   OF 

is  one  tbat  shall  be  filed  and  be  approved  by  the  Interstate  Coinraerco 
Commission,  and  one  that  the  railroads  throu<;h   the  Commission  can 
enforce  on  all  members  of  the  pool,  and  that  penalties  be  provided 
against  companies  violating  tbat  pool  the  same  as  providing  for  penal 
ties  for  violating  the  law  as  it  stands  to-day. 

Senator  Blaib.  Will  you  suggest  the  necessity  of  that  kind  of  com- 
bination, if  there  is  any? 

Mr.  Mellen.  There  is  a  necessity,  I  suppose,  to  i)reserve  property  ; 
to  maintain  stable  and  uniform  rates,  and  to  prevent  demoralization  in 
all  classes  of  business  wliicli  must  necessarily  ensue  if  the  rates  are  un- 
stable, as  1  believe  thay  always  have  been,  ami  as  I  believe  they  are 
today  more  than  before  the  passage  of  the  interstate  couimerce  act.  I 
think  it  would  accomplish  what  the  act  intended,  except — well,  I  make 
no  exception. 

Senator  liLAiR.  And  to  reach  this  end  it  is  necessary  to  have  an  agree- 
ment on  the  i>art  of  the  Can  :dian  Tacitic,  or  otherwise  a  combination 
of  American  railroads  whose  tratlic  may  be  aflected  by  the  Canadian 
Pacific  would  be  inoperative  and  void. 

Mr.  Mellen.  That  is  the  f;u^t.  IJut  I  suggest  an  alternative  propo- 
sition. If  you  are  afraid  the  public  will  be  imposed  upon  by  bringing 
the  Canadian  Pacific  under  the  provisions  of  the  interstate  commerce 
act,  then  release  the  American  roads  from  the  restricting  provisions 
and  let  them  meet  this  competition  if  they  see  fit,  and  the  public  will 
get  the  benefit.  But  if  you  tell  the  Canadian  Pacilic  that  they  can 
come  in  here  and  do  an  unrestricted  business,  you  tie  up  those  you 
should  protect  for  the  benefit  of  those  you  should  restrict,  as  it  seems 
to  me. 

Senator  Blaiu.  Do  you  think  there  would  be  much  sawing  done  if 
the  Canadian  Pacific  and  the  American  roads  were  authoriz"<l  to  com- 
bine ?  Would  not  the  sawing  then  come  between  the  railroad  combina- 
tion and  the  public  f 

Mr.  Mellen.  A  pool  is  not  protection  against  the  public,  but  protec- 
tion against  themselves.  They,  themselves,  are  their  worst  enemies. 
You  establish  just  and  reasonable  rates  to-day  and  these  taritls  are 
filed  with  the  Interstate  Commerce  Commission.  Now,  if  you  entbrco 
those  rates  on  the  part  of  the  American  lines  and  do  not  enforce  them  on 
their  coi'ii)etitor  who  is  out  of  your  jurisdiction,  you  see  how  ineipiita- 
ble  the  i)osition  is  in  which  the  American  roads  are  i)laced.  The  ob- 
jection you  make  to  a  combination  should  be  to  their  larifis  when  tiled. 
There  is  then  time  to  correct  them  if  they  are  not  just  and  reasonable. 
If  they  are  just  and  reasonable  then  all  should  be  made  to  comply  with 
them. 

Senator  Blair.  You  must  catch  your  hare  before  you  cook  him. 

Mr.  Mellen.  That  is  the  rule  generally,  L  believe.' 

Senator  Blair.  Ami  this  hare  is  in  a  country  where  we  have  no 
1)1  ace  to  hunt  him. 

Mr.  Mellen.  I  think  if  you  watch  him  when  he  crosses  the  Ameri- 
can line  you  can  catch  him. 

Senator  Blair.  But  when  he  comes  over  the  line  the  American  publie 
feed  on  him,  and  the  proposition  is  that  the  American  public  shiill  liaA c 
no  chance  to  feed  on  this  Canadian  hare  when  he  (Tosses  the  line. 

Mr.  Mellen.  If  the  laws  which  the  American  (lovernment  i>ass  for 
the  government  of  their  own  corjiorations  are  just  and  ecpiitable  it  is 
not  necessary  to  go  outside  of  their  borders  for  protection.  They  ha\ c 
a  right  to  establish  just  and  fair  rates,  and  if  they  are  not  just  and  fur 
rates  they  are  not  dealing  fairly  with  their  owu  people. 


THE    UNITED    STATES    AND    CANADA.  357 

Seuator  Blair.  You  think  it  just  and  reasonable  that  an  existing 
corporation,  simply  because  it  is  an  American  corporation,  sliall  be 
allowed  to  so  do  business  with  an  American  public  for  all  time  iind  all 
parts  of  the  American  Kepublic  as  that  that  road  shall  make  inoiicy  ! 

Mr.  Mellen.  I  do  not  consider  that  the  question  of  makiufj  money 
has  anything  to  do  with  this  question  at  all.  You  prescribe  a  rule  that 
the  American  railroads  shall  do  business  under  certain  rules  and  re- 
strictions. You  prescribe  that  when  they  make  what  they  consider  just 
and  reasonable  tariffs  they  shall  file  them  with  the  Commission,  which 
has  jurisdiction  to  examine  them  and  say  whether  they  are  just  and 
reasonable.  The  fact  that  no  question  is  raised  against  a  tariff  tiled  is 
})roof  that  the  tariff  is  just  and  reasonable.  If  the  tariff"  lies  there  in 
the  hands  of  the  Commission  without  objection  it  is  a  tariff  that  all 
should  abide  by,  and  you  then  get  from  foreign  and  American  com- 
petitors what  you  require  of  them. 

Senator  Blair.  Do  you  understand  that  the  making  of  a  tariff  by  a 
railroad  company  and  tiling  it  with  the  Interstate  Commerce  Commis- 
sion constitutes  an  estoppel  to  the  Government  or  the  American  people 
ever  objecting  to  any  American  citizen  obtaining  transportation  in  any 
oiher  direction  at  a  cheaper  rate? 

Mr.  Mellen.  You  ask  me  does  it  constitute  an  estoppel  against  an 
American  citizen  getting  transportation  in  any  other  direction  at  a 
cheaper  rate.  I  say  that  if  he  obtains  his  transportation  from  an  Amer- 
ican road  at  a  cheaper  rate  than  the  regular  rate,  you  imprison  him, 
whereas  if  he  gets  it  from  an  English  road  he  is  all  right  and  has  some- 
thing to  feed  on. 

Senator  Blair.  I  do  not  understand  it  so. 

Mr.  Mellen.  The  other  party  can  make  a  secret  cut  at  any  time. 
He  can  make  it  on  the  moment,  and  we  have  got  to  give  a  certain  length 
of  time  before  the  change  can  go  into  effect,  and  in  .the  meantime  the 
business  is  gone. 

Seuator  Blair.  Do  you  think  it  would  be  a  sufficient  protection  if 
the  Canadian  roads  were  not  allowed  to  change  their  rate  except  upon 
the  ten  days'  notice  or  three  days'  notice,  as  the  case  might  be  l 

Mr.  Mellen.  I  think  the  Canadian  road  ought  to  do  all  that  its  com- 
petitors on  this  side  are  required  to  do. 

Senator  Blair.  You  are  assuming  that  restrictions  are  not  Imposed 
where  we  have  no  power  whatever  to  impose  them. 

Mr.  Mellen.  No. 

Senator  Blair.  We  have  no  question  that  if  Canada  were  a  part  of 
our  own  territory  this  law  would  apply  there. 

Mr.  Mellen.  Then  the  American  public  would  have  nothing  to  feed 
upon  and  would  have  no  protection  at  all. 

Senator  Blair.  Do  you  consider  that  this  interstate  commerce  law 
is  a  provision  of  recent  creation  ? 

Mr.  Mellen.  Yes,  sir. 

Senator  Blair.  Well,  there  is  a  vested  right  in  the  New  England 
people  that  they  had  prior  to  the  passage  of  this  act. 

i\Ir.  Mellen.  I  will  ask  you  if  the  New  England  people  have  any 
vested  right  to  any  lower  rates  that  are  not  enjoyed  by  other  people  in 
this  country  ?  Have  the  New  England  people  any  right  to  go  to  the 
Canadian  roads  and  say  that  they  have  a  right  to  manipulate  their 
rates  when  people  in  other  parts  of  the  country  have  not  the  same 
privilege  !  Have  the  manufacturers  of  New  England  rights  that  manu- 
facturers in  aiiv  other  part  of  this  country  have  not! 

Senator  BLAm.  The  answer  to  your  question  is  that  the  people  ot 


368  l-RANSPORTATION  INTERESTS  OF 

New  England  are  entitled  to  whatever  railroad  or  geographical  rights 
God  has  given  them,  and  are  entitled  to  any  advantage  brought  about 
by  their  own  industry  on  the  soil  where  they  live.  The  Union  Pacitic  is 
a  railroad  chartered  by  the  American  people  troni  the  Missouri  Kiver  to 
the  Pacitic  Ocean.  It  is  2,000  miles  from  its  eastern  terminus  to  New 
England.  Is  it  exactly  lair  lor  the  Union  Pacific  Railroad,  wbich  is 
two  or  three  thousand  miles  away  from  us  at  its  nearest  eastern  i)oint,to 
come  here,  where  my  father  and  grandfather  toiled  and  developed  New 
England,  who  are  the  bone  and  sinew  of  its  soil,  and  say  that  the  people 
of  New  England  shall  give  you  a  ])rolit  on  the  business  as  long  as  the 
sun  siiines  and  the  water  runs,  rather  than  take  advantage  of  a  geo- 
grai)hical  situation  and  a  country  west  of  us  of  vast  resources  ;  and  are 
we  to  be  legislated  out  of  our  advantages,  such  as  they  are? 

Mr.  Mellen.  I  should  have  to  say  in  answer  to  that  that  the  New 
England  people  are  entitled  to  any  rates  that  they  can  gain  in  any 
way,  but  1  think  also  where  a  railroad  is  established  by  a  foreign  gov- 
ernment, as  a  military  road,  largely  subsidized,  which  has  no  pros])ect 
of  l)aying  its  interest  on  the  business  it  gets  in  the  country  whicli  it 
traverses,  that  that  railroad  should  not  have  advantages  to  compete  in 
any  portion  of  the  United  States  with  American  corporations,  where 
this  Government  has  taxed  its  ]>eople  to  buihl  the  Union  Pacific,  and 
who  are  holding  the  Union  Pacific  to  an  accounting  for  every  dollar  it 
owes.  I  think  those  people  should  give  their  business  to  their  own 
roads  and  not  contribute  to  maintain  loreigners  at  the  cost  of  their 
own  enterprises. 

Senator  ]5lair.  But  the  way  in  which  you  propose  the  New  England 
l)eople  shall  get  ])ay  for  the  debts  you  owe  is  that'they  shall  pay  higher 
rates  for  all  future  time. 

Mr.  JMellen.  That  is  an  assumption  that  nothing  I  have  said  war- 
rants. It  «loes  not  necessarily  foih>w  that  if  you  put  the  Canadian 
Pacitic  road  on  the  same  basis  as  the  American  roads  that  it  will  in 
crease  the  rates  of  foreign  freight.  It  is  a  matter  in  which  a  great 
many  roads  have  an  interest  and  all  of  them  are  to  be  consulted.  You 
have  a  complete  remedy  in  the  fact  that  if  the  tarifi" established  is  not 
a  reasonable  one  it  may  be  overthrown  at  any  moment  by  your  acti<»ii. 

Senator  Plair.  You  say  that  we  should  require  as  a  condition  ]»re- 
cedent  to  the  Canadian  Pacific  doing  any  business  at  all  in  this  coun- 
try that  it  shall  conlbrm  to  the  interstate  commerce  law.  Y'ou  admit 
uecessarily  from  the  fact  that  we  are  outside  of  that  political  juris- 
diction that  we  can  do  nothing  more  than  impose  by  our  laws  condi- 
tions that  they  shall  comply  with  in  order  that  they  inay  do  business 
at  all  with  us.  If  they  do  not  see  fit  to  comply  with  those  conditions 
you  say  that  by  some  means  we  in  New  England  shall  be  put  to  tiir 
loss  of  transportation  facilities  in  which  we  feel  that  we  have  a  vested 
right.  Are  you  right  or  am  I  right  in  saying  that  your  i)roi)osition  is 
that  we  shall  so  conduct  our  business  by  a  law  of  the  land  that  we  will 
lose  these  Canadian  facilities  unless  these  foreign  roads  choose  to  con- 
form to  these  conditions? 

Mr.  INIellen.    I  gave  you  an  alternative  i)roposition.     Y'ou   try  to 
put  me  in  a  position  where  I  am  going  to  force  the  i)eople  to  pay  more 
money.     I  am  not  going  there.     It  is  immaterial   to  me  which  proposi 
tion  is  adopted  so  long  as  the  law  is  ai>plied  to  all  impartially,  or  el>' 
leave  the  American  roads  free  to  meet  the  comiietition  of  outside  roads. 

Senator  Blatr.  Take  it  in  that  way,  and  relieve  the  American  roa«ls 
from  the  provisions  of  the  interstate  commerce  law?  Is  not  that 
equivalent  to  requesting  a  repeal  of  the  law  t 


tUE    UNITED    STATES   AND    CANADA.  359 

Mr.  Mellen.  If  your  law  is  unjust  it  should  be  repealed. 

Senator  Blaie.  That  is  not  the  question.  Is  not  the  projjosition  that 
you  advance  equivalent  to  a  request  for  the  repeal  of  the  law  .'  To 
illustrate  why  I  ask  the  question,  suppose  alon^  this  wide  ran^e  of 
country  where  the  transportation  is  done  by  the  Baltimore  and  Ohio, 
the  Erie,  the  New  York  Central,  and  lines  that  connect  with  the  West, 
you  release  those  lines  which  are  competing  with  the  Cnnadian  lines 
from  the  operation  of  the  interstate  commerce  law,  when  said  lines  are 
in  imniediatecompetitiou  with  the  roads  passing  easterly  and  southerly 
of  them,  does  it  not  follow  that  if  you  release  any  American  railroail 
from  the  operation  of  the  law  that  you  also  release  the  Canadian  lines  ? 

Mr.  Mellen.  I  say  release  all  or  tie  up  all.  It  is  not  fair  to  tie  a 
man  up  and  allow  an  outsider  to  punish  him  at  his  will. 

Senator  Blair.  I  am  not  entering  into  any  controversy  with  you  any 
more  than  to  get  at  your  ideas.  We  are  in  quest  of  knowledge  on  this 
subject.  I  do  not  know  what  my  own  opinion  is  on  these  questions. 
The  New  England  manufacturers  want  the  lowest  rates  they  can  get,  no 
matter  at  what  cost,  and  you  want  the  highest  rates  that  you  can  get, 
or  the  highest  rates  that  the  traffic  will  bear? 

Mr.  Mellen.  We  are  subject  to  restrictions  to  which  the  Canadian 
lines  are  not  subject.     There  is  no  limit  to  how  low  a  rate  may  go. 

Senator  Blair.  If  the  American  people  release  the  Pacific  roads  of 
their  indebtedness  to  the  public,  would  the  Pacific  roads  afford  more 
reasonable  fares  and  freights? 

Mr.  Mellen.  We  are  ready  to  accept  that  favor  whenever  you  are 
ready  to  grant  it. 

Senator  Harris.  I  understood  you  to  recommend  legalized  jxioling 
based  upon  the  division  of  traffic ;  in  that  event  the  pool  would  dis- 
tribute the  traffic  between  the  various  parties,  would  it  not? 

Mr.  Mellen.  It  would  in  case  the  public  were  not  disposed  to  favor 
shipment  over  the  weak  or  roundabout  road  that  had  a  right  to  com- 
pete for  the  business,  or  else  it  would  be  adjudged  that  the  weaker  road 
was  entitled  to  a  certain  proportion  of  the  traffic,  and  it  could  be  ar- 
ranged by  the  adoption  of  a  differential  rate  that  would  be  siillicient  to 
induce  the  shipment  in  tbe  proper  direction.  In  other  words,  I  i)ropose 
to  make  the  roads  do  the  work  for  the  monej"  they  get,  and  not  get  the 
money  as  under  the  ohl  pool  for  rendering  no  service  whatever. 

Senator  Harris.  Take  the  case  of  one  of  the  i)arties  to  the  pool  that 
failed  to  get  its  due  proportion  of  the  traffic,  then  under  such  pooling 
contract  the  pool,  by  some  agency  of  its  own,  will  have  to  award  to  it 
a  certain  percentage  of  the  carriage. 

Mr.  Mellen.  It  could  be  done  by  allowing  the  road  short  in  its  jier- 
centage  of  traffic  a  differential  rate"^  that  would  draw  to  it  the  amount 
of  percentage  it  was  short,  and  then  each  road  would  absolutely  do  the 
amount  of  work  required  of  it  to  earn  the  money  assigne<l  to  it. 

Senator  Harris.  Do  you  not  now  in  the  fixing  of  your  rates  and  in 
your  conferences  allow  certain  rates  that  are  satisfactory  to  the  various 
competing  companies? 

Mr.  Mellen.  We  attempt  to,  but  we  do  not  succeed  very  well.  What 
we  need  is  a  division  of  traffic.  What  we  really  need  is  what  is  com- 
monly called  a  pool,  so  legalized  that  the  roads  that  enter  that  pool  can 
depend  upon  their  competitors  to  observe  it,  and  in  case  of  failure  to 
observe  it  that  there  be  penalties  imposed  which  will  i)e  sutlicienr  to 
make  all  keep  in  line,  A  pool  under  the  auspices  of  the  luteistate 
Commerce  Commission,  or  any  other  commission  that  may  be  tluuight 
better,  would  be  the  thing  desirable,  so  that  in  case  of  any  road  joining 


360  TRANSl^ORtATlON   It?TERESTS   OF 

the  i)Ool  ai)(l  violiiting  its  jnovisions,  it  may  bo  sufliciciitly  punislu-d.  I 
want  to  feel  that  my  competitors  are  bound  by  their  eontraet,  and  if  I 
discover  that  any  of  them  are  violation;  the  aj;reement  tliey  will  be  dealt 
with  in  a  manner  that  will  prevent  them  from  acting  in  bad  faith  a 
second  time,  ii^ow  we  enter  into  agreements  that  result  in  ilemoraliza- 
tiou  when  there  is  a  violation  of  the  contract,  and  after  this  demoraliza- 
tion continues  for  a  while  we  g«  t  togetlier  again  and  stop  it  for  a  time. 
My  idea  is  to  i)unish  the  party  who  makes  the  break  in  such  manner 
that  he  will  not  violate  the  contract  a  second  time. 

Senator  IlAURis.  And  you  are  not  in  favor  of  a  pool  that  will  pay 
money  to  the  carrier  which  performs  no  service? 

,\-r.  Mellen.  No,  sir. 

Senator  IlAiiKis.  And  you  would  not  favor  a  pool  by  which  a  shi]>- 
))er  would  not  be  able  to  determine  for  himself  over  what  roa<l  he  shall 
send  his  goods  ? 

Mr.  Mkllen.  The  kind  of  a  pool  that  I  want  is  one  that  will  allow  a 
ditterential  which  will  induce  the  shipper  to  send  his  goo<ls  over  the 
weaker  or  longer  route. 

Senator  Uaukis.  And  you  think  the  shipment  over  the  weaker  or 
longer  route  woiU<l  be  accomplislied  by  the  allowance  ot  a  differential 
rate  f 

Mr.  Mellen.  Yes,  sir. 

THE   TRADE  WITH  CHINA  AND  JAPAN. 

Senator  (Iorman.  Suppose  the  Canadian  Pacific  and  all  other  Cana- 
dian roads  should  be  put  under  exactly  the  same  comlitions  as  the 
American  roads  as  to  the  publication  of  tariffs,  and  so  on,  woidd  you 
then  be  in  a  condition  to  comi)ete  with  them  for  the  trade  of  China  and 
Japan  ? 

Mr.  Mellen.  I  tie  not  think  it  woidd  seriously  affect  the  China  and 
Jai)an  rates.  Tlie  steam-ship  lines  on  the  o<'ean  are  practically  parties 
to  an  agreenuMit  for  a  division  of  the  traflic  at  the  present  time. 

Senator  GoKMAN.  Can  you  give  us  the  distance  by  the  steam  ship 
line  frt)ui  San  Francisco  to  Yokohama? 

]\Ir.  Meli.en.  No,  sir. 

Senator  Gorman.  Can  you  give  the  distance  from  San  Francisco  to 
New  Yt)rk  and  Boston  api)roximately  ? 

]\Ir.  Mellen.  It  is  ai)proximately  1,SG5  miles  to  the  Missouri  IMver, 
and  about  ],(»(»()  miles  Iron)  the  Missouri  Iviver  to  New  York;  in  round 
numbers,  3,r>0()  miles. 

Senator  Gorman.  AVhen  you  reach  New  York  you  are  dependent 
upon  w  hatever  foreign  steamers  you  can  pick  up  ? 

Mr.  Mellen.  Yes,  sir. 

Senator  Gorman.  It  has  been  testified  before  this  committee  that  the 
Canadian  l^icific  has  a  line  of  steam-ships  running  between  Vancouver 
and  Ciiina  and  Japan  subsidized  to  the  extent  ot  $lioO,0()0  per  annum, 
and  that  their  distance  to  St.  John  is  very  little  greater  than  yours,  and 
then  that  they  have  a  line  of  steam-shi])s  subsidized  to  about  an  e(|ual 
amount  running  from  St.  John  to  Liverpool.  Now,  with  a  subsidized 
railroad  and  subsidized  steam-shij)  lines  at  each  end  of  the  line  of  road, 
how  is  it  ])ossible  for  the  American  roads  to  compete  with  them  in  the 
trartic  referred  to  ? 

Mr.  MellisN.  With  an  arbitrary  tarifF  established  at  just  a  slight 
margin  above  the  cost,  it  woidd  l)e  imi)ossible  foi-  tiie  American  line  to 
compete  witli  the  foreign  line  having  a  subsidy.     r>ut   if  a  pooling  ar- 


tiiE    UNITED    STATES    AND    CANADA.  361 

rang^emcut  were  made  (here  unquestionably  would  be  an  agreement  be- 
tween those  roads  establishing  tariffs  and\lividing  the  tratlii;  so  that 
each  would  get  a  fair  rate,  and  the  regulation  of  these  rates  wonld  eoine 
from  the  competition  via  the  Suez  Canal  to  Liverpool.  The  rates  across 
this  continent  are  affected  by  the  rates  via  the  Suez  Canal  to  the  same 
points,  and  the  rates  will  always  be  sufficiently  low  bv  that  route  to 
prevent  any  extortionate  rate  by  the  routes  via  this  continent.  The 
Canadian  Pacific  will  want  to  earn  as  much  money  as  it  can  and  they 
would  be  glad  to  enter  into  a  combination  to  distribute  that  trallic  over 
the  American  lines  and  afford  renuraerative  rates  to  all. 

Senator  Gorman.  You  thiidc,  then,  that  the  amount  of  traffic  they  de- 
rive from  onr  territory  is  sufficient  to  induce  them  to  enter  into  an  ar- 
rangement of  that  kind  ? 

JNIr.  Mellen.  I  liave  no  doubt  of  it. 

Senator  Gorman.  About  what  is  the  percentage  now  ? 

Mr.  Mellen.  I  think  the  Northern  Pacific  will  draw  about  12  per 
cent,  to  Tacoma.  I  think  there  will  be  about  27  i)er  cent,  go  by  way  of 
Vancouver,  and  GO  per  cent,  go  by  way  of  San  l^'rancisco.  That  busi- 
ness is  reckoned  as  business  going  to  points  in  this  country. 

Senator  Gorman.  Would  they  submit  to  a  division  of  the  traffic  go- 
ing over  their  line  through  Canada  ? 

Mr.  Mellen.  They  would  for  this  reason,  if  they  do  not  onr  people 
would  charter  clipi)er  ships  and  do  the  business  at  a  loss.  If  we  were 
as  free  as  they  are  we  would  pursue  such  a  policy  as  tliat  we  should 
'have  a  fair  share  of  the  traffic  or  haul  it  at  unremnnerative  rates,  just 
as  they  did  until  we  granted  these  differential  rates  timt  they  now  hav&. 

Senator  Gorman.  So,  in  your  opinion,  if  we  oilorce  the  same  condi- 
tions on  the  Canadian  Pacific  as  exist  with  respect  to  the  American 
roads,  you  have  no  fear  of  them,  notwithstanding  their  subsidized  lines 
of  steam-ships  both  on  the  Pacific  and  Atlantic. 

Mr.  Mellen.  It  does  not  make  any  more  difference  than  it  does  that 
the  Union  Pacific  is  capitalized  at  more  than  cost.  Generally  all  fixed 
charges  of  a  railroad  have  nothing  to  do  with  the  making  of  a  rate. 
We  are  fortunately  situated  and  can  do  things  that  other  roads  can  not 
do.     We  would  take  the  business  at  the  same  rates  that  tiiey  do. 

Senator  Gorman.  Reverse  the  position.  Suppose  conditions  such  as 
you  suggest  could  not  be  applied,  and  matters  go  on  as  they  are  to-<lay, 
with  the  Canadian  roads  free  and  your  haiuls  tied,  whar  then  will  he 
the  effect  of  the  competition  of  the  Canadian  Pacific  ni)on  the  through 
trade  f 

Mr.  Mellen.  The  Canadian  Pacific  will  gradually  draw  the  traflic 
from  us  until  they  get  an  undue  proportion-  The  railroads  can  safely 
be  left  to  themselves  to  determine  what  is  fair  as  between  them.  Wh  it 
we  need  is  a  law  enforcing  these  agreements  that  are  entered  into  by 
the  railroads  andai>plying  penalties  to  make  the  roads  live  up  to  the 
agreements  when  once  made,  and  there  should,  perhaps,  be  supervision 
of  the  agreements  before  they  go  into  effect. 

Senator  Gorman.  To  see  whether  the  rates  are  fair? 

Mr.  Mellen.  Yes,  sir. 

changes  in  rates. 

Senator  Gorman.  And  when  a  change  is  made  in  the  rates  it  is  oidy 
to  be  nnide  with  tlie  consent  of  the  Commission  or  whoevei-  has  the  su- 
pervision of  them  ? 

Mr.  Mellen.  Yes,  sir;  I  do  not  think  rates  ought  to  be  increased  on 
eveu  ten  days'  notice.     1  would  not  have  a  rate  changed  under  thirty 


362  TRANSPORTATION  INTERESTS  01* 

days.  A  great  many  railroads  p:ot  pretty  warm  some  times,  and  do 
tliiiifjs  tliat  can  be  clianged  in  ten  days  wliieli  tliey  would  not  do  if  it 
required  thirty  days. 

(Senator  Gorman.  Would  not  the  effect  of  that  be  to  stop  improve 
ments  and  block  the  ener<ry  of  our  i>eople  to  some  extent  f 

Mr.  Mei.len.  1  do  not  think  it  would,  I  thiidi  that  jjreat  trouble 
comes  to  the  busim'ss  of  this  country  throiijj:h  the  fact  of  these  jitth' 
breaks  in  rates.  Durinfj  November  two  new  railroads  opened  into  the 
city  of  Denver.  They  soiijjht  to  nnike  themselves  jiopular  by  lowering 
rates,  and  rates  went  down  very  low.  They  went  down  legally,  but  they 
went  down  very  low.  Just  before  the  rates  went  down  the  merchants 
of  the  city  had  stocked  Denver  with  goods,  and  the  lowering  of  the 
rates  demoralized  their  prices;  they  lost  a  large  amount  of  money,  and 
dissatisifiction  was  cause<l  from  Chica;jo  to  Denver.  Lowering  of  rates 
demoralizes  business  generally.  I  tliink  if  those  roads  had  known  that 
the  rates  which  they  made  had  to  remain  in  force  ."Jo  days  tiiey  would 
have  hesitated  beiore  tlu>y  lower«'d  them.  I  would  increase  the  time 
required  before  rates  could  be  n-duced. 

Senator  Harris.  Wouhl  you  make  the  time  the  same  for  increasing 
rates  as  for  reducing  them  ? 

Mr.  Mellen.  1  see  no  reason  why  there  should  be  any  ditVereuce.  I 
assume,  under  any  condition  of  aflairs,  that  as  soon  as  the  proper  way 
can  be  found  there  will  be  a  disposition  to  restrict  the  Canadian  roads 
just  as  the  American  roads  are  restrictted.  The  only  question  is,  how 
joon  will  that  be  brought  about;  how  long  have  the  Americau  roa«ls 
got  to  suffer  f 

DIVISION  OF  BUSINESS  WITH  THE  CANADIAN  PACIFIC. 

Senator  Gorman.  It  seems  a  litth'  unnatural  that  you  should  divide 
San  Francisco  business  with  a  line  which  ends  on  i'uget  Sound. 

Mr.  Mellen.  The  Canadian  Pacific  have  a  steamship  line.  They 
make  a  rate  from  Montreal  or  from  Boston  to  San  Francisco.  The  long 
haul  of  the  Canadian  Pacific  is  entirely  out  of  your  control.  They  can 
pay  a  commission,  or  a  rebate,  or  a  salary,  or  whatever  they  may  call  it, 
by  whicii  the]»arty  shi])|iing  by  their  line  will  get  a  less  rate  than  if  Im' 
shipped  from  .Montreal  and  NVinnipeg  to  intermediate  i»oints  on  tlir 
same  road.  We  have  got  to  submit  to  it.  The  Northern  I'acific  does 
a  busiiu'ss  out  of  San  Francisco.  One  of  the  most  serious  items  of  coni- 
])etitiou  that  we  have  between  the  Atlantic  antl  the  i'acitic coast  is  the 
clipper  ship  competition  by  way  of  Cape  IJorn. 

The  Chairman.  From  where  i 

Mr.  Mellen.  From  New  York  to  San  Francisco  by  way  of  the  Horn. 

Seimtor  Blaik.  How  many  days  does  it  take  to  go  around  by  Cape 
Horn  ? 

Mr.  Mellen.  Ninety  days. 

Senator  (ioiiMAN.  You  (livide  busnitss  witii  rlie  Canadian  Pacific  on 
the  Sound? 

Mr.  Mellen.  The  Canadian  Pacific  takes  business  at  the  Sound  and 
all  the  way  down  to  San  Diego.  They  use  the  I'acific  t^oast  steam  ship 
liue. 

Senator  Gorman.   How  about  west-bound  business? 

Mr.  xMeI-LEN.  The  Canadian  Pacific  <loes  not  <lo  so  much  of  the  west- 
bouiul  l)nsiness.  The  comjutition  of  the  Camnliaii  Pacific  hat*  so  far 
been  felt  njost  seriously  on  east-bound  business. 


i 


1:he  united  states  and  canada.  '^Q'6 

Senator  Gorman.  Have  you  any  arrangement  as  to  west-bound  bu.si- 
ness? 

Mr.  ME1.LEN.  No,  sir. 

RATES  CUT  BY  THE   CANADIAN  LINES. 

Senator  Gorman.  Then  I  understand  you  to  say  that  both  East  and 
West,  owing  to  the  fact  that  the  Canadian  Pacific  is  relieved  from  the 
operation  of  the  interstate-commerce  law,  being  a  political  or  military 
road  rather  than  a  commercial  one,  it  gets  an  undue  proportion  of  the 
traffic  to-day  because  of  the  conditions  that  you  have  named  '? 

Mr.  Mellen.  We  think  so.  I  am  free  f)  state,  howcv<n-,  that  wo 
might  endure  the  present  situation  if  we  saw  any  chance  of  relief;  but 
the  situation  is  growing  worse.  The  Canadian  PaeiQc  is  increasing  its 
proportion  of  tonnage  carried.  When  a  road  in  the  month  of  2Vi)iil 
will  do  34  per  cent,  of  the  business  going  out  of  San  Francisco,  and  when 
that  road  is  such  a  road  as  you  will  see  the  Canadian  Pacific  is  by  look- 
ing on  the  map,  it  certainly  looks  as  if  something  were  wrong.  I  do  not 
believe  that  business  was  ever  done  on  the  differentials  which  the  asso 
ciation  allows  the  Canadian  Pacific.  I  believe  there  is  a  cut.  I  have 
no  doubt  of  it. 

Senator  Gorman.  Would  not  the  fact  that  the  Canadian  Pacific  car- 
ri  id  so  large  an  amount  of  the  business  out  of  San  Francisco  be  positive 
proof  that  there  was  a  cut? 

Mr.  Mellen.  I  do  not  believe  there  is  a  railroad  man  but  who  believes 
that  there  is  a  cut.  It  may  be  a  concession  on  business  that  goes  from 
San  Francisco  to  Montreal.  They  might  give  a  concession  on  Montreal 
business  in  the  Dominion  of  Canada,  and  it  would  be  wholly  legal,  and, 
at  the  same  time,  it  might  be  used  to  induce  the  shipment  of  American 
goods  over  that  line. 

Senator  Gorman.  Do  you  know  of  any  case  where  a  drawback  has 
been  given  ? 

Mr.  Mellen.  I  have  not  absolute  proof  of  it.  I  know  pretty  well  the 
practices  of  the  Canadian  lines.  I  was  connected,  until  a  year  ago,  with 
the  Boston  and  Lowell  Railroad,  which  forms  a  connection  with  the 
Grand  Trunk,  and  nine-tenths  of  the  business  of  that  road  was  taken 
on  cut  rates,  particularly  before  the  interstate  commerce  act  went  into 
effect. 

Senator  Gorman.  Now,  if  the  suggestions  that  you  make  were  car- 
ried out,  do  you  believe  that  such  an  arrangement  would  increase  the 
rates  from  New  England  to  the  Pacific? 

Mr.  Mellen.  1  think  just  this  about  that,  that  the  railroads  would 
be  disposed  to  get  all  they  could.  The  railroads  all  want  money.  There 
is  no  sentiment  about  the  railroad  business.  The  railroads  would  get 
just  as  high  a  rate  on  that  business  as  they  thought  it  would  bear.  1 
believe  that  if  any  such  plan  were  adopted  that  the  tariffs  should  be 
scrutinized  by  the  Commission,  and  should  be  passed  upon  as  to  whether 
they  were  reasonable,  and  if  a  raise  in  the  rates  could  be  made  without 
damaging  business,  or,  on  the  other  hand,  if  the  tariffs  were  too  high, 
that  the  Commission  should  say  so.  I  believe  the  railroads  would  com- 
ply without  any  objection.    Business  would  be  more  stable  under  such 

an  arrangement.  ,         ,     r..,     i-        e,.i 

The  Chairman.  What  is  the  difference  in  the  length  of  the  line  ot  the 
Union  Pacific  and  that  of  the  Canadian  Pacific  between  ban  trancisco 

**"Mr^MELLEN.  That  I  can  not  tell  you.    I  should  assun.e  the  water  and 
rail  route  to  be  the  longer;  the  Canadian  Pacific  to  be  the  longer. 


3G4  TRANSPORTATION    INTERESTS    OF 

The  Chairman.  You  can  put  the  correct  distance  in  your  statement. 

]Mr.  ^Iellen.  All  lisht  ;  I  will  do  so. 

[The  distance  from  Uoston  to  Sail  Francisco  is  as  follows :  Via  Cana- 
dian Pacific  Kaihvay,  4,073  miles;  via  Union  Pac'ilic  Kailway,  ;i.'J14 
n)iles.] 

Senator  Reagan.  Do  you  know  whether  the  Sontlicin  racilic  has 
withdrawn  from  the  Transcontinental  Association! 

]Mr.  Mellen.  They  have  given  notice  that  unless  the  Canadian  Pa- 
cific will  consent  to  reduce  tlic  <litTcrentiaIs  now  allowed  it  on  San  Fran- 
cisco business  one-half,  they  will  \\  iilidraw  Iroiii  tiie  asMK-iatioii. 

oeuator  Keagan.  The  Northern  Pacific  has  willidrawn  fioni  llie  as 
sociation,  has  it  not  ? 

Mr.  Mellen.  Yes,  sir;  to  take  effect  oh  Cie  HMh  instant,  and  there 
is  a  meeting  called  lor  the  I'Otli  to  consider  the  w  ithdrawals  of  those 
roads. 

Senator  Blair.  I^j  the  stock  of  the  Canadian  Pacific  on  the  inaiket  ? 

Mr.  Mellen.  I  have  seen  it  (juoted  in  New  V(»rk  at  ahont  (il  or  (L*. 

Senator  Dlair.  Is  it  iiM'ieasing  in  vahn? 

Mr.  Mellen.  1  think  it  is.  I  suppose  the  value  of  the  stock  is  largely 
due  to  the  Governnu'nt  guarantee  of  3  per  cent.  «lividend<  t'«i  several 
yi'ars. 

RATES   TO   SAN   FRANCISCO. 

The  Chairman.  Can  you  give  the  rates  of  transjiortation  on  first, 
second,  third,  and  fourth  classes  of  friMght  on  your  road  between  San 
Francisco  and  Boston,  and  also  what  tlu'y  were  two  or  three  years 
ago  ? 

Mr.  Mellen.  The  rates  from  New  York,  Boston,  Philadelphia,  and 
IJaltimore  on  first-class  freight  to  San  Francisco  are  •'J't.'JOper  hundred  ; 
on  second-class,  So.TO  per  hundred  ;  on  third  class,  >»i.'.!>.">  per  hun- 
dre<l ;  on  fourth-class,  $-.30  i»er  hundred,  and  on  filili  class,  $1*  per 
hundred.  Then  in  car  lots  the  rates  are:  class  A,  $2  per  hundred; 
class  B,  Sl.SO  per  hundred  ;  class  C, $1.4.1  i)er  hundred  ;  class  I),  $1.30 
per  hundred,  and  class  E,  $1.20  per  hundred.  Now  the  Canadian  Pa- 
cific is  allowed  to  reduce  those  rates  to  the  amount  of  tlu>  diflereiitial 
named  on  the  sheet  I  gave  you. 

Senator  Harris.  Are  the  i)resent  rates  higher  or  lower,  if  you  re- 
member, than  they  were  prior  to  the  passage  of  the  interstate  commerce 
act  ? 

Mr.  Mellen.  I  was  not  connected  with  the  Cnion  Pacific  at  the  time 
the  act  was  i)assed.  I  understand  the  present  rates  have  been  raised 
within  a  year. 

Senator  GoKMAN.  Has  the  classification  l)een  changed  ? 

j\Ir.  ^Mellen.  Y'es,  sir;  the  classification  is  changed  a  little  at  every 
meeting  of  the  association.  The  diflerent  parties  file  their  complaints, 
and  the  classification  is  adjusted. 

The  Chairman.  If  you  could  give  the  rates  year  by  year,  beginning 
with  the  year  before  the  i)assage  of  the  interstate  commerce  act  uj)  to 
the  present  time,  we  would  be  glad  to  have  it. 

]\Ir.  Mellen.  It  would  take  some  time  to  do  it. 

RATES   ON    WEST-BOUND   TRAFFIC. 

Senator  IIISCOCK.  So  far  as  west  bound  freiglit  is  concerned,  as  I 
understand  you  to  say,  from  New  Kii;:land.  New  York,  and  Peniusyl- 
vauia,  the  same  rates  are  charged  by  all  the  lines  ? 


THE    UNITED    STATES    AND    CANADA.  3G5 

Mr.  M ELLEN.  Yes,  sir. 

Senator  HiscoCK.  By  the  American  trunk  lines? 

Mr.  Mellen.  Yes,  sir;  by  all  the  lines.  They  all  charge  the  same 
rate. 

Senator  HiscocK.  If  there  is  any  section  of  our  country  which  can 
get  a  cut  on  the  route  through  Canada,  because  it  is  not  under  the 
interstate  commerce  law,  it  ge^s  an  undue  advantage  over  sections  of 
the  country  which  can  not  avail  themselves  of  Canadian  transportation. 
Is  that  not  true  ? 

Mr.  Mellen.  Under  the  interstate  commerce  bill,  as  it  is  now,  New 
England,  Kew  York,  Pennsylvania,  and  JNIarylaud  are  on  equal  terms. 

Senator  Blair.  Then  there  is  no  competition  between  the  Canadian 
Pacific  and  these  American  lines  for  any  business  except  that  which 
lies  in  i^ew  England? 

Mr.  Mellen.  Oh,  yes;  there  is  a  differential  on  all  that  business. 

Senator  Blair.  Then,  if  the  Canadian  Pacific  cuts  for  the  benefit  of 
New  England  it  cuts  for  the  benefit  of  the  rest  of  the  country? 

Mr.  Mellen.  It  cuts  for  itself  principally.  New  England  is  the 
point  from  which  the  Canadian  Pacific  draws  particularly. 

Senator  Blair.  I  understood  you  to  say,  in  answer  to  questions  ])ro- 
pounded  by  Senator  Hiscock,  that  the  Canadian  Pacific  could  not  re- 
duce rates — could  not  cut  rates  for  the  benefit  of  New  England.  Is  it 
not  a  fact,  however,  that  the  Canadian  Pacific  competes  for  business 
all  alojig  the  line  from  Chicago  east? 

Mr.  Mellen.  I  referred  to  the  question  of  the  rates  that  were  pub- 
lished. The  rates  from  Boston,  New  York,  Philadelphia,  and  Baltimore 
are  the  same.  Those  are  the  published  rates.  Now,  when  the  Cana- 
dian Pacific  comes  it  gets  business  just  as  near  the  Canadian  frontier  as 
it  can.  If  the  rate  from  Boston  is  the  same  as  from  Baltimore,  the  Cana- 
dian Pacific,  to  reach  its  own  line,  has  to  pay  less  to  the  American  line 
to  bring  the  freight  to  it  from  Boston  than  it  has  to  i)ay  to  have  freight 
brought  to  it  from  Baltimore.  Therefore  it  has  just  that  much  more 
margin. 

Senator  Blair.  So  it  does  New  England  some  good,  whether  it  ben- 
efits other  sections  of  the  country  or  not. 

Mr.  Mellen.  Yes,  sir. 

Senator  Blair.  New  England  simply  has  the  advantage  of  her  geo- 
graphical position. 

Mr.  Mellen.  Yes,  sir. 

Senator  Hiscock.  The  point  I  was  pressing — and  I  do  not  understand 
you  to  change  it  at  all — is  that  under  the  interstate  commerce  act  all 
sections  of  our  Atlantic  coast  are  on  equal  terms. 

Mr.  Mellen.  Boston,  New  York,  Philadelphia,  and  Baltimore  are  on 
the  same  basis  of  tariffs  whether  the  traffic  goes  on  the  Canadian  Pa- 
cific or  on  the  American  lines. 

Senator  Hiscock.  They  are  practically  on  the  same  basis  so  f\ir  as 
the  West  is  concerned,  and  also  so  tar  as  east-bound  business  is  con- 
cerned. 

Mr.  Mellen.  Yes,  sir. 

Senator  Hiscock.  So  that  there  is  nothing  in  the  geography  of  either 
section  of  the  country  that  would  justify  any  discrimination  in  favor  of 
one  section  as  against  another  ? 

Mr.  Mellen.  Not  the  slightest.  It  is  the  intention  of  the  railroads 
to  adjust  their  traffic  so  that  there  shall  be  no  discrimination. 

Senator  Gorman.  Has  the  interstate  commerce  law  interfered  with 
that  intention  at  all? 


3G6  TRANSPORTATION  INTERESTS  OP 

Mr.  Mellen.  Xo,  sir. 

Senator  Blair.  What  is  the  taritl"  of  the  Transcontinental  Associa- 
tion on  any  given  coniniodity  or  ehuss  of  freight  from  California  to  New 
York  for  consumption  in  New  Yoik, 

Mr.  ^Iellen.  East-bound,  anything  that  is  enumerated  under  the 
liead  of  "  tirst  (lass"  woidd  be  transported  from  San  Francisco  to  New 
York  at  S4.L'(),  and  it  woidd  be  transiiorted  by  all  the  roads  which  are 
embraced  in  the  Transcontinental  Association  at  the  same  rate.  It 
would  be  transported  to  Pliiladi-lpliia  or  New  York  or  Baltimore  at  the 
same  rate. 

Senator  (Jorman.  That  would  be  the  rate  whether  the  freight  trans- 
l)orted  would  be  consumed  in  New  York  orreshipped  abroad. 

]\Ir.  Mkllkn.  We  make  no  export  rates. 

The  CiiAiKMAN.  That  is  all,  Mr.  Mellen.  We  are  very  much  obliged 
to  you. 

If  there  are  no  further  witnesses  to  be  examined  this  evening  the 
committee  will  stand  adjourned  until  to-morrow  at  10  o'clock. 

At  4  o'chxrk  and  ryO  minutes  p.  m.  the  committee  adjourned  until  to- 
morrow at  10  o'clock  a.  m. 


Boston,  Mass.,  July  G,  1889. 

The  committee  met  at  10  o'clock  a.  m.,  luirsuant  to  adjournment. 

The  Cii.\ik:\;an.  The  expectation  was  that  we  should  liear  this  morn- 
ing a  *lelegation  Irom  Portland.  I  have  received  a  telegram  stating 
tliat  the  gentlemen  will  not  be  ready  to  be  heard  before  12  o'clock. 
However,  the  committee  is  ])repared  to  hear  any  gentleman  from  this 
city  at  this  time.  I  tlo  not  know  what  Mr.  Speare's  wish  is  in  the 
premises,  but  if  he  would  like  to  be  heard  now  we  would  be  glad  to 
listen  to  him. 

Mr.  Si'EAiJE.  1  am  i)repare(l  to  go  on. 

The  ('iiAiiJAiAN.  As  you  are  a  business  man  in  this  city,  and  not  rep- 
resenting a  railroad,  and  as  your  examination  necessarily  ditfers  from 
that  of  a  railroad  otlicial,  the  committee  would  be  glad  to  have  you  pro- 
ceed in  your  own  way  to  make  your  statenuMit,  subject  to  whatever 
questions  members  of  the  committee  may  deem  proper  to  put  to  you 
at  the  conclusion  of  whatever  you  desire  to  say. 


STATEMENT  OF  ALDEN  SPEAEE. 

INIr.  Aeden  Speare,  president  of  the  Chamber  of  Commerce,  and 
reiuesenting  various  associations  of  Boston,  appeared. 

Mr.  Speare.  I  would  state,  gentlemen,  that  I  come  here  as  president 
of  the  Chamber  of  Commerce,  as  chairman  of  the  trans|)ortation  com- 
mittee of  the  Oil  Trade  Association,  and  as  chairman  of  the  lioston 
Executive  Business  Association.  This  latter  organization  is  composed 
of  tlie  following  bodies:  Bay  State  Lumber  Trade  Association,  l)Oston 
P.oard  of  Fire  Underwriters,  Boston  Chamberof  Commence,  Boston  Coal 
Tiade  Association.  Boston  Druggists' Association,  Poston  Fish  P.ureau, 
P.ostoii  I"'ruitan«l  Produce  P^xclinngo,  lioston  Grocers' Association,  Bos- 
ton Merchants'  Association,  Earthenware  and  (} lass  Tra<le  A.ssociat ion, 
Boston  Paper  Trade  A.ssociation,  Drysalters'  C!lub  of  New  England, 
N<'w  lOngland  Shoe  aiid  Leather  Association,  New  Enghind  Furniture 
Exchange,  New  England  Metal  Association,  Oil  Trade  As.sociation  of 


I 


THE    UNITED    STATES   AND    CANADA.  307 

Boston,  Paint  and  Oil  Clnbof  New  England,  The  Master  Builders'  Asso- 
ciation, or  eigl'.teen  organizations  in  all. 

I  will  first  read  you  the  resolutions  which  were  adopted  by  these 
bodies : 

Resolved,  That  for  many  years  a  considorable  quantity  of  produce  from  the  West- 
ern States  has  been  carried  through  Canada  to  Boston,  uot  only  for  home  coiismnp- 
tlou,  but  also  for  export  from  the  port  of  Boston,  and  a  large  amount  of  iii:uiul:i<t- 
ured  and  imjiorted  goods  has  been  sent  from  Boston  to  Canada,  and  throngli  Canada 
to  the  Western  States,  much  to  the  advantage  of  Boston  and  New  England  interests, 

litsolved,  That  the  route  throngh  Canada  to  and  from  Boston  is  geographically  the 
natural  route  for  many  places  of  importance  in  the  Western  and  Nortlmestern  States. 

Rcsohed,  That  for  the  long  period  during  which  business  has  been  open  to  the  mer- 
chants and  manufacturers  of  Boston  and  New  England  by  this  channel,  it  Las  been 
carried  on  by  the  Canadian  railway  companies  undertaking  it  in  a  fair  and  greatly 
advantageous  manner. 

Resolved,  That  a  competitive  route  through  Canada,  independent  of  other  trunk 
lines  in  America,  has  been  of  great  benefit  to  the  merchants,  manufacturers,  and  the 
community  generally  of  Boston  and  New  England,  as  by  that  means  any  tendency 
that  might  otherwise  have  been  to  charge  exorbitant  rates  has  been  held  "in  check. 

L'esolved,  That,  by  reason  of  this  route  being  available  for  ado))ti()n  by  traders,  it 
has  also  been  a  direct  benetit  to  the  port  of  Boston,  from  the  fact  that  large  shipments 
of  Canadian  proiluce  have  been  exported  through  it,  and  imports  for  Canada  made, 
which  would  not  have  been  received  had  there  been  any  restriction  upon  the  frpe  in- 
terchange of  such  business;  and  it  is  nu)8t  desirable  to  lay  before  the  Senate  Com- 
mittee this  expression  of  opinion,  in  the  hope  that  what  has  been,  and  is,  of  so  much 
benefit  to  Boston  and  New  England  will  be  continued  in  the  future. 

These  resolutions  were  unanimously  adopted  in  the  first  instance  by 
the  Oil  Trade  Association,  and  referred  to  the  Boston  Executive  Busi- 
ness Association,  which  discussed  the  same  resohitions  and  unani- 
mously adopted  them,  and  appointed  a  committee  which  was  instructed 
to  ajipear  before  this  Senate  committee  to  oppose  any  elimination 
of  the  Canadian  lines. 

I  will  submit  a  few  reasons  why  we  would  not  have  them  eliminated. 

RELATIONS  OF  THE  CANADIAN  LINES  TO  NEW  ENGLAND. 

New  England  has  8  per  cent,  of  the  population  of  the  United  States, 
and  grows  one-fourth  of  1  per  cent,  of  the  wheat  crop  and  one-lialf  of 
1  per  cent,  of  the  corn  crop  to  feed  8  per  cent,  of  the  inhabitants  of  the 
United  States  ;  not  enough  to  supply  the  inhabitants  of  Kliode  Island 
alone,  and  we  have  to  buy  annually  of  and  bring  from  other  sections 
550,000  tons  of  grain,  525,000  tons  of  flour,  and  $50,0(10,000  worth  of 
meat  for  our  own  consumption.  We  grow  but  4  per  cent,  of  the  wool 
crop  of  the  country,  but  consutne  50  per  cent,  of  the  entire  dij)  and  55 
per  cent,  of  all  consumed  in  the  country.  We  grow  not  a  i»onnd  of 
cotton,  but  consume  annually  23  per  cent,  of  the  whole  crop  and  75  i)er 
cent,  of  all  consumed  in  this  country. 

While  New  England  has  31  per  cent,  of  the  water  power  employed  in 
industrial  work,  we  also  have  15  per  cent,  of  steam  power,  and  con- 
sume 5,250,000  tons  of  anthracite  and  4,000,000  tons  of  bituminous 
coal,  and  we  do  not  produce  a  pound  of  either,  and,  of  course,  buy  of 
and  transi)ort  from  other  sections. 

The  estimated  value  of  American  goods  consumed  in  New  England 
in  1888  was  $310,000,000. 

New  England  annually  produces  more  than  $200,000,000  in  value  of 
boots  and  shoes  and  leather,  at  least  50  per  cent,  of  the  production  and 
consumption  of  the  United  States. 

Such  being  our  inability  to  supidy  our  own  wants  witliin  our  own 
borders,  the  value  to  us  of  reasonable  freight  rates  must  be  apparent  to 
every  one,  and  the  absolute  necessity  in  order  that  we  may  retain  such 


368  TRANSPORTATION    INThJRESTS    OF 

reasonable  rates  that  we  should  retain  every  line  of  transportation  that 
we  now  havi?  to  and  from  other  sections  of  onr  country  that  furnish  us 
our  needfd  sui)i)lies  and  take  our  manufactured  i)roducts.  If  we  take 
into  consideration  the  fact  that  New  En^dand  takes  (>()  i)er  cent,  of  the 
Ireij^ht  brought  from  the  West  by  the  New  York  Central  to  the  Hudson 
Itiver,  and  doubtless  as  larjre  a  per  cent,  of  that  brou<;ht  by  the  West 
Shore,  it  is  no  matter  of  surprise  that  the  New  York  Central  ami  the 
Pennsylvania  Railroad  Company  should  desire  to  elimiiuite  the  Cana- 
dian roads  from  carryinj;  any  i)art  of  our  ])roducts  and  havin<j  any 
voice  in  making  rates.  Hut  we  believe  the  f.icililies  furnished  by  tiie 
Canadian  lines  under  existing;  reuidations  for  the  shipment  of  nu'reliiin- 
dise  in  bond  to  and  from  and  across  some  parts  of  either  Canada  or  the 
United  States,  with  no  more  intei  f'erenee  with  the  How  of  commerce 
than  if  we  were  one  country,  is  of  vital  importance  to  New  I^iiy:land, 
and  a  manifest  advanta;;e  to  every  section  of  our  country  that  lurnishes 
New  Knj;land  any  of  its  supplies  or  consumes  any  of  our  prodiu'ts,  and 
todepiive  us  of  these  facilities  would  be  a  jjross  injustice,  especially 
to  those  industries  which  have  been  created  ami  are  fostered  by  these 
facilities,  luid  which  can  not  be  supplied  on  equally  advantajjeous 
terms  by  any  existinfj  American  line. 

^Yhat  advantages  have  couie  to  New  I'n^hunl  from  these  Canadian 
ro;i(ls,  and  tiie  desirability  of  their  continuance,  will  be  stated  for  the 
manufacturers  of  New  Kn^dand  by  the  Arkwri^jht  Club;  for  the  shoe 
amlieatherdealers  by  IIou.  William  Claliin,  \V,  15.  Kice,  and  F.  F.  i'^mory ; 
ibi-  the  importers  by  .Jerome  .lones  and  SamiU'l  Johnson  ;  for  the  st«'am- 
ship  lines  l>y  William  11.  Lincoln  ;  for  the  wool  trade  and  lishiu},^  inter- 
ests by  chosen  representatives;  for  the  Chamber  of  Commerce  by  Mr. 
Goodwin  and  myself. 

Ivesolutions  will  l)e  presente<l  from  various  towns  and  cities  in  New 
Enj^land,  and  «lelej;utions  from  various  towns  and  cities  will  appear  be- 
fore the  committee. 

CHANGES  EFFECTED   BY   TIIE   CANADIAN  LINES. 

In  the  first  place,  gentlemen,  allow  me,  in  a  randiliii}::  way,  to  state 
some  of  the  facts  as  they  existeil  before  the  chan;;es  which  have  come 
about  since  the  establishment  of  these  Canadian  lim's.  and  in  the  lifjht 
of  i>ast  experience  what  we  fear  would  be  the  result  were  these  lines 
eliminati'd.  Prior  to  the  existence  of  the  Canadian  lines  we  had,  of 
course,  only  the  New  Y'ork  Central  and  the  Boston  and  Albany  run- 
ning into  Poston.  The  rates  were  Ui'^h.  It  will  be  told  you  by  one  of 
our  number  later  on  how  the  first  oi>ening  was  nnnlc  by  the  (Irand  Trunk 
Kailway  and  the  lesultinj;  chanj^es.  Some  years  at;o  the  i-ate  on  jirain 
in  the  lowest  class  was  oO  cents  p»'r  hundred  pounds.  Now  the  wite  on 
the  same  article  to  New  Y'ork  is  LM  cents  and  to  Boston  M)  (;ents.  We 
have  tried  to  {jet  this  rate  reduced.  The  rates  to  pointsou  the  Atlantic 
coast,  commencing  at  lialtimore,  are  precisely  the  same  as  to  Boston, 
but  tiie  minute  you  come  to  anyihinjj  consume<l  in  New  lCn{;land  and 
comiiifT  from  Chicafjo  or  anywhere  this  side  of  (Jliicajjo,  we  have  to  pay 
this  arbitrary  of  5  cents  o\er  the  Ni'W  York  rate.  We  brou^jht  a  ("om- 
l)laiTit  a>:ainst  the  Lake  Sliore  ami  Michijjfan  Southern  Kailway  Com- 
])any  and  ajjainst  the  New  York  Central  and  Hudson  Hiver  Railroad 
Company  on  account  of  this  arbitrary,  and  in  the  hearinjj  of  the  case 
before  the  Interstate  Comiueree  Commission  the  railroads  named  ad 
niitted  that  they  were  takiii<i-  car  loads  of  Hour  from  Cliica;:o  and  land- 
inj:  them  at  Bullalo  in  the  .same  train  that  car  loads  of  Hour  tlestined 


THE    UNITED    STATES    AND    CANADA.  369 

for  Bostou  were  drawn,  and  that  the  car  load  of  flour  coiuin-  loI5ostoii 
for  local  consumption  would  have  to  pay  $10.48  more  to  the  Lake  Shore 
Eailroad  Company  than  the  car  going  to  ^\nv  York  pays.  You  will 
understand  that  it  is  a  car-load  of  precisely  the  same  weiglit  travdin" 
in  the  same  train  and  hauled  over  the  same  road  and  over  the  same 
distance.  Nevertheless  we  were  given  no  relief.  The  diflen-nce  in 
distance  is  about  5  per  cent.,  or  5G  miles  more  to  Boston  than  to  Xew 
York. 

A  few  years  since,  when  the  Hoosac  Tunnel  was  opened,  the  rit(;h- 
burg  line  acquired  it,  and  opened  what  is  called  the  Hoosac  Tunnel 
Line,  which  opened  up  alineof  towns  on  its  road  and  connections  which 
bad  not  before  that  received  the  advantage  of  Boston  rates,  and  if  it 
had  not  been  for  the  building  of  that  tunnel  and  this  arrangement 
through  the  Grand  Trunk  and  the  Lackawanna  and  Western,  that  large 
number  of  towns  would  have  been  left  without  the  Boston  rate. 

When  the  interstate  commerce  law  first  went  into  effect  the  Trunk 
Line  Association  notified  the  various  lines  that  they  must  not  give  any 
reduced  Boston  rates  beyond  Boston.  A  little  later  the  Canadian  Pa- 
cific perfected  its  arrangements  whereby  it  came  in  contact  with  the 
whole  Boston  and  Maine  system,  and  opened  uj),  in  connection  with 
the  Grand  Trunk,  seven  or  eight  hundred  towns  in  New  England 
which  became  benefited  by  Boston  rates,  as  well  as  towns  in  C-anada. 
So  that  to-day  goods  can  be  shipped  from  the  West  by  means  of  the  two 
Canadian  lines  and  their  connections;  also  by  the  Red,  W^hite  and  Bine 
Line,  and  the  Erie  Despatch,  and  one  or  two  other  lines,  to  a  vast  num- 
ber of  towns  in  New  England,  to  the  great  benefit  of  the  people. 

Mr.  Mellen  admitted  here  on  yesterday  that  north  of  a  line  drawn 
through  White  Eiver  Junction  there  was  great  benefit  derived  by  the 
existence  of  the  Canadian  lines.  But  we  could  draw  the  line  at  the 
Fitchburg  Railroad,  or,  for  that  matter,  take  in  the  territory  north  ot 
the  Boston  and  Albany,  and  say  that  all  that  country  is  benefited  by 
the  Canadian  lines. 

Some  allusion  was  made  yesterday  to  the  amount  of  tonnage  carried 
by  water  as  compared  with  the  amount  carried  by  rail.  1  have  here 
the  report  of  the  Produce  Exchange  of  New  York,  giving  the  statistics 
of  the  carriage  for  several  years. 

For  the  year  1887  there  were  brought  to  New  York  by  canal  4G,0()9,L'()() 
bushels  of  grain,  and  by  ail  the  railroads  50,775,235  bushels,  nearly  50 
per  cent,  of  it,  as  you  see,  coming  by  water. 

In  the  year  1880  all  the  railway  lines  that  passed  Detroit  and  throngh 
that  citv  carried  3,000,000  tons,\nnd  20,000.000  tons  were  carried  by 
water.  Buffalo  received,  in  the  year  1887,  by  water  102,000,(i0t>  busiiels 
of  grain,  while  New  Y"ork,in  the  aggregate,  received  less  than  150,00(>,000 
bushels. 

Now,  New  York  has  this  advantage,  that  it  is  not  at  all  under  the  in- 
terstate commerce  law  on  freight  originating  in  Bnftalo  and  stopping 
in  New  York.  Therefore  on  the  102,000,000  bushels  of  grain  that  ar- 
rived at  Buffalo  the  New  Y^ork  Central  could  make  any  rate  it  chos<', 
whether  the  grain  was  lor  home  consumption  or  for  ex|>ort. 

We  in  Bostou  ha\  e  not  a  single  mile  of  water  comnuiuication,  ex- 
cept by  the  ocean,  and  we  are  entirely  dependent  on  the  railways. 

Some  years  since  parties  engaged  in  putting  up  fresh  cured  meats  in 
this  city*^  found  great  difficulty  in  bringing  their  hogs  fioiii  (lie  West 
from  the  fact  that  the  cars  were  irregnhiT-  in  size,  in  length,  and  in  height, 
with  no  facilities  for  feeding  the  hogs.  By  an  arrangement  with  tlu^ 
railways  the  shippers  built  all  their  own  cars,  and  put  on  a  sufficient 

0543 l^i 


370  TRANSPORTATION  INTERESTS  OF 

imniber  to  do  the  biisiuess  aud  to  give  to  the  lailioiuls  entire  train  loads 
of  bogs.  The  cars  were  carried  for  some  j'ears  by  the  Canadian  rail- 
ways. 

Afterwards  an  arrangement  was  made  with  the  New  York  Central 
line  and  its  connecting  roads  to  carry  them  by  that  line.  The  change 
was  not  made  on  acconnt  of  any  change  of  rates — there  was  no  difler- 
erence  in  rates  between  the  two  systems  of  roads — bnt  in  the  promise 
of  sixt3'  lionrs  as  against  eighty  or  eighty  live  hours  by  the  other  I'oads. 
Bnt  in  i)ractice  it  was  found  that  the  sixty  hours'  time  was  never  made, 
except  in  one  or  two  trial  trii)s,  and  the  practical  saving  was  only  tive 
or  ten  hours. 

When  this  arrangement  was  made  there  was  an  agreement  on  the 
])art  of  the  railioads  to  i»ay  wheelage  u]K)n  the  ears  owned  by  the  i)ri- 
vate  i>arties.  Wiihin  the  last  year  and  a  half  the  parties  owning  the 
cars  were  notified  that  the  railroads  would  jiay  no  wheelage  uj)on  those 
cars,  as  the  roads  would  buy  their  own  cars. 

The  shippers  then  went  back  to  the  Canadian  roads,  which  have  car- 
ried out  the  original  agreement,  and  they  carry  the  cars  today.  The 
shipi>ers  were  distinctly  told  that  it  was  not  the  business  of  tlie  Mew 
York  Central  Kailroad  to  foster  New  I'liglaud  business,  and  that  Chi- 
cago and  New  York  were  the  two  export  ports  of  this  country. 

Now  you  can  see,  gentlemen,  why  we  are  Jealous  in  New  England. 
Every  interest  here  is  jealous  for  the  continuance  of  these  Canatlian 
roads. 

I  have  read  witli  great  care  the  testimony  taken  In  New  York,  and  1 
have  also  read  statements  of  i)arties  in  Chicago.  1  find  there  is  not 
a  man  but  who  says  the  Canadian  roads  have  served  him  reasonably, 
honorably,  and  squarely  ;  that  he  has  had  no  rebates  in  any  shape  or 
kind,  and  does  not  believe  anybody  has.  So  far  as  my  own  knowledge 
goes,  no  man  in  IJostou  or  New  iMigland  receives  any  rebate  from  the 
Canadian  railways,  and  we  do  not  believe  that  the  Canadian  roads 
should  be  eliminated  from  being  one  of  the  elements  to  help  us  in  our 
position.  • 

REGULATION   OF   THE   CANADIAN   LINES. 

The  Chairman.  Your  statement  is  very  instructive  and  a  very  valu- 
nbk'  contiibution.  Y'ou  seem  to  run  upon  the  theory,  iiowever,  llial  the 
Canadian  roads  are  to  be  eliminated  frouj  any  com|)eritiou  with  the 
American  roads.  Suppose  they  were  not  so  eliminated,  but  were  placed 
under  the  same  regulation,  so  far  as  possible,  as  our  Ameiican  u»ads? 

Mr.  Speare.  Are  they  not  to-day,  sir  1 

The  Chairman.  \Vhiie  it  is  adniitted  that  tlie  Canadian  roads  are 
under  the  same  regulation  as  to  the  specific  trallic  in  wliich  you  are  inter 
ested,  yet  it  is  the  allegation  of  the  American  roads  that  the  Canadian 
loads  take  advantage  of  the  fact  that  they  are  not  under  the  inter 
state  law  with  res])ect  to  other  business,  and  make  uj)  on  their  local 
business  what  they  lose  in  the  carrying  t^ade  Irom  one  side  of  this  coun- 
try to  the  other,  under  the  operation  of  the  interstate  commerce  act. 
If  there  was  any  further  regulation  oranangementby  which  tliey  would 
obey  some  such  act  as  the  interstate  commerce  act  in  all  i)arti'nlars,  in 
their  own  country  as  well  as  in  the  United  States,  or  with  respect  to 
commerce  which  touches  the  United  States,  do  you  Ihink  that  such  an 
arrangement  would  interfere  with  your  interests  here  ? 

Mr.  Speare.  F  should  say  not  ;  but  1  should  s;)y  in  the  next  place 
that  we  have  no  right  to  intcil'ere  with  the  business  of  the  (^anailian 


THE  UNITED  STATES  AND  CANADA.  371 

roads.  Furthermore,  I  have  never  yet  heard  a  statement  that  they  did 
recoup  on  their  own  people. 

The  Chairman.  I  do  not  allege  that  they  do.  I  am  stating  that  that 
is  the  argument  used  by  the  American  roads.  Of  course  we  liave  no 
right  to  interfere  with  their  business  in  Canada,  but  at  the  same  time 
we  have  the  right  to  protect  the  business  of  our  own  people,  and  to  say 
that  the  Canadian  roads  shall  only  do  business  in  the  United  States  on 
condition  that  they  obey  the  law  in  their  own  business  at  home  as  well 
as  in  the  United  States.  I  suppose  we  would  have  the  right  to  make 
that  condition  or  keep  them  out.  If  they  consented  to  accept  those 
terms  and  continued  in  competition  with  our  roads,  you  do  not  think 
you  would  suffer,  do  you  ? 

Mr.  Speare.  No,  sir. 

The  Chairman.  I  suppose  there  is  no  disposition  on  the  part  of  any- 
body to  build  up  a  wall  between  the  United  States  and  Canada,  so  as 
to  prevent  their  roads  from  coming  into  this  country  ;  but  tbe  general 
proposition  is  to  see  whether  there  is  anything  that  can  be  done  in  the 
United  States,  or  by  the  United  States,  that  would  simply  put  the 
Canadian  roads,  under  certain  regulations,  on  an  equality  with  our 
own  roads,  which  at  present  are  under  regulation.  If  that  could  be 
done,  you  do  not  think  any  serious  damage  would  be  done  to  NTew  Eng- 
land or  Boston  ? 

Mr.  Speare.  No,  sir;  but  I  go  back  to  my  original  proposition  that 
I  do  not  believe  we  have  any  right  to  ask  them  to. 

The  Chairman.  What  you  want  substantially  is  to  let  the  Canadian 
roads  alone.  You  think  things  are  in  pretty  good  shape  now,  and  you 
would  like  to  see  them  stay  so  ? 

Mr.  Speare.  Yes,  sir.  I  see  by  the  report  of  the  Interstate  Com- 
merce Commission  that  the  Canadian  roads  have  been  summoned  be- 
fore it  (not  so  many  times  as  the  New  York  Central,  of  course)  and 
have  answered  in  a  square  way,  and  have  obeyed  the  decisions  of  the 
Commission. 

The  Chairman.  Mr.  Hickson,  the  general  matiager  of  the  Grand 
Trunk,  testified,  unqualifiedly,  that  his  road  was  obeying  the  United 
States  interstate  commerce  law  in  all  business  touching  the  United 
States,  and  produced  circulars  which  he  had  given  to  the  employes  of 
his  road  showing  instructions  issued  as  to  carrying  out  the  i)rovislons 
of  the  law.  Mr.  Van  Home,  of  the  Canadian  Pacific,  testified  to  the 
same  effect,  substantially,  as  respects  his  road.  At  the  same  time  our 
roads  are  complaining  that  the  Canadian  roads  have  an  advantage 
which  should  be  remedied  in  some  way,  from  the  fact  that  tliey  are  not 
under  the  regulations  our  roads  are  under.  With  which  one  of  these 
Canadian  lines  do  you  do  the  larger  business? 

Mr.  Speare.  Oiir  people  do  more  business,  so  far  as  the  West  is  con- 
cerned, with  the  Grand  Trunk.  So  far  as  export  business  to  Japan  is 
concerned,  of  course  they  do  more  business  with  the  Canadian  I^acific. 

The  Chairman.  You  have  understood,  have  you  not,  that  the  Cana- 
dian Pacific  has  been  pretty  largely  subsidized  by  the  Canadian  Govern- 
ment from  time  to  time  or  aided  in  its  construction,  and  that  some 
Ijarts  of  it,  or  its  connections— those  portions  in  the  United  States— are 
getting  a  subsidy  from  year  to  year  now,  and  that  there  is  a  steam-ship 
line  from  some  point  in  Canada  to  Nova  Scotia,  which  is  also  heavdy 
subsidized?  Do  you  apprehend  any  danger  to  your  State  or  to  this  sec- 
tion of  New  England  in  the  loss  of  business  on  account  of  that  pur- 
pose to  do  business  on  their  own  soil? 

Mr.  Speare.  I  do  not,  for  the  reason  that  their  route  to  Boston  is 


372  TEANPORTATION  INTERESTS  OF 

much  shorter,  and  the  division  that  they  woukl  have  to  give  to  the  road 
from  Newi)ort  to  Boston  is  altsoliitdy  less  than  the  cost  of  carrying 
freight  to  their  port  on  the  Athintic,  Halifax,  or  St.  John. 

Senator  Reagan.  I  did  not  understand  your  answer;  please  repeat  it. 

Mr.  Speare.  I  do  not  believe  it  will,  lor  the  reason  that  their  route 
to  Boston  is  much  shorter,  and  the  proportion  that  they  would  have  to 
give  to  the  American  road  for  carrying  the  business  from  Newport  to 
Boston  would  be  less  than  the  absolute  cost  of  their  carrying  the  trallio 
from  that  i)oint  to  their  port  on  the  Atlantic,  Halifax,  or  St.  John. 

The  Chairman.  I  have  forgotten  whether  you  stated  the  total  value 
of  the  business  done  by  the  people  repre-ented  in  these  organizations. 

Mr.  Speare.  I  did  not. 

The  Chairman.  Have  you  any  idea  ot  the  amount  T 

Mr.  Speaue.  I  thiidc  y\r.  CJiuidwm,  who  represents  the  Chamber  ot 
Commerce,  will  be  able  to  give  it  to  you. 

Senator  Blair.  Suppose  that  private  individuals,  or  any  i)ower, 
shouhl  come  in  with  the  <'apital  and  biiihl  a  canal  from  lioston  due  west 
to  the  I'acili.'  Ocean  and  make  a  waterway  from  one  sidt;  of  this  coun- 
try to  the  other,  and  otter  to  carry  the  freight  of  the  whole  country  for 
nothing  for  all  time,  do  y<m  think  that  that  manifest  a<lvantage  to  the 
people  ought  to  be  denied  them  in  order  that  they  should  continue  to 
pay  aii<l  bear  burdens  for  tlie  purjjose  of  taking  care  of  American  rail- 
road interests ! 

Mr.  Speare.  Certainly  not. 

Senator  Blair.  Suppose  a  canal  shouhl  be  built  from  theGulf  of  St. 
Lawrence  to  Vancouver,  or  to  Puget  Sound,  all  outside  the  territory  of 
the  United  States,  and  offered  fice  to  tht'  people  of  the  I'nited  States 
lor  all  time,  are  we  to  be  denied  the  use  of  that  canal  and  to  be  taxed 
forever  simply  to  maintain  the  railroail  interests  of  this  country  ? 

Mr.  Speare.  I  do  not  think  we  would  willingly  stand  it  very  long, 
sir. 

Senator  Blair.  In  what  respect  is  there  any  equity  in  compelling 
the  people  of  New  lingland,  or  tlu^  people  of  any  part  of  this  country, 
to  pay  perpetually,  or  at  all,  higher  freights  ami  fares  than  they  would 
otherwise  liave  to  pay  in  order  to  maintain  American  cajjital  invested 
in  private  enterprises  ? 

Mr.  Speare.  We  do  not  think  there  is  any  justice  in  it. 

Senatoi  Blair.  Is  there  any  business  that  asks  that  protection  ex- 
ce])t  the  railroads  f 

Mr.  Speare.  I  know  of  none. 

Senator  Blair.  That  is  all. 

Senator  Gorman.  Do  I  understand  you  to  assert  the  principle  that 
you  would  disregard  American  transj)ortation  interests  if  you  could  get 
your  transportation  by  a  foreign  enti'ri)rise  for  less  money  f 

Mr.  Speare.  1  am  not  prepared  to  say,  sir,  that  if  there  were  an  ex- 
isting line  through  Canada  that  would  carry  my  goods  cheaper  than  the 
American  roads  that  I  would  permit  myself  to  be  taxed  to  send  the 
goods  over  an  American  line. 

Senator  (Jorman.  Would  you  apply  that  principle  to  water  carriage 
as  well  as  rail  ? 

Mr.  Speare.  Yes,  sir;  if  the  conditions  were  equal. 

Senator  CxORMAN.  Would  vou  apply  the  same  rule  to  onr  coastwise 
trade? 

iMr.  Speare.  No,  sir. 

Senator  (rOiiMAN.  Where  is  the,  distinetioii  between  the  water  car- 
riers along  the  Atlantic  coast  and  the  railroad  carriers  across  the  con- 
tiueut  ? 


I 


THE    UNITED    STATES   AND   CANADA.  373 

Mr.  Speare.  It  is  too  loiijj  ami  too  broad  a  question  for  me  to  go  into 
at  this  time,  but  I  am  clear  tiiat  the  coastwise  trade  is  verv  important 
to  the  American  people,  and  tliat  we  should  not  give  that  trade  to  any 
foreign  country  or  corporation;  but  the  reasons  are  of  such  a  broall 
character  that  I  do  not  care  to  go  into  the  question  at  present. 

Senator  Gorman.  Would  it  be  an  unfair  proposition  to  say  to  the 
Canadian  Government,  "  We  will  permit  your  roads  to  enter  "into  our 
trade,  as  we  do  now— continue  the  present  state  of  things— provided 
you  put  your  railroads  under  the  same  restrictions  under  which  we  have 
placed  the  American  roads,  by  the  passage  of  the  interstate  commerce 
law,  with  the  additional  requirement  that  you  shall  receive  at  tlie  ter- 
mini of  your  roads  in  Canada  freight  from"  American  vessels  touching 
at  Canadian  ports  and  bring  that  freight  to  Boston  without  discrimina- 
tion, just  as  you  are  permitted  to  do  in  our  American  trade  ?"  In  other 
words,  put  the  two  systems  upon  an  exact  equality  ? 

Mr.  Speare.  I  understand  tliey  are  so  to  day  under  our  law,  sir. 

Senator  Gorman.  The  (Canadian  roads  claim  that  they  are  under  the 
exact  regulation  so  far  as  trade  originating  in  the  United  States,  brought 
through  Canada,  and  then  into  the  United  States,  at  Boston,  for  in- 
stance, is  concerned,  but  nobody  pretends  to  claim  that  on  local  busi- 
ness the  long  and  short  haul  clause  of  our  law  applies  as  it  does  on  our 
American  roads.  Nobody  claims  that  the  Canadian  roads  will  receive 
at  Canadian  ports  fish  from  our  American  vessels  and  bring  them 
through  to  Boston  or  New  York  on  the  Canadian  lines.  They  exclude 
that  trade.  Now,  if  we  were  to  require  that  the  conditions  should  be 
precisely  alike  in  Canada  as  in  the  United  States,  would  that  be  an  un- 
fair proposition,  in  your  judgment? 

Mr.  Speare.  If  I  understand  your  question,  the  purport  of  it  is  this, 
that  if  at  Port  Huron,  which  is  a  Canadian  port,  an  American  vessel 
should  bring  grain  destined  to  Boston,  that  the  Canadian  lines  should 
take  it  from  that  vessel  and  bring  it  to  Boston  on  precisel^'^  the  same 
terms  as  they  would  for  themselves? 

Senator  Gorman.  Yes,  sir. 

Mr.  Speare.  Well,  that  would  compel  them' to  do  what  the  New 
York  Central  and  the  Baltimore  and  Ohio  or  any  other  road  is  not 
compelled  to  do;  that  is  to  say,  to  make  its  inland  rate  conform  to 
some  outside  dictation.  When  grain  is  landed  in  the  elevators  at  Buf- 
falo, the  New  York  Central  can  make  its  rate  to  New  York  City  on  that 
grain  at  any  figure  it  chooses.  The  Canadian  road  can  make  its  rate 
from  Port  Huron  to  Island  Point  at  any  figure  it  chooses,  that  being  a 
local  road.  The  interstate  commerce  law  or  the  United  States  law  does 
not  apply  to  that  haul. 

Senator  Gorman.  You  are  confining  it  to  purely  local  business, 
which  originates  and  terminates  in  the  State  of  New  York.  I  spoke 
of  the  through  freight. 

Mr.  Speare.  I  so  understood  you. 

Senator  Gorman.  Taking  all  the  conditions  the  American  roads  are 
under,  I  ask  you  the  question  whether  it  would  be  unftur  to  say  to  the 
Canadians,  "if  we  permit  you  to  engage  in  our  American  trade  you  must 
come  under  the  same  rules  precisely  as  to  local  and  through  business  as 
the  American  roads  do,  with  the  additional  requirement  that  you  shall 
receive  freight  from  our  fishing  vessels  at  your  terminals  in  Canada 
and  transport  it  to  Boston  and  other  points  in  the  United  States  with- 
out discrimination  ? 

Mr.  Speare.  I  will  say  as  to  the  proposition  with  reference  to  goods 
coming  from  Port  Huron  or  in  that  direction  that  at  Port  Huron  or 


374  TRAKSPOBTATION  INTERESTS  OP 

Detroit  or  wherever  the  Canadian  roads  have  a  line  const riuteil  they 
take  the  goods  on  the  same  terms  exactly  as  from  an  Knglish  vessel. 

Senator  Gorman.  I  am  speaking  of  your  New  England  fishing 
vessels  entering  St.  John  and  running  into  the  St.  Lawience.  The 
Canadian  roails  will  not  bring  a  pound  of  fish  and  land  it  at  any  Ameri- 
can port  as  matters  stand  to-day.  You  can  not  ship  a  ton  of  goods 
without  going  through  the  customhouse;  whereas  on  the  other  iiand 
we  permit  them  ro  carry  through  our  territory  without  any  discrin)ina- 
tion  whatever. 

Mr.  Speahp:.  I  was  not  aware  that  such  a  state  of  facts  existed.  I 
■was  under  the  imjiression  that  you  could  ship  thiongh  in  bond  Irom  St. 
John  to  r>ost(»n.  The  fish  matter  is  a  (jnesiion  of  disjtute,  and  they  will 
not  bring  our  fish  for  some  reason  that  seems  satisfiu-tory  to  themseU  es. 

Senator  (Iouman.  Will  it  do  to  apply  to  the  Canadian  roads  the 
exact  rules  we  apply  to  our  own  roads,  or  if  we  give  the  Canadian  lines 
the  privileges  they  now  enjoy  should  we  not  exact  for  our  own  goods 
coming  this  way  tlH>  same  privileges! 

Mr.  Si'icAKK.  I  think  the  privileges  should  be  entirely  reciprocal. 
Whatever  we  ask  of  them  we  should  be  willing  to  give  them. 

SIIirMKMS   FKOM   NEW  ENGLAND   TO   THE   WEST. 

Senator  Keacax.  I  believe  it  is  deeliired  in  the  resolutions  which 
have  been  i)resi'nted  here  that  the  roads  passing  through  Canada  com- 
prise a  niitural  channel  tor  the  trade  of  lloston. 

Mr.  Stkakk.   Yes;   Boston  and  New  ICngland. 

Senater  1:ka(;an'.  Can  you  tell  me  to  what  part  of  the  ^V  est  or  North- 
west the  resolutit)ns  particularly  relate t 

Mr.  Si'EAKK.  We  have  reference  to  Chicago,  Detroit,  St.  Paul,  Min- 
neapolis, and  the  whole  of  the  Northwest — Washington  Territory,  and 
through  that  country. 

Senator  Keagan.  Uave  you  any  data  with  you  whi<;h  would  enable 
you  to  give  the  distance  by  the  roads  running  through  the  territory  of 
the  United  States  and  those  going  through  Canadian  territory  and 
touching  Toledo,  Detroit,  Chicago,  St.  Paul  and  Minneapolis? 

]\Ir.  Speahe.  I  have  not  the  data  with  me. 

Senator  Keagan.  Are  you  not  aware  that  the  roads  through  Canada 
to  these  points  are  much  longer  than  the  roads  reaching  the  same  points 
running  through  the  United  States? 

Mr.  Steauj:.  Much  longer  in  some  instances  from  Boston  to  some  of 
those  points,  but  to  Minneapolis  and  to  all  those  other  points  Boston 
itself  IS  just  about  the  same  distance  as  Irom  New  \ork. 

Senator  Keagan.  For  instance,  in  shipping  grain  or  Hour  from  Min- 
nea])olis  to  St.  Paul  you  bring  it  through  Chicago,  do  you  nott 

Mr.  Speare.  No,  sir. 

Senator  Keagan.  By  what  route  does  it  come? 

Mr.  Speare.  By  the  "Soo  route"  it  is  called,  coming  through  Can- 
ada. 

Si'nator  Reagan.  That  is  the  recently  constructed  route? 

Mr.  Speare.  Yes,  sir. 

Senator  Keagan.  Can  you  give  us  the  distance  from  Minneapolis  to 
Boston  via  Sault  St.  Marie,  and  the  distance  from  Minneapolis  to  Bos 
ton  via  Chicago? 

Mr.  Speare.  I  can  not  today,  but  will  give  it  to  you  hereafter,  if 
you  desire. 

Senator  Keagan.  Are  you  aware  that  the  shortest  route  by  rail  from 


THE    UNITED    STATES    AND    CANADA.  375 

Cliicago  to  Boston  thiougli  Canada  is  292  miles  longer  than  the  shortest 
route  south  of  the  lakes. . 
Mr.  Speake.  No,  sir. 

Senator  Reagan.  That  the  American  routes  are  much  shorter  than 
the  Canadian  routes'? 

Mr.  Speare.  No,  sir;  I  was  not  aware  of  that  difference  in  distance. 
The  flour  and  grain  coming  from  Minneapolis  and  St.  Paul  to  Boston 
does  not  come  that  long  distance  via  Chicago. 

The  Chairman.  Do  you  mean.  Senator,  from  Chicago  or  from  St. 
Paul ! 

Senator  Reagan.  I  mean  from  Chicago,  because  I  do  not  know  ex- 
actly the  distance  from  St.  Paul.  1  wanted  to  ask  and  did  ask  whether 
the  route  through  Canada  from  Chicago  to  Boston  was  not  2()J  njiles 
longer  than  the  route  from  Chicago  to  Boston  through  ihe  territory  of 
the  United  States.  I  believe  Mr.  Speare  stated  that  he  is  not  i)r«'pared 
to  say  how  much  difference  there  is  between  the  line  from  St.  Paul 
through  Canada  and  the  line  from  St.  Paul  through  the  United  States. 

Mr.  Speare.  No,  sir. 

Senator  Reagan.  Is  it  true  that  the  route  from  St.  Paul  and  Minne- 
apolis through  Canada  to  Boston  is  longer  than  the  route  between  the 
same  points  through  the  United  States. 

Mr.  Speare.  I  am  sure  it  is  shorter  through  Canada  than  via  Chi- 
cago. 

Senator  Reagan.  Are  not  the  roads  through  this  country  along  routes 
more  populous  and  affording  more  business  than  the  country  through 
which  the  roads  in  Canada  pass  ? 

Mr.  Speare.  There  is  no  doubt  of  it. 

Senator  Reagan.  How,  then,  do  you  account  for  the  fact  that  you 
get  cheaper  transportation  over  the  longer  route  having  less  business 
along  its  lines  than  over  a  shorter  road  with  greater  business  ? 

Mr.  Speare.  The  New  York  Central  passes  through  a  veryiioi)ulous 
country,  and  it  doubles  its  stock  and  pays  dividends  on  its  stoc'k  after 
being  doubled  and  all  that,  while  the  Canadian  roads  up  to  within  a 
very  recent  time  had  not  paid  dividends  upon  their  stuck. 

Senator  Reagan.  If  I  understand  the  answer,  it  is  that  the  Cana- 
dian roads  have  been  carrying  at  rates  that  prevent  them  from  paying 
dividends  as  against  the  United  States  roads. 

Mr.  Speare.  Probably,  as  compared  with  the  United  States  roads. 

Senator  Reagan.  With  respect  to  the  transportation  of  flour  and 
meats  from  the  West  by  water  through  the  lakes  and  by  canal  to  Al- 
bany and  by  the  Boston  and  Albany  road  to  Boston,  can  you  not  bring 
that  trafiflc  also  by  water  from  Albany  to  Boston  cheaper  than  you  can 
by  the  railroads  through  Canada? 

Mr.  Speare.  No,  sir. 

Senator  Remgan.  What  is  the  difficulty  about  it  ? 

Mr.  Speare.  Mr.  Bliss  told  you  yesterday.  The  expense  of  chang- 
ing from  cars  to  boats,  and  vice\-ersa,  stops  it.  As  you  know,  cars  are 
loaded  from  Chicago  and  come  through.  If  you  bring  the  freight  to 
Buffalo  in  boats  and  then  reload  it  into  canal-boats,  when  the  freight 
gets  to  Albany  j'ou  have  to  change  into  cars.  As  he  told  you  yester- 
dav,  the  Boston  and  Albany  never  carried  goods  that  way. 

Senator  Reagan.  Do  vou  know  the  difference  in  cost  of  transporta- 
tion from  the  West  by  the  lakes  and  the  canal  to  New  York  City  as 
compared  with  transportation  on  the  railroads  ? 

Mr.  Speare.  I  am  not  prepared  to  say. 


376  TRANSPORTATION  INTERESTS  OF 

Seujitor  Reagan.  You  lioanl  the  statc-inent  yestcrtlay  iliat  (li»>y  were 
lower,  did  you  uot  ? 

Mr.  bPEARE.  Yes,  sir. 

Senator  Eeagan.  That  had,  of  course,  to  bear  the  trausshipment  at 
Bufialo  ? 

Mr.  Speake.  Yes,  sir. 

Senator  Eeagan.  Then  you  would  only  have  one  more  transship- 
ment to  reach  here  than  to  reach  New  York,  the  one  at  Albany? 

Mr.  Speaee.  Yes. 

Senator  Reagan.  Do  you  know  what  it  costs  to  transship  at  Albany? 

Mr.  Speake.  The  elevation  alone  is  one-half  a  cent  a  bushel. 

Senator  Keagan.  Would  that  half  a  cent  a  bushel  make  up  the 
ditterence  in  the  cost  of  trausi)()itati(>n  by  water  and  the  tians])orta- 
tion  by  rail  from  the  West  to  iJoston  ? 

^Ir.  Speaue.  Tiie  Uoston  and  Albany  Kaiboad  is  the  most  expensive 
link  in  the  line  to  operate.  It  takes  an  t'xtra  pt'iecnta^ieof  the  thioiij^h 
rate.  The  IJoston  an<l  Alltany  has  a  7-foot  ^'rad*',  whih'the  New  York 
Central  in  c()nii)aiison  with  the  toriii<*r  load  has  ver\  li;iht  {^rade. 
They  are  allowed  an  extra  i)roi)ortion  of  the  rate.  As  yon  icniciidter, 
Mr.  Bliss  told  yon  that  on  the  lioston  and  Albany  Railroad  there  is  no 
proht  in  the  through  business. 

Senator  Reagan.  That  relates  to  the  thronj,di  transportation  from 
the  West  f 

]\rr.  Speare.  Yes. 

Senator  Reagan.  Does  that  affect  the  rate  when  the  transportation 
to  Albanv  is  by  water  and  then  to  Boston  by  the  Boston  and  Albany 
Railroad  "f 

Mr.  Speaue.  Yon  can  very  well  understand  that  if  the  Boston  and 
Albany  Kailroad  wants  the  business  and  can  make  a  piolit  out  of  it  by 
takiiij;  the  business  trom  tlu'  canal  at  Albany  (tlie  rate  is  .'}(>  cents  to 
day),  and  coidd  p't  vessels  toj^o  there  and  disehar;,^',  they  W()uld  do  so. 
They  have  never  seen  any  i)rotit  in  doin;^  it  in  that  way,  and  ti  erelore 
they  have  never  erected  any  elevators  nor  done  the  bnsiness  by  that 
method.  One  half  of  the  grain  and  Hour  going  to  New  York  by  water 
is  carried  tluring  seven  months  of  the  year. 

Senator  Ueagan.  Your  reason  for  not  wanting  the  Canadian  roails 
brought  under  the  same  regidations  as  the  United  States  roads  is  be- 
cause by  their  sitmition  they  can  <liscriminate  and  do  discriminate? 

Mr.  Speake.  What  is  the  first  part  of  your  <jnestion  ? 

Senator  Reagan.  1  ask  if  your  reason  for  not  wanting  the  Canadian 
roads  brought  under  the  same  regulations  as  onr  roads  is  becausi-  the 
diseiiinination  they  make  in  their  rates  enables  them  to  give  you  lower 
rates? 

Mr.  Speare.  I  do  not  understand  that  they  are  not  under  the  regula- 
tions so  far  as  they  can  legally  be  put  uiuh'r  them. 

Senator  Reagan.  1  ask  if  it  is  a  fact  or  not,  the  Canadian  roads  not 
being  under  regulation,  that  they  can  cut  uinler  the  United  States  roads. 
But  I  believe  .you  say  that  the  Caimdian  lines  are  nnder  regidation. 

Mr.  Speake.  Yes,  sir. 

Senator  Reagan.  You  do  not  un<lerstand  that  they  are  under  the 
same  regnlation  in  reference  to  the  local  freights  in  Canada  as  our 
roads  iire  in  this  country,  do  you  ? 

.Mr.  Speake.  No,  sir;  no  more  than  our  roads  are  under  the  same 
regidation  as  the  Canadian  roads  are  as  respects  Canadian  business. 

Senator  Reagan.  Our  roads  are  under  sncli  regnlation  that  they  are 
j)revented  from  charging  more  for  the  shorter  than  the  longer  haul  ia 


THE  UNITED  STATES  AND  CANADA.  377 

our  territory,  and  tlic  Canadian  roads  arc  not  nndci  tlial  i.ro\  ivion  in 
their  own  territory. 

Mr.  Speare.  Not  in  Canada. 

Senator  HiscocK.  You  claim  that  grain  shipped  from  Chicnjro  oon- 
slgned  to  Albany,  in  the  ^tate  of  New  A'ork,  tlu^  moment  it  <;cts''to  15ut- 
falo  is  subject  to  local  rates  on  the  New  York  Central,  and  that  it  is 
not  subject  to  the  interstate  commerce  law  ? 

Mr.  Speare.  Certainly  not. 

Senator  Hiscock.  When  it  is  consijiiied  to  Albany,  in  the  State  of 
New  York,  the  mo:iu*iit  it  strikes  Bnifalo  the  traflic  is  then  exempt  from 
and  outside  of  the  provisions  of  the  interstate  commerce  law. 

Mr.  Speare.  I  do  not  make  any  such  claim,  if  you  will  permit  me. 
What  I  claim  is  this,  that  grain  in  the  elevators  at  Buffalo,  at  the  end 
of  tlie  route,  is  not  subject  to  the  law. 

Senator  HisoucK.  It  may  be  at  the  end  of  the  water  route,  but  not 
at  the  end  of  the  consigned  route. 

Mr.  Speare,  I  say  at  the  end  of  the  consignment.  The  Boston  and 
Albany  is  at  libeity  to  make  any  arrangement  it  chooses  to  carry  tluit 
grain  through  to  Boston. 

THE   INCREASE   OF  BUSINESS  OVER  CANADIAN  LINES. 

Senator  Keagan.  Did  you  hear  the  statement  yesterday  with  respect 
to  the  increased  business  over  the  Canadian  roads  since  the  passage  by 
Congress  of  the  interstate  commeree  act? 

Mr.  Speare.  Yes,  sir. 

Senator  Reag\n.  To  what  do  you  attribute  that  increase? 

Mr.  Speare.  Do  you  refer  to  Mr.  Mellen's  testimony  as  to  trafllc 
from  San  Francisco! 

Senator  Reagan.  I  have  allusion,  principally,  to  tralTu;  between  St. 
Paul  and  Detroit,  and  Minnesota  and  that  part  of  the  country. 

Mr.  Speare.  I  was  not  aware  that  there  had  been  such  a  heavy  in- 
crease over  the  Canadian  roads  since  the  interstate  commerce  law  went 
into  effect,  and  I  do  not  think  it  is  a  fact. 

Senator  Reagan.  I  ask  if  you  are  aware  of  the  largely  increased  busi- 
ness on  the  Canailian  lines? 

Mr.  Speare.  I  am  not  aware  that  the  proportion  of  business  or  per- 
centage of  business  done  by  the  Canadian  roads  has  been  so  largely  in- 
creased since  the  interstate  commerce  act  went  into  effect. 

Senator  Reagan.  In  the  testinu)ny  given  before  us  at  New  York  it 
■was  shown  by  various  persons  that  the  increase  of  business  over  the 
Canadian  roads  since  the  adoption  of  this  law  had  been  very  great. 
Are  you  aware  whether  that  is  so  or  not? 

Mr.  Speare.  Mr.  Goodwin,  who  will  speak  for  the  Chamber  of 
Commerce,  will  answer  more  in  detail  on  that  i)oint.  1  am  not  aware 
that  it  is.  In  1880  the  New  York  Central  carried  d5  per  cent,  of  its 
freight  to  New  England,  and  last  year  00  per  cent.  So  it  does  not  look 
like  th'ey  suffered  very  much,  so  far  as  New  P^ngland  is  concerned. 

Senator  Reagan.  If  the  Canadian  roads  doing  business  on  United 
States  territory  are  placed  so  that  they  must  do  business  under  the 
same  legal  restriction  as  our  roads  in  order  to  let  commerce  take  it,s 
natural  channels  over  the  shortest  routes,  and  that  business  was  turned 
back  on  the  American  roads,  would  it  not  cheapen  the  transportation 
on  the  American  roads  and  put  rates  down  to  a  pouit  lower  tlian  the 
Canadian  roads  could  afford  to  go  ?  ,      /.        r 

Mr.  Speare.  My  judgment  is  that  if  you  eliminate  tlie  banaaiau 


378  TRANSPORTATION   INTERESTS   OP 

roads  and  make  a  fixed  rate  and  permit  traffic  to  go  bj'  tlio  shortest 
route  the  rates  would  be  raised  Iii<;lier  than  tliey  now  are.  You  liavc 
passed  a  law  ])lacinfr  the  Canadian  roads  under  the  same  rule  as  our 
roads.  They  have  to  file  their  through  rates  i)recist'ly  as  the  other  roads 
do  with  the  Interstate  Commerce  Commission.  Any  differentials 
that  are  allowed  them  are  aj^reed  to  by  the  association.  These  routes 
exist  and  the  association  says  to  thini,  •'  You  have  a  longer  route,  and 
we  will  allow  you  to  charge  2  cents  less  in  order  to  get  a  i)art  of  the 
traffic. " 

Senator  Keagan.  Is  it  not  true  that  the  Canadian  roads  in  making 
the  cheapest  rate  from  Detroit  and  Chicago  recouj)  on  the  local  rates  in 
Canada  to  make  up  the  loss  of  revenue? 

Mr.  SPEAiiE.  I  have  not  seen  tin'  evidence  to  substantiate  anj*  such 
statement.  You  jirobably  remember  that  Mr.  De,.ew  said  in  New  Y'ork 
that  so  far  as  he  knew  the  Cana«iian  lailroads  live  up  to  the  interstate 
commerce  act,  but  that  he  thought  they  have  a  chance  to  evade  it. 

Senator  liioAGAN.'  l>ut  the  manager  of  the  Canadian  Tacilic  and  the 
general  manager  of  the  Grand  Trunk  Line  do  not  say  that.  They  say 
that  as  t<)  commerce  going  to  and  from  the  United  States  that  they  obey 
the  law  and  they  do  not  claim  that  tliey  obey  it  as  to  commerce  iu 
Canada. 

Senator  Blair.  I  understood  the  gentlemen  rei)resenting  both  Cana- 
dian lines  to  say  that  they  did  not  reeou])  on  the  local  freight  in  Canada 
for  the  money  lost  on  tLe  comjieting  rates  with  the  American  roads. 

The  CifAiiniAN.  Of  course  the  law  is  uotiu  force  as  to  local  traffic  on 
Canadian  roads. 

Senator  Blair.  They  claim  that  they  do  not  recoup  in  Canada. 

CANADIAN  RAILROAD  TRAFFIC  AND  THE  COASTWISE  TRADE. 

The  Chairman.  Are  you  fa  niliar,  Mr.  Speare,  with  the  coastwise 
trade  at  this  point? 

]\Ir.  Speaue.  Yes,  sir. 

The  Chairman.  Who  controls  it  T 

Mr.  Speake.  The  jn-ople  who  own  the  vessels. 

The  CiiAiKMAN.  Who  owns  them! 

Mr.  Speaue.  Americans  entirely. 

The  CiiAimiAN.  To  secure  this  condition  of  things  has  been  the 
policy  of  the  Covernment  from  the  beginning. 

Mr.  Speare.  Y'"es,  sir. 

The  Chairman.  Do  you  think  it  right? 

Mr.  Speare.  I  do. 

The  Chairman.  Snpi)ose  we  let  the  British  in  here  to  take  a  hand  in 
the  coastwise  trade,  <lo  you  not  believe  it  would  cheapi-n  it  f 

Mr.  Speare.  Possibly  it  might,  and  drive  our  American  people  out 
of  it. 

The  Chairman.  That  is  what  you  are  for — cheap  transportation — is 
it  not  ? 

Mr.  Speare.  Everything  taken  into  consideration. 

The  Chairman.  On  the  theory  that  it  is  absolutely  right  that  the 
American  Government  should  protect  Americans  in  the  coastwise  trade 
as  against  all  others,  why  ought  not  the  same  princijde  prevail  on  the 
northern  border  of  the  United  States,  whether  it  be  with  respect  to  rail 
or  to  water  ? 

Mr.  Speare.  That  is  too  deep  a  question  for  me  to  answer  off-hand. 


THE    UNITED    STATES    AND    CANADA.  379 

The  Chairman.  Ton  tliiiik  that  is  a  difficult  problem.  Yon  liavo  no 
doubt  of  the  right  of  the  American  Government  to  protect,  and  the 
soundness  of  its  policy  in  protecting,  Americans  in  the  coastwise  trade 
but  you  are  not  prepared  to  say  that  the  same  policy  should  prevail  as 
to  the  trade  on  the  northern  border,  whether  by  rail  or  water  ? 

Mr.  Speare.  There  are  very  manifest  differences  in  the  situation. 
Americans  own  roads  in  Canada.  Americans  own  a  road  running  from 
Newport  to  Sherbrook. 

The  Chairman.  Do  Americans  own  it  entirely? 

Mr.  Speare.  Yes,  sir. 

The  Chairman.  What  is  the  length  of  the  line  ? 

Mr.  Speare.  Forty-six  or  47  miles,  I  think. 

The  Chairman.  What  are  its  connections  ! 

Mr.  Speare.  It  connects  with  the  Grand  Trunk  Railway.  The  Ver- 
mont Central  owns  a  line  running  from  St.  Albans  to  St.  John,  which 
makes  the  link  between  the  Grand  Trunk  and  the  Vermont  Central. 

The  Chairman.  Suppose  Americans  own  it,  ought  there  be  any  dif- 
ference in  the  policy  of  the  Government  as  to  the  general  proposition 
to  control  the  trade  on  the  northern  border  as  well  as  the  coastwise 
trade  ? 

Mr.  Speare.  Is  it  not,  so  far  as  water  is  concerned  ? 

The  Chairman.  I  think  the  trade  is  divided  on  the  lake  between 
Canada  and  the  United  States.  I  think  the  Canadian  vessels  are  do- 
ing their  trading  as  they  please.  There  seems  to  be  no  definite  i)olicy  on 
the  part  of  the  Government  thus  far  as  to  the  trade  on  the  northern 
border,  while  there  has  been,  since  the  beginning  of  the  Government, 
as  regards  the  Atlantic  seaboard. 

Mr.  Speare.  1  think  you  will  see  there  is  a  treaty  regulation  as  to 
those  vessels. 

The  Chairman.  That  might  be,  but  it  does  not  keep  out  vessels  of 
Canadian  ownership. 

Mr.  Speare.  I  think  you  will  find  that  a  Canadian  vessel  could  not 
be  stopped  from  running  between  Chicago  and  Buffalo.  They  can  come 
to  any  of  our  lake  ports  precisely  as  they  can  on  the  ocean.  There  is 
nothing  to  prevent  a  vessel  from  St.  John  trading  on  equal  terms  with 
a  vessel  from  elsewhere. 

Senator  Blair.  I  would  like  to  ask  you  a  question  about  this  coast- 
wise trade.  Is  it  not  a  universal  law  and  a  custom  among  nations  that 
the  coastwise  trade  of  each  shall  be  confined  to  its  own  citizens  ? 

Mr.  Speare.  I  think  so. 

Senator  Blair.  If  Great  Britain  permitted  the  ships  of  the  United 
States  to  enter  into  her  carrying  trade,  do  you  think  that  there  would 
be  much  doubt  that  the  Americans  would  do  so;  or  do  you  think  the 
reverse— do  you  think  it  is  at  all  strange  or  wrong  in  our  excluding  for- 
eigners from' our  coastwise  trade  when  they  exclude  us  from  theirs  i 

Mr.  Speare.  I  do  not. 

Senator  Blair.  Does  not  that  arise  from  the  fact  that  the  defense  of 
our  interests  upon  the  ocean  at  large  requires  trading  and  disciplining 
of  the  American  people  upon  the  sea,  and  is  not  that  the  reason  why 
we  and  other  nations  exclude  foreigners  from  the  coastwise  trade  ? 

Mr.  Speare.  I  think  it  is,  and  it  is  quite  right  in  every  nation  to  con- 
fine its  coastwise  trade  to  its  own  peojile. 

Senator  Blair.  Now,  do  you  think  that  by  doing  business  or  continu- 
ing to  do  business  with  the  Canadian  railroads  as  we  always  have  done, 
we  in  any  wise  endanger  the  defense  of  our  people  in  case  ot  war? 

Mr.  Speare.  No,  sirj  not  in  the  least. 


380  TRANSPORTATION  INTERESTS  OP 

Senator  IJlair.  Then,  if  tbe  reason  Tails  wliicli  leads  to  the  discrini 
ination  aj,'ainst  forei<iners  in  onr  coastwise,  trade,  why  should  we  apply 
any  such  rule  to  our  transportation  relations  with  Canatla  as  we  <lo  in 
our  coastwise  trade?  What  I  mean  is  this:  I  believe  it  is  a  maxim 
that  when  tiie  reason  of  a  law  fails  the  law  ceases.  If  there  is  no  reason 
connected  with  the  defense  of  our  ])e(»ple  why  we  should  not  enter  into 
and  continue  our  transportation  relations  with  Canada  then  why  is  tids 
comparison  |)ertinent  ? 

Mr.  Speake.  1  do  not  think  it  is. 

Senator  Blair.  Do  you  not  understand  tliat  the  water  refiulations, 
the  r«-<jnIations  on  the  lakes,  and  on  the  line  of  the  St.  Lawrenc^e,  are 
recii)rocal  between  this  country  and  Canada,  so  that  Canadian  vessels 
Lave  the  same  |)rivilej,a*s  as  ours! 

Mr.  Si'EAUE.  Just  the  same. 

Senator  liLAiif.  He<;iproeal  between  the  two  countries t 

]\Ir.  Si'EAIm:.  Precisely  As  I  understand  it, tin  r»'lations  with  respect 
to  shippinj;  in'twce/i  tin*  two  countries  are  reciprocal,  with  the  one  ex- 
ception <if  lishin;;  vessels,  Fishiiij;  vessels  are  allowed  to  enter  Cana- 
dian ports  for  but  four  thinjis — shelter,  woo<l,  water,  and  repairs.  The 
restriction  with  respect  to  our  lishinj;  vessels  is  the  only  restriction 
that  is  put  u|>on  «»ur  vessels  '^i>]iiii  into  Canadian  ports.  \N'e  [»ut  uo 
restrictions  whatever  upon  their  vessels. 

A   QUESTION   BETWEEN   THE   PEOPLE    AND    TUE    RAILROADS. 

Senator  Ulair.  Now,  another  question,  which  has  been  put  to  nearly 
every  witness  ami  which  was  asked  you.  If  it  is  not  fair  to  subject  the 
Canadian  railroads  to  precisely  the  same  c<>nditions  in  transactinj;  busi- 
ness as  our  roads  are  subjected  to,  and  yousay  yes;  now,  if  that  is  fair 
as  betwt'en  the  radroads,  is  it  fair  when  the  questi(ui  aris«'s  betwe«'n  our 
own  people  doin^'  business  and  an  Anu'rican  radroad  !  If  irovernmental 
re;:nlations,  whii-h  are  fair  between  the  radroads,  are  an  injury  to  the 
American  p«'opIe,  is  it  fair  to  the  Ameri(;an  people  to  m.dce  such  regula- 
tions ? 

Mr.  Si'EARE.  I  do  not  know  on  what  ground  you  would  do  it. 

Senator  IJi-AiR.  I  want  to  know  where  the  shoe  i)iiMhes.  Is  this  a 
question  between  the  Canadian  and  the  American  railroads,  or  is  it  a 
question  between  the  Ameiican  people  and  the  railroads  gt'uerally  t 

]\Ir.  Speare.  As  it  stands  to  day.  it  seems  to  me  it  is  a  (juestion  b»'- 
tween  a  lew  American  railroads  and  the  people.  The  few  American 
railroads  want  to  shut  us  in  more  eflectually  than  we  are. 

A  year  ago  this  spring  when  we  went  to  the  Trunk  Line  Associati«m 
at  New  York  and  asked  to  be  placed  upon  a  par  with  New  York,  Mr. 
Fink,  the  commissioner,  said,  "  We  do  not  give  you  the  same  rate  as 
New  York  because  ot  your  jiosition.  You  have  not  the  competition. 
New  York  has  water  routes,  etc.,  ami  yon  have  not." 

Senator  Blair.  These  New  York  and  other  railroads  made  you  that 
answer  1 

Mr.  Speare.  Yes,  sir;  through  the  commissioner  of  their  associa- 
tion, Mr.  Fink. 

Senator  Blair.  In  other  words,  that  thej*  could  charge  you  mon 
and  tliey  did  charge  you  more? 

Mr.  Speare.  Yes,  sir. 

Senator  I'.LAIR.  Then  the  real  (piestion  here  is  not  one  between  the 
railroads,  but  between  the  railroads  and  the  people  of  New  England  ! 

Mr.  Speare.  That  is  practically  what  it  is  to-day,  sir. 


THE  UNITED  STATES  AND  CANADA.  381 

RATES  TO  BOSTON  AND  TO  NEW  YOKK. 

Senator  Blair.  I  understand  you  to  say  that  tliese  New  York  ronds 
and  the  Pennsylvania  road,  and  I  suppose  perliaps  the  Baltimore  iiiid 
Ohio,  while  nominally  making:  the  same  rate  from  Chicago  to  liostou  as 
they  make  from  Chicago  to  New  York,  yet,  in  practice,  they  charge 
Boston  5  cents  more  ? 

Mr.  Speare.  No,  sir;  you  have  not  got  that  quite  right.  So  far  as 
export  rates  are  concerned,  and  so  far  as  anything  going  to  the  Pacific 
coast  is  concerned,  we  have  the  same  rates  as  New  York  ;  but  as  far  as 
all  local  business  is  concerned  we  pay  more.  It  is  an  open  fact  that  we 
l)ay  5  cents  more  per  hundred  on  local  freight  than  do  the  i)e()ple  of 
New  York. 

Senator  Blair.  And  that  is  charged  to  the  consumption  of  tlie  peo- 
ple of  New  England  ?  I  am  not  talking  about  the  merchants,  but  the 
people,  who  have  to  pay  all  these  bills  in  the  end. 

Mr.  Speare.  Yes,  sir;  it  costs  the  people  of  New  England  from  5  to 
20  cents  per  hundred  more  than  the  people  of  New  Y''ork. 

Senator  Blair.  I  think  that  is  a  difierence  which  should  be  made 
manifest  and  which  should  be  understood. 

Senator  Keagan.  Is  that  so  as  to  grain  coming  over  the  lakes? 

Mr.  Speare.  Yes,  sir;  on  everything  that  comes  to  Boston.  We  have 
to  pay  5  cents  more  per  hundred  on  the  lowest  classes,  and  on  the 
higher  classes  it  runs  up  to  20  cents. 

Senator  Blair.  When  you  applied  to  Mr.  Fink  for  a  reduction  of 
the  rates  to  New  England  and  to  put  New  England  on  a  basis  with 
New  York,  Philadelphia,  and  Baltimore,  he  told  you  that  they  would 
not  give  you  the  same  rates  as  the  States  in  which  those  cities  are  lo- 
cated, because  there  was  no  competition  to  compel  them  to,  and  so  the 
roads  charge  you  25  per  cent,  more  than  they  do  the  people  living  in 
those  other  localities  ? 

Mr.  Speare.  That  is  the  practical  result  of  it. 

Senator  Blair.  That  is  the  result  that  the  farmer  would  comprehend 
and  whoever  consumes  commodities  would  comprehend. 

Mr.  Speare.  It  just  puts  that  much  more  upon  the  cost  of  the  com- 
modity to  the  consumer,  or  deducts  so  much  from  the  value  of  the  i)rod- 
ucts  of  the  West. 

Senator  Blair.  Thus  it  is  that  transportation  enters  into  the  com- 
merce of  New  England,  exporting  and  importing,  more  than  into  liie 
commerce  of  any  other  part  of  the  country. 

Mr.  Speare.  Yes,  sir.  It  puts  that  much  more  tax  upon  our  manu- 
factures as  well  as  upon  everything  we  consume. 

Senator  Blair.  Mr.  Melleu's  statement,  then,  was  quite  misleading, 
was  it  not  ? 

Mr.  Speare.  I  thought  so  at  the  time,  sir. 

Senator  Blair.  I  thought  so,  too,  but  I  was  not  well  enough  informed 
to  make  plain  these  facts;  I  have  always  so  understood  them,  however. 

TRAFFIC  BETWEEN  NEW  ENGLAND  AND   CANADA. 

Is  there  not  a  great  deal  of  business  intercourse  ami  other  inter- 
course between  the  people  of  Canada  and  our  own  peoi)le,  whicii  can  in 
no  wise  be  accommodated  by  these  trunk  railroads  which  we  have  been 
speaking  of?  Is  there  not,  along  the  northern  bonier,  within  two  or 
three  hundred  miles  of  the  border  in  Canada  and  the  United  States,  a 
good  deal  of  intercourse  that  could  not  be  at  all  accommoilaled  by 
these  American  trunk  lines  ? 


382  TRANSPORTATION  INTERESTS  OF 

Mr.  Speare.  It  conld  not  be  accommodated  except  by  payliif;  local 
rates  from  wliatever  should  be  the  common  point,  which,  as  I  have 
stated,  I  believe  the  Canadian  railroads 

Senator  Blaik,  Please  <;et  the  New  England  roads  separated  from 
these  trunk  lines.  We  use  our  trunk  lines  in  jjettinjj  to  any  portion  of 
Canada  which  lies  north  of  New  Kn-^land,  do  we  not  ? 

Mr.  Spear.  Yes,  sir  ;  of  course  we  do. 

Senator  liLAiR.  And  is  that  not  true  of  all  northern  New  York  t 

Mr.  Speare.  Northern  New  York  is  supplied  entirely  by  the  Og- 
densburgh  road. 

Senator  Blair.  Are  the  New  Enjrland  roads,  except  where  they 
have  direct  connection  with  the  trunk  lines,  ver^*  lar<;ely  dci)endent 
upon  Canadian  communications  or  connections  for  what  suppoits 
them  ? 

Mr.  Speare.  Yes,  sir. 

Senator  Blair.  As  well  as  the  j)eople  of  New  England  t 

Mr.  Speare.  Yes,  sir. 

CANADIAN    INTERESTS   IN  THE   UNITED   STATES. 

Senator  Blair.  Now,  another  tliin{r.  Mr.  Speaie,  with  reference  to 
the  future  and  the  defense  ot  the  country.  Do  you  not  thiidc  it  would 
be  good  policy  to  i)ursue  that  course  which  would  locate  the  termini  of 
the  Canadian  roads  under  the  jurisdiction  of  the  American  llag,  so  that 
in  case  of  war  we  could  shut  them  otl't 

Mr.  Speare.   Ves,  sir. 

Senator  Blair.  What  would  become  of  Canada,  iu  case  of  war,  if 
we  had  jiosscssion  of  her  eastern  outlets  ? 

Mr.  Speare.  1  think  we  would  certaiidy  have  the  advantage  of  her 
in  that  particular.  If  the  road  of  the  Canadian  Tacitic  through  Maine 
is  built,  in  case  of  trouble  we  can  stoj)  it  iininediately. 

Senator  Blair.  They  could  not  use  that  road  very  much  if  we  held 
this  end  of  it. 

Mr.  Speare.  No,  sir. 

Senator  Blaik.  Suppose  that  war  broke  out  in  winter  when  the  St. 
Lawrence  is  frozen  up,  how  would  the  Canadians  get  troops  info  the 
center  of  Cana<la  to  meet  an  American  army  ? 

Mr,  Speare.  They  have  a  railway  line,  sir.  We  can  shut  them  out 
of  Maine,  if  we  choose,  but,  at  the  same  time,  we  do  not  close  up  the 
Caiuidian  Pacific. 

Senator  Blair.  I  am  aware  that  there  is  as  yet  that  unimportant 
branch  line;  but  snjjpose  we  bring  their  i)rincii)al  termini  and  all  their 
business  under  the  jurisdiction  of  our  own  tlag  in  the  State  of  Maine, 
at  Portland,  further  east,  and  at  Boston.  They  are  going  to  have 
their  connections  at  New  York,  which  will  be  as  important  to  them  as 
any,  I  su])])ose,  and  they  are  even  forming  connections  with  IMiila- 
dciphia  and  Baltimore.  Now,  if  we  fasten  all  the  interests  of  Can- 
adian transportation  on  the  Atlantic  coast  under  the  American  flag, 
why  is  it  not  a  good  thing  to  do  ? 

Mr.  Speare.  1  think  it  is  a  good  thing  to  do. 

Senator  Blair.  It  is  inevitable  that  as  more  commerce  develops 
under  our  own  flag  on  the  Atlantic  it  will  be  of  beuelit  to  us. 

Mr.  Speare.  Of  course. 

THE  NEW  YORK   AND   BOSTON   RATES. 

Senator  Uiscock.  Did  I  understand  you  to  say  that  the  New  Eng- 
land rates  were  o  per  cent,  higher  than  the  New  York  rales? 


THE    UNITED    STATES    AND   CANADA.  383 

Mr.  Spearp:.  No,  sir;  we  have  this  singular  anomaly:  our  rates  on 
westbound  freight  are  precisely  the  same  as  all  other  points  hut 
everything  that  comes  into  New  England  for  consumption,  iu,t  for  ex- 
port,  i)ays  5  cents  a  hundred  on  the  lowest  and  20  cents  a  hundred  on 
the  highest  more  than  the  New  York  rate— 5  to  20  ceuts  per  hundred 
not  5  per  cent.  ' 

Senator  Hiscock.  There  is  that  difference  between  freight  that 
comes  into  New  England  for  consumption  and  that  which  comes  for 
exportation? 

Mr.  Speare.  Yes,  sir. 

Senator  Hiscock.  Are  those  rates  published? 

Mr,  Speare.  Yes,  sir. 

Senator  HiscocK.  Are  they  published  exhibiting  that  discrimination 
as  between  domestic  and  exi)ort  trade? 

Mr.  Speaee.  l^es,  sir.  You  heard  that  in  your  testimony  in  New 
York.  That  was  given  in  the  testimony  before  this  committee  in  New 
York. 

Senator  Blair.  I  did  not  understand  that  was  brought  out  in  New 
York. 

The  Chairman.  I  do  not  think  such  testimony  was  given  in  New 
York. 

Senntor  Hiscock.  I  never  heard  that  statement  made  before. 

The  Chairman.  Have  you  any  tariffs  showing  the  facts? 

Mr.  Speare.  I  have  not  the  tariffs  with  me.  That  discrimination 
occurs  in  this  wise:  The  railroads  bill  freight  to  Boston  at  30  cents  i>er 
hundred,  but  5  cents  per  hundred  rebate  is  allowed  on  all  freight  ex- 
ported. 

Senator  Blair.  Five  cents  per  hundred? 

Mr.  Speare.  Yes,  sir. 

Senator  Hiscock.  Five  cents  per  hundred  is  20  per  cent.  My  rec- 
ollection is  that  Mr.  Depew's  testimony  would  be  entirely  inconsistent 
with  that  statement. 

Mr.  Speare.  We  can  show  you  the  facts,  sir. 

Senator  Hiscock.  Mr.  Depew  stated  that  with  reference  to  all  of 
their  freight  for  export  they  made  their  arrangement,  as  1  remember  it, 
for  ocean  transportation,  at  the  rates  of  the  day. 

Mr.  Speare.  There  is  no  question  but  what  there  is  a  good  deal  of 
freight  which  goes  across  the  ocean  on  which  the  rate  is  made  from 
Chicago  to  Liverpool.  The  rate  from  Chicago  to  Liverpool  is  made  from 
day  to  day.  My  point  is  that  the  rate  to  Boston  to-day,  upon  a  car-load 
of  grain,  is  30  cents  per  hundred.  If  that  car  load  of  grain  is  exported, 
a  rebate  of  5  cents  per  hundred  is  allowed.  Now,  New  York  would  get 
that  car-load  of  grain  for  25  cents  per  hundred,  whether  it  was  used  in 
New  York  or  exported.     That  is  my  point. 

Senator  Blair.  We  do  business  cheaper  for  the  people  of  Great  Brit- 
ain than  for  our  own  people  ? 

Mr,  Speare,  Yes,  sir. 

Senator  HiscocK.  That  offers  a  premium  of  just  so  mu(;h  for  all  of 
the  export  trade  to  come  through  Canada  to  Portland  or  Boston  for 
shipment? 

Mr.  Speare.  Where  is  the  premium  ?  When  you  are  down  to  the 
lowest  rate,  you  are  no  lower  than  New  York. 

Senator  Hiscock.  As  I  understand  you,  on  all  freight  coming  to 
Boston  for  export,  a  rebate  of  5  cents  per  hundred  is  allowed,  and  that 
rebate  is  not  allowed  to  Philadelphia  or  New  York. 


384  TRANSrOKTATION  INTERESTS  OP 

Mr.  Speare.  It  puts  Pbiladelpliia  and  New  York  aud  Bostou  on  pre- 
cisely the  same  basis  with  respect  to  the  export  trade. 

Senator  Hischk'k.  ])o  ,voii  mean  tliat  after  that  5  cents  per  hundred 
rebate  is  allowed  then  the  rate  on  export  goods  from  St.  Paul  to  Liver- 
l)ool  b}-  Boston  is  precisely  the  same  as  it  would  be  by  way  of  Xew 
York? 

Mr.  Speare.  f  do  not  say  that,  because  the  ocean  rates  may  vary  ; 
but  I  say  that  we  are  put  upon  a  par  when  that  rebate  is  paid  with 
New  York  and  riiiladeli>hia  in  re<;ard  to  the  exjjort  business.  NVith 
respect  to  th«'  freight  for  consumption  in  New  England  wo  pay  five  cents 
l)er  hundri'd  nu)re  than  anybody  west  of  us  pays. 

Senator  Blair.  Which  is  the  more  important  to  us,  the  export  trade 
or  tlie  domestic  trade? 

Mr.  Speare.  The  domestic  trade  is  much  n)ore  important. 

Senator  Hiscock.  As  I  understand  it,  then,  for  the  export  tr.ide  tlie 
rates  are  adjusted  in  such  a  manner  that  if  the  freight  is  to  be  shipped 
from  Boston  there  fnust  l»e  this  rebate  of  5  cents  per  hundred  given  to 
you  to  place  Boston  and  New  York  on  an  etpiaiity  ! 

Mr.  SPKAUE.  Yes,  sir  ;  and  we  are  not  on  an  efpiality  quite,  then,  to 
go  a  little  fartlier.  As  you  remember,  it  was  statetl  before  your  c«»m- 
mittee  in  New  Yoik,  tiiat  3  cents  per  hundred  was  dediH't<Ml  (br  light- 
erage ;  so  that  while  it  is  ntiminally  a  L'.")  cent  rate  to  Ni-w  Voik,  it  is  in 
reality  only  1*2  cents.  The  majority  of  tlie  stnlf  exported  from  B(jslon 
takes  no  lighterage  whatever.  When  it  does  it  costs  not  over  a  cent 
and  a  iialf  as  against  3  cents  in  New  York}  so  that  we  are  not  quite  on  an 
equabty  with  New  York. 

Senator  Blair.  What  is  lighterage? 

Mr.  Spear K.  When  grain  is  rakeu  from  the  cars  for  export  it  has  to 
be  taken  in  lighters  to  where  the  ship  lies.  Our  facibties  here  an*  veiy 
ample,  and  the  steamers  land  rightalongside  where  the  raib'oads  dei»os- 
it  the  grain,  in  most  cases. 

Senator  Ke.V(;an  Are  the  rates  of  transportation  of  flour,  wheat, 
meats,  and  other  <lomestic  i»iodncts  coming  from  the  West  to  Albany 
the  same  whether  they  come  to  New  Y'ork  or  to  IJoston  ? 

Mr.  Speare.  I  can  not  answer  that. 

Senator  Keacjan.  Under  tlie  law  would  they  not  be  compelled  to  bo 
the  same,  so  that  there  should  be  no  discrimination? 

Mr.  Speare.  No,  sir.  As  I  told  you  a  little  while  ago,  in  our  case 
before  the  Interstate  Commerce  Commission  we  showed  that  the  Lake 
Shore  road  received  '?1<K48  more  upon  a  car  load  of  flour  coming  to  Bos- 
ton, hauling  it  from  Chicago  to  BidValo,  than  it  did  upon  a  car-load  of 
flour  in  the  sam  '  train  going  to  New  York  City ;  so  that  equality  is  not 
there. 

Senator  Reagan.     Was  any  action  taken  upon  that  case  I 

Mr.  "'PEARE.   Yes,  sir. 

Senator  Keagan.  And  they  corrected  it? 

3rr.  Spearf.  No,  sir. 

Senator  Keagan.  Do  you  understand  that  on  the  New  Y'ork  Central 
and  its  connections,  and  the  other  roads  that  bring  produce  to  Albany 
from  the  \Vest,  that  they  chargf  r»  cents  a  hundred  pounds  more,  t)r  any 
more,  to  Albany  on  freight  going  to  Boston  than  they  do  on  freight 
going  to  New  Y'ork  City? 

Mr.  Speark.  I  have  just  told  you,  in  this  case  the  Lake  Shore  road 
charged  810.-48  more. 

Senator  Keagan.  That  is  only  a  single  road. 

Mr.  Speare.  Yes,  sir;  but  1  think  the  New  Y'oik  Central  did,  too. 


THE    UNITED    STATES    AND    CANADA.  385 

Senator  Reagan,  tlow  far  is  it  from  Albany  to  the  bonier  of  tlie 
New  England  States  ? 

Mr.  Spearb.  It  is  right  across  the  river,  50  or  60  miles. 

Senator  Keagan.  Would  the  railroads  charge  5  cents  per  liiindred 
pounds  more  to  a  point  in  Connecticut  than  to  iSTew  York  ? 

Mr.  Speare.  Yes,  sir. 

Senator  Reagan,  ^ow,  as  a  matter  of  fact— I  do  not  know  how  it  is 
and  ask  for  information— is  this  large  addition  to  the  cost  of  freight 
coming  to  New  England  made  by  other  roads  or  by  tlie  New  England 
roads  tliemselves  ? 

Mr.  Speare.  No,  sir;  by  other  roads.  The  5  cents  per  hundred  is 
not  allowed  to  the  Boston  and  Albany  Railway,  as  you  could  see  by 
the  table  which  we  could  furnish  you  showing  llow  the  freight  rate  is 
divided. 

Senator  FliscoCK.  Through  the  Canadian  line,  the  Grand  Trunk 
hne,  1  sup]wse  you  are  able  to  get  your  freight  to  those  \Yestern  points 
at  the  same  rate  that  is  given  to  the  shipjjers  in  New  York? 

Mr.  Speare.  Yes,  sir. 

Senator  HiscocK.  Now,  do  you  know  whether  this  diiference  in  rates 
on  these  trunk  lines  is  due  to  the  fact  that  differential  rates  liave  been 
agreed  to  between  the  trunk  lines  with  a  view  to  giving  the  Canadian 
lines  their  share  of  the  business? 

Mr.  Speare.  Do  you  refer  to  the  5  cents  additional  that  is  charge<l 
to  Boston  ? 

Senator  Hiscock.  I  do  not  care  whether  it  is  5  cents  more  or  5  cents 
less.  Do  you  know  whether  it  is  accounted  for  by  the  diffeiential  rates 
agreed  to  as  between  the  railroad  companies,  allowing  the  Canadian 
roads  to  carry  at  a  less  rate  in  order  to  get  their  share  of  the  business  ? 

Mr.  Speare.  I  do  not  quite  understand  you,  Senator. 

Senator  Hiscock.  I  want  to  know  whetlier  this  ditierence  over  the 
the  New  York  Central  and  then  over  the  Boston  and  Albany  is  dne  to 
the  fact  of  differential  rates  having  been  agreed  to  between  the  various 
trunk  lines,  including  the  Canadian  line,  with  a  view  to  allowing  the 
Canadian  lines  to  get  their  share  of  the  business? 

Mr.  Speare.  No,  sir.  There  is  no  differential  on  east-bound  freight. 
It  is  only  on  west-bound  freight  that  the  Canadian  roads  are  allowed  a 
differential. 

The  Chairman.  Your  statement  is  correct  as  to  the  differential  being 
given  only  one  way. 

Senator  Hiscock.  Do  you  understand  that  freight  coming  from  a 
point  west  of  New  York  is  transported  to  Albany  or  any  [loint  west  of 
New  York  City  at  a  higher  rate  than  it  is  to  New  York  City  ? 

Mr.  Speare.  Yes,  sir;  I  do. 

Senator  Hiscock.  Do  you  know  that  to  be  the  case? 

Mr.  Speare.  I  will  give  you  the  figures. 

Senator  Hiscock.  I  do  not  sec  how  it  is  possible.  I  should  tliink 
the  law  of  trade  would  regulate  that  and  make  it  imi>ossible. 

Mr.  Speare.  I  will  read  you  a  few  facts.  I  will  read  the  decision  of 
the  Interstate  Commerce  Commission. 

Senator  Gorman.  In  what  case? 

Mr.  Speare.  The  case  of  the  Boston  Chamber  of  Commerce  vs.  Tlie 
Lake  Shore  and  two  connecting  lines  to  Boston.     Here  are  the  ligures: 

New  Y'ork  Central  on  corn  and  flour  to  New  York,  $23.04. 

New  York  Central  on  corn  and  flour  to  Albany,  $i{5.78. 

Senator  Hiscock.  From  what  point? 

Mr.  Speare.  From  Chicago. 
6543 25 


386  TRANSPORTATION    INTERESTS    OF 

Senator  Htscock.  But  notwitliRtandiiij;  that  ia  true,  aro  you  not 
aware  that  that  difiference  is  not  cliarged  to  the  purchaser,  but  is  al- 
lowed to  the  railroad  which  delivers  the  lreijj:ht  at  lUillalo;  so  that 
when  you  take  the  two  a^^^^refjate  rates,  say  from  Chicajjo  to  llulValo, 
the  rate  is  not  hi;,'her  than  it  is  from  Chica<:co  to  New  York  ? 

J\Ir.  iSi'KAKK.   I  do  not  understand  your  qiu'stion  at  all. 

Senator  lIiscofK.  What  I  mean  is  tliis,  that  under  the  arrangement 
between  the  New  York  Central  and  the  Western  roads,  the  Western 
roads  allow  a  hirj^er  proportion  on  the  throu;;h  rate  to  the  New  York 
Central  on  business  which  is  west  of  New  Yt)rk  than  they  do  on  biisi 
iiess  just  to  New  York,  be<*ause  th';  New  York  Central  has  to  compete 
there  with  the  Hrie,  the  Pennsylvania,  and  other  lines,  whereas  witli 
respect  to  the  other  business  it  has  not,  ami  tlie  Western  roads  are  c(Hn- 
])elled,  in  the  division  of  freijrht  between  theui  and  the  New  York  Cen 
tral,  to  make  this  dillerential  rate  to  them  on  i)urely  local  frei;,dit  to 
the  city  «>f  New  York,  but  in  the  agi,aef;ate  the  rate  is  no  hif^her  to  the 
Albany  purchaser  or  shipper  than  to  the  New  York  City  purchaser  or 
8iiipi)er. 

Mr.  Spkakk.  I  i)resume  it  is  the  sjune. 

Senator  lliscocK.  1  «lid  not  so  understand  the  statement  as  you 
made  it. 

Mr.  Si'KAUK.  1  will  },'ive  you  th«'  exact  facts  as  to  tlu' matter.  Ac- 
c<»rdin<;  to  the  reconl  of  the  case  before  the  interstate  Commerce  Com- 
mission, a  cai -load  of  Hour  over  tiie  Lake  Shore  and  Miclii,i,Mn  Southern 
to  New  York  Harbor  costs  $3(>.<>8.  If  tlie  car  load  of  corn  or  than  j;oin^' 
over  th«'  Lake  Shore  is  destine<l  to  Boston  the  rate  is  •'j  l(I.r»G,  or  a  dif- 
ference of  slO.lvS  in  favor  of  New  York  on  a  car  1(kuI  of  Hour. 

Senator  KkA(;an.  Ls  that  dilVerence  made  in  the  charj^es  west  of  Al- 
bany or  is  it  the  dillerence  in  charjres  east  of  Albany  ? 

Mr.  SrKAin:.  It  is  simply  a  dilVeriMice  inaile  up  by  an  agreement 
amon^'  the  railroa«ls.  On  what  principle  I  am  not  able  to  inform  you. 
They  ajiree  on  certain  throu;;h  rates  from  Chicajro  to  Boston  and  New 
Y()rk,  and  then  make  the  divisions  ainon^Mliemselves. 

Senat(M-  IvEAcJAN.  Tiiat  decisicMi  relates  to  a  thr«>u<,di  rate  to  this 
place  and  does  not  settle  the  cpiestion  at  all  that  more  is  char^'ed  on  the 
ireigiits  from  the  west  to  Albany,  if  coming  to  Boston,  than  if  goinj;  to 
New  York. 

Mr.  Si'KAKE.  W^^  know  that  such  is  the  fact. 

Senator  Keagan.   Vt)ur  late  is  just  the  aj,'j,Megate  rate. 

Mr.  SrEAUE.  1  read  you  the  specilic  rate,  not  the  agjrre;;ate  rate. 

Senator  IvEAGAN.  It  is  the  ag^^regate  rate  to  Boston  and  does  not 
deal  with  the  question  of  transportation  to  Albany.  My  «piestion  was 
whether  there  was  any  discrimination  in  freight  rates  lulore  Albany  is 
reached  between  tratlic  coming  to  Boston  and  that  going  to  New  York. 
This  is  an  aggregate  rate  covering  the  whole  tlistance.  Now,  is  not  that 
diflerenee  made  by  the  New  I'^nghmd  roads  ? 

Mr.  Steaue.  No,  sir. 

Senator  Beagan.  Have  you  anything  to  show  that  traffic  to  Albany 
is  charged  more  if  it  comes  to  Boston  than  if  it  goes  to  New  York  ? 

Mr.  Sl'EAUE.   I  Just  read  you  ligures  showing  that  such  is  the  fact. 

DELEGATION  FROM  FORTLAND,   MAINE. 

The  Chairman.  I  am  infornu'd  that  the  delegation  from  Portland 
has  arrived,  and  the  comnnttee  ]>romised  to  hear  them  upon  their  arri- 
val. As  those  gentlemen  are  i)reseut  I  would  be  glad  to  have  them 
come  forward. 


i 


THE  UNITED  STATES  AND  CANADA.  387 

Mr.  Speare.  Mr.  Goodwin,  presideut  of  the  Boston  Executive  BuKi- 
iiess  A8sociatiou,  is  present,  and  I  would  {isi<  tlie  coniinittee  to  hear 
him  at  this  time,  inasmuch  as  the  delegation  from  l»ortland  was  not 
present  when  we  started  in. 

The  Chairman.  I  understand  from  Mr.  Wescott,  of  l*ortlan<l,  thiit 
it  would  be  entirely  satisfactory  to  them  for  us  to  hear  at  this  time  tin*, 
gentleman  you  name.  We  will  have  time  enough  to  day  to  hear  from 
the  Portland  gentlemen. 

STATEMENT  OF  HERSEY  B.  GOODWIN. 

Mr.  Hersey  B.  Goodwin,  president  of  the  Boston  Executive  Busi- 
ness Association,  ai)peared. 

The  Chairman.  What  is  your  business,  Mr.  Goodwin  :' 

Mr.  Goodwin.  My  business  is  an  exporter  of  grain  to  Great  Britain, 
also  a  commission  merchant  and  receiver  of  Hour. 

The  Chairman.  Where  do  you  do  business? 

Mr.  Goodwin.  In  Boston, 

The  Chairman.  I  suppose  you  have  your  own  views  on  this  ques- 
tion, and  probably  it  would  be  better  for  you  to  proceed  in  your  own 
way  without  the  interposing  of  questions  upon  our  i>art.  If  that  is 
agreeable  to  you,  you  may  do  so. 

Mr.  Goodwin.  As  a  representative  of  the  Boston  Executive  Business 
Association,  of  which  1  have  the  honor  to  be  president,  I  have  been 
asked,  on  behalf  of  the  Boston  Chamber  of  Commerce,  to  present  the 
preamble  and  resolutions  which  I  hold  in  my  hand,  and  if  1  may  be  al- 
lowed to  read  the  same  I  will  do  so. 

The  Chairman.  You  may  do  so. 

Mr.  Goodwin.  The  resolutions  are  as  follows  : 

Whereas  the  honorable  the  United  States  Senate  Comiuittoe  on  Interslato  Com- 
merce are  to  give  a  hearing  on  or  about  July  5,  1889,  at  Boston,  relative  to  ])n)iiosoil 
restriction  upon  the  traffic  which  is  carried  over  the  lail  roads  of  Canada;  and 

Whereas  the  subject  is  one  of  the  greatest  vital  importance  to  the  commercial  in- 
terests of  the  city  of  Boston  as  well  as  of  New  England,  more  especially  as  the  opera- 
tion of  the  interstate-commerce  act  has  borne  somewhat  heavily  on  this  section  of 
the  country  :  Therefore  bo  it 

Resolved,  That  the  honorable  Committee  on  Interstate  Commerce  of  the  United 
States  Senate  be  earnestly  solicited  to  give  lull  and  impartial  consideration,  Itelore 
advocating  any  step  Avhich  may  operate  as  a  check  upon  the  advancement  of  trade 
between  the  great  territory  of  the  Northwest  Jind  the  eastern  section  of  tiiis  country 

KcsoUed,  That  this  chamber  looks  upon  the  channel  of  transportation  as  furnished 
over  the  Canadian  railroads  as  a  natural  one  between  tlio  Northwest  alid  the  East, 
and  so  exp^rcssed  itself  in  a  petition  to  your  honorable  committee  at  the  tinif  of  a 
previous  movement  in  the  same  direction,  under  date  of  February 'JH,  1888;  it  now 
most  earnestly  protests  against  any  legislation  by  the  General  Government  which 
may  tend  to  the  prejudice  of  any  particular  section,  or  impede  the  development  of 
new  and  rapidly  growing  territory. 

Resolved,  That  this  expression  of  the  position  of  the  Boston  Chamber  of  Commerce 
upon  the  vital  question  now  under  consideration  be  communicated  to  thehonorabhi 
the  chairman  of  the  United  States  Senate  Committee  on  Interstate  Commerce,  bespeak- 
ing its  presentation  before  the  members  of  said  committee. 

[seal.  1 

D.  W.  Kaulet. 

FRKD'K  N.  CitKNKV. 
Rm-US  A.   El.ANDKKS. 

Boston,  July  3,  1889. 

IMPORTANCE  OF  THE  CANADIAN  LINES  TO  BOSTON. 

I  will  add  a  few  words  on  behalf  of  the  Boston  Chamber  of  Com- 
merce, for  whom  I  was  asked  to  speak.    What  I  say  will  perhaps  bo 


388  TRANSPOKTATION  INTERESTS  OF 

uiore  particularly  in  eini>basi8  of  several  of  the  points  made  by  Mr. 
Speare,  who  precetlcMl  me,  as  well  as  presenting  one  or  two  points  that 
sugfjest  themselves  to  me. 

The  Boston  Chamber  of  Commerce  represents  a  number  of  larjCje  and 
important  interests  jiarticularly  in  Boston,  the  breadstutf  interest,  the 
produce  interest,  the  i)rovisi(>n  interest,  the  oil  intterest,  the  grocery 
interest,  and  a  number  of  other  interestsof  less  importance.  To  tliree  or 
four  of  these  interests  the  maintenance  of  the  Canadian  trallic  (the  tratlic 
over  the  Canadian  roads  in  all  its  entirety)  is  especially  important. 
Take,  for  instance,  the  {,'rain  interest.  Diirinfj  the  winter  season — the 
seiison  of  closed  navif;ation — a  very  larj,^*'  jtroportion  of  the {^rain shipped 
from  Chicaj;o  to  Boston  and  New  En;,dand,  as  much  as  40  per  cent.,  is 
carried  over  the  Canadian  roads,  leaving  Chica^^o  by  th(5  Chicago  and 
Grand  Trunk  Ivailroad,  and  carrie<l  by  the  northern  route  to  New  Eng- 
land and  there  distributed.  I'oit  Huron  is  the  principal  i)oint  where 
the  Crand  Trunk  receives  its  «;raiii.  The  j,'rain  is  stored  on  the  eastern 
coast  of  Cieor},'ian  Bay  durin;^  the  season  of  navi;;ation,  and  distributed 
later  in  the  season  to  northern  and  northeastern  New  England,  as  occa- 
sion recpiires. 

We  will  take  next  the  produ<'e  interest,  wliich  is  a  very  lar^e  one, 
especially  with  Boston.  That  interest  complained  that  until  the  advent 
of  this  Canadian  trans|;ortation,  this  route  by  the  Chicaj,'o  and  (Jrand 
Truid<,  and  also  over  the  (irand  Trunk  of  Canada,  tlu'y  Inul  to  submit 
to  hijih  charjjes  and  poor  transportation  service,  and  that  the  (irand 
Trunk  has  been  the  means  of  im])rovin<;  the  siTvice  and  lowerinj;  the 
rates.  'J'en  ()r  twelve  years  aj,'o,  when  tliis  National  Dispatch  biiu'  wjvs 
established,  the  rale  on  Britisli  products,  such  as  butter,  clu'cse,  and 
egj^s,  butter  more  particularly,  was  ^\  a  hundred,  ami  the  time  cx)n- 
8ume<l  in  the  transixirtatiou  of  it  from  Chica«;o  and  t!:e  initial  points  to 
Boston  was  at  least  twelvedays.  Owiii;;  to  the  competition  established 
by  the  (Irand  Trunk  line  the  rates  were  re<luced  from  >fl  a  hundred  to 
75  cents  a  hundred,  and  the  time  of  carriage  Inis  been  reduced  from 
twelve  days  to  six,  and  even  five  days.  In  many  cases  tln^  time 
from  the  West  to  Boston  is  not  now  over  four  days,  thereby  obviating 
the  necessity  ofreicing  the  cars  in  transit,  which  was  a  matter  of  con- 
siderable expense. 

If  I  may  be  allowed  to  read  a  letter  that  I  received  this  morning  from 
one  of  our  representative  prodin-e  men  in  Boston,  it  will  luesent  the 
l»oint  1  am  endeavoring  to  make  (piite  f()rcil)ly.     The  letter  says : 

Boston,  July  H,  lh89. 
Mr.  H.  B.  Goodwin  : 

Dear  Sir:  It  woiiM  Ik-  very  (liHiciilt  for  iin-  In  state  the  .Tdv.-inta^ics  tiijit  Bostuii 
ami  Nt'\v  Kiij^laiid  liavo  dnivrd  from  tiic  (Jiaiid  Trunk  Kailroail.  It  in  soim- ten  <»r 
twflvti  years  siiui'  tlie  Cliicafi",  Boston  ami  Livcri>ool  lJffri;ierator  lim-  w;w»  ostab- 
lislifd.  Previotis  to  that  time  ^vcstern  cities  and  towns  had  not  established  rat«s  of 
freijjht  to  Boston,  had  difierent  rates  from  each  town  or  .shii»iiinjt  point ;  time  was 
irrej^iilar,  rangin;^  from  eight  to  twtdve  clays  from  Chicago;  sorvico  poor;  that  is,  I 
mean  refrif^erator  cars  were  in  jtoor  couditioii  or  jtoorly  iced.  So  when  this  lino  waa 
(\stablished  new  cars  were  put  on,  afterward  icinjj  stations  between  Chicago  and  Bos- 
ton, excellent  service  was  rendered,  time  rednced  to  five  to  seven  days,  which  ha« 
since  been  reduced  to  four  and  live  days. 

Of  course  the  American  roads  were  compelled  to  improve  their  time  and  service, 
but  only  did  it  when  compelled  to  liy  competition  with  the  Grand  Trunk  line.  Now 
every  sliipping  point  in  the  entire  West  and  Northwest  has  regular  rales  to  Boston 
and  New  England  points,  and  did  before  the  j>as.sage  of  the  interst.ite-commerce  law. 
The  American  trunk  lines  are  particularly  interested  in  New  York,  rhila<lelphi,i.  and 
llaltimore,  and  seem  to  care  bnt  little  for  Boston  or  New  England,  only  to  secure  the 
tratlic  with  snch  service  and  rates  as  they  see  lit  to  render.  The  same  condition  of 
affairs  existed  on  grain,  Hour,  and  provisions  previous  to  tbo  establishment  of  the 


THE    UNITED    STATES    AND    CANADA.  389 

National  Car  Conipauy,  known  as  the  National   Dispatch  Line,  but  you  nn.bablv 
know  as  much  about  that  as  I  can  tell  you.  '  j       i  j 

^i'l.?^.^^""'?''"''''^''"''"^''^^  •*^*^''  ^'^"*^'''  c^i««««'  eggs,  and  poultrv  from  the  West 
and  Northwest  is  shipped  over  these  Canadian  roads,  simply  because  it  has  been  the 
pioneer  road  in  good  service  and  quick  time,  and  the  merchants  of  Boston  remember 
and  realize  what  their  condition  would  be  if  this  line  were  shut  out  from  New  Fn.'- 
land  business ;  it  would  be  impossible  to  estimate  the  damage  to  Boston  and  New 
England  trade.  These  facts  that  I  give  you  are  my  personal  experience,  not  only  in 
dairy  products  but  in  all  other  hues  of  produce,  previous  to  the  thorou-rli  estubU.sh- 
ment  of  the  National  Despatch  Line.  " 

I  will  not  give  the  name  of  the  writer,  but  those  are  the  points,  aud 
they  are  presented  as  forcibly  as  possible. 

Senator  Blair.  Do  you  indorse  thein ! 

Mr.  Goodwin.  Yes,  sir.  It  is  just  what  I  would  have  stated  and  was 
prepared  to  state. 

Next,  take  the  article  of  foreign  fruit,  which  is  a  large  interest  in  the 
Chamber  of  Commerce.  Gentlemen  engaged  in  that  business  tell  me 
that  while  they  do  not  ship  west  in  refrigerator  cars,  they  do  ship 
largely  in  ventilated  cars.  They  find  that  this  northern  route  by  way 
of  the  Vermont  Central  is  better  on  account  of  the  climate.  Of  course 
the  more  northerly  the  route  the  cooler  the  climate. 

The  Chairman.  From  where  does  the  fruit  come  ? 

Mr.  Goodwin.  From  the  Mediterranean  ports  and  the  West  Indies. 
They  do  a  large  amount  of  shipping  to  Detroit  and  other  northwestern 
points.  Time  and  temperature  are  a  great  consideration.  They  toll  mo 
that  they  ship  fully  one-half  their  products  now  by  this  northern  Hue. 

In  all  these  interests,  as  well  as  every  other  interest  represented  in 
the  Chamber  of  Commerce,  the  competition  that  is  derived  tlirougli  the 
Canadian  route  is  vital.  Setting  aside  Canadian  competition,  Boston 
and  New  England  labor  under  great  disadvantage  as  compared  with 
the  other  sea-ports  of  the  United  States.  This  is  so,  first,  on  account  of 
the  geograi)hical  ijosition  of  Boston,  it  being  at  a  greater  distance  from 
the  western  centers  than  the  other  ports  ;  and,  secondly,  by  reason  of  the 
operation  of  the  interstate  commerce  law,  which  certainly  has  been  of 
disadvantage  to  New  England  universally,  and  particularly  in  the  way 
alluded  to  by  Mr.  Speare,  inasmuch  as  all  freight  passing  to  and  from 
Boston  and  New  England,  and  between  Boston  and  the  West  and  South- 
west, is  interstate  freight,  and  subject  to  the  conditions  of  the  interstate 
commerce  law;  whereas,  New  York,  our  great  competitor,  has  the  ben- 
efit not  only  of  the  water  line,  but  also,  as  has  been  stated,  and  which 
is  a  very  important  point,  has  one  railroad  entirely  within  the  limits  of 
the  State,  which  is  entirely  free  from  the  conditions  imposed  by  the  law— 
I  refer  to  the  New  York  Central.  Grain  and  flour  and  other  classes  of 
goods  maybe  shipped  during  the  season  to  Buffalo,  and  detained  there 
and  be  reshipped  to  New  York  over  the  New  York  Central  at  any  rate 
that  road  chooses  to  make. 

DIFFERENCE  BETWEEN  BOSTON  AND  NEW  YORK  RATES. 

Another  disadvantage  that  Boston  and  New  England  labor  under  is 
the  attitude  of  the  American  trunk  lines  toward  her.  I  refer  to  this  T)- 
cent  arbitrary  rate  which  was  established  years  ago  when  we  had  fewer 
lines  from  the  West  than  now,  and  when  the  rates  here  w^^re  at  a  10  per 
cent,  difference,  based  upon  the  difference  between  the  shortest  lino 
from  Chicago  to  Boston  aud  the  shortest  line  from  Chicago  to  New  York. 
As  the  difference  then  w\as  10  per  cent,  an  arbitrary  rate  ofr-  rents  per 
hundred  pounds  was  fixed  as  a  difference  between  the  points.  Since  that 
time  the  rates  have  shown  a  difference  of  50  per  cent,  and  trecjnently 


390  TRANSPORTATION    INTERESTS    OF 

more,  but  new  roads  liavo  reduced  (Im;  diUereiiee  lioui  U)  i»er  cent,  to 
an  insi;4nili<;aiit  difieieiice.  For  iii.stiiiiee,  tlie  distance  from  Oliieaj^o  by 
the  New  York  Central  and  tbc  Boston  and  Albiiny  is  DSL*  miles,  ami  by 
the  Nickel  Phite  and  Ilousatonic  line  the  distance  is  1,001.^  miles,  re- 
duciiif;  the  difference  to  19.^  miles  instead  of  a  10  jht  cent.  «lilVerence 
in  distance  as  heretofore. 

Therefore,  to  maintain  an  arbitrary  rate  which  was  based  on  the  dif- 
ference in  distance  years  ;ij;o,  when  the  distance  has  been  reduced  to 
an  insi^niiticant  jjoint,  when  the  rates  have  been  reduced  from  50  to  20 
])er  cent.,  and  sometimes  lower,  seems  to  be  a  j^reat  injustice  to  New 
En^dand.  Hence,  the  ('bamber  of  Commerce  of  Boston  brought  that 
case  betbre  the  Interstate  Commerce  Commission,  and  it  was  «lecided 
ajj^ainst  us  on  what  seems  to  us  insuilicient  grounds.  At  the  samt^  time 
we  can  not  (juestion  decisions  of  the  Interstate  Commerce  Commission. 
J  have  here  tables  that  were  laid  liefore  the  Interstate  Commerce  Com- 
mission, from  which  I  can  (juote  to  the  committee  some  lij^ures  later  on. 

The  Chairman.  What  are  the  tables  to  which  you  refer  t 

Mr.  Goodwin.  Some  tables  {;i\  inj;  information  with  resjjcct  to  and 
in  the  line  of  questions  asked  by  members  of  the  committee  of  Mr. 
Speare  in  re<janl  to  rates  over  the  same  line,  in  the  same  <lirection,  on 
tiie  same  ci;iss  of  frei|;ht,  s«)me  destined  to  Boston,  another  consign- 
ment to  New  York,  and  still  another  lot  to  Lewiston,  ^le. 

The  Chairman.  You  may  iioint  out  whatever  you  think  j)roi)er  in 
connection  with  the  matter,  and  submit  the  same  to  the  committee. 

Mr.  (looDWiN.  There  are  a  good  miiny  of  them,  but  they  follow  out 
the  line  of  (|uestioning  of  the  ])revious  w  itness. 

Here  are  the  lignrcs  with  reference  to  the  Lake  Shore  and  Michigan 
Southern  road.  That  is  a  point  referred  to  by  Senator  Beagan.  The 
rate  per  100  i)ounds  west  of  Butlalo  now  existing,  without  deducting 
exi)euses  of  lighterage,  is  given.  1  have  all  the  classes  here,  but  it  is 
not  necessary  to  mention  all,  because  the  dillerence  seems  to  be  about 
the  same.  Here  are  the  earnings  of  the  Lake  Shore  and  Michigan 
Southern  from  Chicago  to  Buffalo,  jkt  100  pounds,  under  existing 
rates,  without  deducting  from  the  New  York  rate  any  exj)ense  of  light- 
erage :  I'irt  class,  billed  to  New  York,  41  cents;  billed  to  Boston,  44 
cents ;  that  is  to  say,  a  car-load  of  Hour  over  the  Lake  Shore  and  Michi- 
gan Southern,  if  for  New  York,  ])ays  $41,  whereas  a  car-load  (»f  Hour 
over  the  same  road,  if  for  Boston,  ])ays  >!4<}.50. 

Senator  HiscoCK.  That  is  for  through  freight! 

Mr.  Goodwin.  That  is  on  the  existing  basis. 

Senator  HiscocK.  But  it  is  tbrongh  freight? 

Mr.  Goodwin.  Yes,  sir. 

Senator  Hiscook.  The  (juestion  asked  by  Senator  Beagan  was 
whether  that  difference,  for  aught  you  know,  is  not  idl  made  ui>  by  the 
extra  cost  of  transportation  when  the  freight  strikes  the  New  England 
roads. 

Mr.  Goodwin.  No,  sir.  The  pro|)ortion  of  the  Boston  and  Albanj'  is 
given,  and  it  does  not  show  that. 

Senator  HiscocK.  I  would  like  to  have  you  demonsfrate  that  that  is 
not  the  fact.  You  have  been  retening  to  tiie  through  ratci  to  the  ter- 
minus. 

Mr.  Goodwin.  I  have  given  the  proportion  of  tiie  Lake  Shore. 

Senator  HiscoCK.  No,  yon  haxc  not  given  the  jnoportion  that  the 
Lake  Shore  charges,  but  the  whole  distance.  1  want  you  to  demon- 
strate, if  you  can,  that  this  dilTerenee  is  not  made  up  by  the  extra  cost 
when  the  goods  strike  the  New  i'jugland  load. 


J 


THE    UNITED    STATES    AND    CANADA.  391 

Mr.  Goodwin.  A  car-load  of  flour  over  tlio  LaUcSlioiv  and  Mirhi-r  „i 
Soutliern,  538  mdes,  if  for  New  York,  $3(i.()S.  For  a  cur-load  of  llT.m- 
over  the  same  road,  tbe  same  distance,  if  for  IJoston,  s  ii;  r,(j 

Senator  Hiscock.  But  that  is  the  full  freight.  Do  l  undcrsiimd  you 
to  say  this,  that  for  the  trausportjition  over  the  Miclii^aii  Soutli.-i  n".  or 
over  the  Lake  Shore,  if  you  please,  they  receive  mon''  and  cxaci  moie 
ou  Bostou  freight  thau  they  do  for  New  York  freight,  carried  the  same 
distance  f 

Mr.  Goodwin.  Yes,  sir;  that  is  just  the  point  1  am  endeavoring  to 
make. 

Senator  Hiscock.  I  am  inclined  to  think  that  your  paper  does  not 
show  that. 

Mr.  Goodwin.  I  have  been  quoting  from  tabulated  statements  i)re- 
sented  to  the  Interstate  Commerce  Commission. 

Senator  HiscocK.  What  I  think  they  exhibit  is  this,  that  the  full 
freight  is  given  for  the  two  terminals  at  which  it  is  delivered,  but  these 
papers  do  not  undertake  to  give  the  i)ropoition  that  each  road  receives; 
that  is  to  say,  what  the  New  England  road  received  and  the  .Michigan 
Southern  received  of  the  aggregate  rate  for  the  whole  distance  between 
the  two  terminals. 

Mr.  Goodwin.  I  have  not  the  proportion  that  each  road  received,  but 
I  give  the  proportion  of  the  Lake  Shore  and  Michigan  Southern.  The 
Lake  Shore  and  Michigan  Southern  from  Chicago  to  liulfah)  receives 
per  100  pounds,  under  existing  rates,  first  class,  41  cents,  billed  to  New 
York;  on  first  class  billed  to  Boston,  44  cents. 

Senator  Haeeis.  That  is  for  carrying  the  merchandise  from  Chicago 
to  Buffalo. 

Mr.  Goodwin.  From  Chicago  to  Buffalo.  I  can  go  further  and  give 
the  earnings  of  the  New  York  Central  and  Hudson  Kiver  Railroad  froni 
Buffalo  to  East  Albany. 

Senator  Hiscock.  I  can  understand  that  there  may  be  a  c<Mit  or  two 
exacted  from  you  on  account  of  transshipment  or  something  of  that 
kind;  that  there  might  be  terminal  charges  which  would  make  that 
difference. 

Mr.  Goodwin.  I  have  given  the  difference  on  first-class  freight  as  4 1 
cents  to  New  York  and  44  cents  to  Boston.  On  sixth  class  it  is  i;;,'„ 
cents  to  New  York  and  15i  cents  to  Boston. 

Senator  Hiscock.  I  can"understand  that  in  the  shipment  to  Bost<m 
there  might  be  terminal  changes  that  niaUe  that  dillVrence. 

Mr.  Goodwin.  That  is  all  rail  without  breaking  l)ulk. 

Senator  Hiscock.  But  the  other  table  gives  figures  much  larger  than 
that,  showing  that  there  is  a  mistake  somewhere,  or  else  that  we  do 
not  understand  the  statement. 

Mr.  Speaee.  If  you  will  allow  me  I  can  give  it  to  you  from  the  re- 
port of  the  Interstate  Commerce  Commission  itself. 

The  Chaieman.  You  may  do  so. 

Mr.  Speaee.  Lake  Shore,  on  corn  to  Boston,  $4G.r)();  the  same  on  wheat 
and  the  same  on  flour.  New  York  Central,  on  corn  and  lloui'  to  lloston, 
$26.05,  making  a  total  of  $72.01.  By  the  Bostou  and  All)any  on  corn, 
wheat,  and  flour  to  Boston,  $17.40,  which,  added  to  the  share  ot  the 
Lake  Shore  and  the  share  of  the  New  York  Central,  brings  the  arncMnil 
up  to  $90.01.  That  is,  the  division  to  each  road  ad. led  togetlu-r  makes 
$00.01  as  the  rate  to  Boston. 

Senator  Hiscock.  Now,  is  there  anything  in  the  tables  showing  that 
on  the  same  freight  for  the  distance  carried  by  the  Michigan  Soutliern 


392  TRANSPORTATION  INTERESTS  OF 

it  receives  a  larger  proportion  ou  the  freight  destined  to  Boston  than 
on  the  freight  destined  to  New  York  ! 

Mr.  Speare.  Precisely;  and  jilso  that  the  New  York  Central  does. 
On  freight  going  to  New  York  the  Lake  Shore  receives  $3G.08,  whereas 
if  it  is  going  to  Boston  they  receive  $46.50,  or  $10.4<S  more.  The  New 
York  Central,  if  the  freight  is  going  to  Boston,  gets  ^JG.Oo,  and  if  it  is 
going  to  New  York  it  gets  $LV}.04. 

Mr.  (iooDWiN.  That  shows  you  that  the  ">  cent  arbitrary  is  divided 
between  the  different  lines  composing  the  through  line  from  Chicago 
to  Boston. 

To  ])roceed  from  that  jtoint,  as  I  say,  the  Chamber  of  Commerce 
broiij^lit  a  case  before  the  Interstate  CNunmerce  Cominission  in  order  to 
eliminate  this  5  cent  discrimination  against  freight  brought  to  Boston 
for  h)eal  eoiisiiinption  ;  but  our  reciuest  was  refused  and  this  discriuii- 
uation  exists  to-«lay. 

Senator  Blaiu.  Will  you  state  the  reason  given  for  the  refusal  by 
the  Commission  ! 

Mr.  (}<MH)\viN.  There  was  a  «livision  among  the  members  of  the  Com- 
mission. A  mimuity  of  the  Commission  di<l  not  imhu'se  the  decision 
in  mil.  The  eliief  reason  given  was  heavy  grades  and  the  expense  of 
breaking  up  trains  at  Alliany. 

'The  Chairman.  That  was  argued  befon*  tlie  ('oinmission,  was  itt 

I\Ir.  CiooDWiN.  Yes.  What  we  are  w  ilMng  to  rest  on  !U)w  and  were 
then  is  that  these  sejiarate  lines  constituting  the  through  line  charge 
in  the  same  direction  for  the  same  dist^ince,  in  the  same  train,  consider- 
ably more  for  Boston  freight  tlian  for  New  York  freight. 

Senator  Bi.Aiu.  If  the  Interstate  Commerce  Commis.sion  and  the 
railroads  combine  to  maintain  that  discrimination,  then  your  only  rem- 
edy is  l)v  this  Canadian  competition. 

Mr.  (looDWiN.  I  can  not  say  that  we  can  do  away  with  this  discrim- 
ination tlirough  tlie  ('ainulian  lines  alone,  but  1  do  know  that  the 
Cana<lian  roatls  are  willing  to  do  away  with  this  5  cent  arbitrary  if  the 
American  lines  consent  to  it.  Of  «-ourse  if  the  American  lines  main- 
tain it  the  Canadian  lines  will  ni:iintaiii  it  too. 

CANADIAN  LINES  EXTENDED  THE  BOSTON  RATES. 

I  will  now  ]>ass  to  the  other  i)oint  mentioned  by  Mr.  Speare,  namely, 
that  immediately  after  the  passage  of  the  interstate  commerce  law  the 
trunk  lines  withdrew  tiieir  through  Boston  rates  from  a  large  number 
of  New  England  points,  terminating  the  billing  at  Boston,  ami  thus 
compelling  New  llnglaud  freij,Mit  to  pay  the  local  rates,  ranging  i'roiw 
5  to  10  or  15  cents,  according  to  distance.  That  operated  in  this  way, 
as  was  foreseen  at  the  time  the  inti'rstate  commerce  law  wa-<  passed  : 
A  5-cent  arbitrary,  added  to  the  local  freight  on  the  Canadian  roads, 
enabled  New  York  merchants  to  come  in  by  water  to  Boston  and  to 
various  points  along  tlx^  Massachusetts  coast,  and  take  from  us  our  Bos- 
ton business.  During  the  tirst  summer  while  that  state  of  things  con- 
tinued, the  largest  consumer  of  grain  in  Boston  was  supplied  by  vessel 
from  New  York.  The  Canadian  lines  came  to  the  res«ue  at  liiat  jmint 
and,  as  has  been  stated,  oixiicd  up  several  hundred  p<>inls  in  south- 
east<M'n  N<'w  England  at  Boston  rates,  and  the  American  trunk  lines 
were  com|>elled  to  follow. 

The  etfect  of  restricting  or  sup])r(\'<sing  this  Canadian  trallic  would 
undoubtedly  be  to  restore  that  condition  of  things  of  which  I  have  just 
s]K>ken,  namely,  to  withdraw  again    the   Boston   rates  from   this  very 


THE    UNITED    STATES    AND    CANADA.  393 

large  number  of  New  England  points  and  terminate  billing  at  Boston 
thereby  increasing  the  cost  to  the  consumer  by  just  so  much  on  all  the 
food  products  that  are  brought  from  the  West. 

I  do  not  mean  to  claim  that  the  Canadian  lines  have  been  reckless  iu 
rates,  for  they  have  not.  The  trunk  lines  seem  to  consider  New  Eng- 
land a  harvest-field  from  which  to  reap  large  profits,  and  this  competi- 
tion on  the  part  of  the  Canadian  lines  is  about  the  only  check  we  have. 
Aside  from  tbe  competition  of  the  Canadian  railroads  it  can  hardly  Ix! 
claimed  that  we  have  any  competition,  because,  although  we  havetwo 
trunk  lines,  the  West  Shore  Line  and  the  New  York  Central,  they  are 
both  under  Vanderbilt  control,  and  the  New  York  and  New  England 
route  is  so  circuitous  that  at  minimum  rates  they  are  unable  to  conTpete. 

Boston  has  had  a  hard  struggle  ibr  years  to  maintain  her  trade  against 
ail  these  disadvantages,  and  it  is  vital  that  we  should  not  now  lose  any 
of  our  advantages. 

I  shall  be  glad  to  answer  any  question,  Mr.  Chairman,  you  or  any 
members  of  the  committee  may  think  proper  to  ask. 

EFFECT  OF  THE  LAW  ON  NEW  ENGLAND. 

The  Chairman.  You  say  Boston  has  had  a  pretty  hard  struggle  for 
a  good  many  years,  so  that  the  trouble  you  have  been  in  since  the  in- 
terstate commerce  act  was  passed  is  not  a  new  one"? 

Mr.  Goodwin.  The  main  obstacle  that  we  had  to  contend  with  prior 
to  the  passage  of  the  interstate  commerce  act  was  this  arbitrary,  which 
was  always  maintained. 

The  Chairman.  How  much  of  an  additional  struggle  was  placed  upon 
you  by  the  passage  of  the  interstate  commerce  act,  and  iu  just  what 
particular  ? 

Mr.  Goodwin.  It  has  been  in  just  what  I  have  spoken  of,  that  it  en- 
ables New  York,  through  her  additional  facilities,  to  deprive  us  of  a 
portion  of  our  business,  which,  as  far  as  our  local  business  is  concerned, 
is  very  important. 

The  Chairman.  The  struggle  has  always  been  between  you  and  New 
York,  resulting  from  the  fact  that  you  are  further  from  the  grain  and 
pork  and  beef  region,  and  that  the  railroads  were  disposed  to  favor  New 
York  iu  preference  to  Boston,  because  New  York  is  the  greater  sea-port ; 
is  that  not  so "? 

Mr.  Goodwin.  I  do  not  recognize  the  justice  of  that,  because  Boston 
has  all  the  advantages  that  New  York  has  in  the  matter  of  terminal 
facilities  and  deep  water. 

The  Chairman.  When  you  get  to  it  I 

Mr.  Goodwin.  Y^es,  sirj  1  think  I  have  just  illustrated  by  the  figures 
I  have  given  that  the  difference  is  insignificant. 

The  Chairman.  But  it  is  the  fact  that  there  has  always  been  a 
struggle  going  on  on  the  part  of  the  people  of  Boston  to  get  such  rates 
established  by  the  trunk  lines,  before  you  had  anything  to  do  with 
these  Canadian  lines,  as  would  give  Boston  a  fair  share  of  the  business 
coming  from  the  West. 

Mr.  Goodwin.  So  far  as  the  export  business  is  concerned  wc  have 
the  New  York  rate;  Boston  and  New  York  are  on  the  same  basis  in 
respect  of  that.  Philadelphia  and  Baltimore  have  a  ditterential  i  n  tlu'ir 
favor.  But  as  to  traffic  for  domestic  consumption  we  always  liavo  been 
held  on  this  traditional  basis  of  10  per  cent,  difference  in  distance, 
■which  has  always  worked  to  the  injury  of  our  local  business. 


304  TRANSPORTATION    INTERESTS    OF 

boston's  EXPORT  BUSINESS. 

The  Chairman.  The  business  of  Boston  is  pretty  largely  export,  is 
it  not  ? 

Mr.  (tOodwin.  Boston  has  a  fair  share  of  the  exjmrt  trade  to  Liver- 
l)Ool.  We  have  a  London  line  which  does  a  good  business,  and  a  fort- 
nightly line  to  Glasgow. 

The  Cn AIRMAN.  Suppose  that  these  Canadian  roads  should  make 
their  connections  so  as  to  carry  on  their  exi)ort  trade  from  some  j^oint 
in  Canada,  what  would  he  the  affect  of  that  condition  upon  Boston? 
^\'()uld  it  drain  away  from  you  whatever  <'xport  trade  you  have  ? 

Mr.  (iooDWiN.  It  would  be  very  prejudicial  to  Portland,  which  is  the 
northern  i)ort. 

The  Chairman.  Would  it  not  injure  Boston,  too! 

Mr.  CiOODWiN.  I  do  not  think  it  would  particularly  affect  our  export 
tiade,  be(;ause  we  haVe  the  New  York  rates  on  export  business.  I  was 
speaking  morr  es])ecially  with  reference  to  our  local  business. 

The  Chairman,  if  that  condition  should  i)revail  hereafter  you  might 
not  get  the  New  Yoi  k  rate. 

Mr.  CooDWix.  If  that  were  done  all  our  steamers  would  bo  obliged 
t<*  leave  the  i)ort.  That  is  the  point  Mr.  I'ink  made  to  the  comnntti'i^ 
of  which  I  was  chairman,  when  wt^  visite(l  him.  lie  drew  this  line  dis- 
tinction wliieli  the  raiboads  drew  jjrevions  to  the  j)assage  of  the  inter- 
state commerce  law,  the  difference  iH'tween  com])eting  ami  non-com- 
peting points.  Boston  is  a  comp«'ting  point  so  far  asexi>ort  business  is 
concerned.  It  is  non-comix'ting  as  far  as  local  luisiness  is  concerned. 
Hence,  the  same  rate  is  nuule  to  Boston  as  to  New  York  on  export  busi- 
ness, but  the  rates  on  local  business  to  Boston  are  higher. 

SHIPMENTS  TO  NEW  ENGLAND   OVER  CANADIAN  LINES. 

The  ('iiAiiniAN.  \\'hal  jiroportion  of  your  business  is  done  on  the 
Canadian  roads f 

Mr.  (iooDvviN.  Do  you  refer  to  west-bound  business  f 

The  Chairman.  Yes,  sir. 

Mr.  Goodwin.  1  am  not  familiar  with  westbound  business. 

The  Chairman.  What  i)roportion  of  the  east-bound  business  is  done 
on  the  Canadian  roads  i 

Mi.  Goodwin.  Tin;  only  statistics  I  have  at  hand  are  in  this  little 
l)ami)hlet  [exhibitingj.  The  shii)ments  for  the  year  1S88  from  Chicago 
\o  New  l%ngland  were  <livided  in  the  ratio  of  40  to  43  per  cent,  by  the 
(yhicago  and  Grand  Trunk,  which  is  the  Grand  Trunk  connection. 

The  Chairman.  The  Ciiicago  and  Grand  Trunk  got  nearly  one  half 
of  the  business. 

I\Ir.  (iooDWiN.  That  is  ch icily  for  northeastern  New  England.  We 
have  no  detinite  statistics  of  the  summer  business. 

The  Chairman.  It  has  been  stated  before  the  committee  that  cotton 
goods  ami  other  articles  manufactured  here  in  New  England  for  ship- 
ment abroad  get  on  to  the  Canadian  Bacitic  line  here  ami  go  to  the  Pa- 
<ilic  Ocean  over  that  line  in  preference  to  the  American  lines.  Do  yon 
know  to  Avhat  extent  that  juactice  i)revail8f 

Mr.  Goodwin.  No,  sir;  I  am  not  familiar  witli  that  branch  of  the 
l»usincss.  West-bound  business  is  entirely  out  of  my  line.  There  ai'e 
jtrobably  gentlemen  here  who  can  speak  more  delinitely  in  reganl  to 
that. 


THE    UNITED    STATES    AND    CANADA.  395 

REGULATION   OF   THE   CANADIAN  ROADS. 

The  Chairman.  Suppose  that  any  airaugeraent  could  be  uijide  l>v 
which  the  same  regulation  of  interstate  commerce  as  exists  in  the 
United  States  now  could  prevail  in  Canada,  so  that  the  Canadian  roads 
would  be  brought  under  exactly  the  same  condition  of  regulation  that 
the  American  roads  are,  would  you  have  any  objection  to  it? 

Mr.  Goodwin.  Not  at  all,  sir.  I  think  that'our  American  roads  should 
be  protected,  but  I  do  not  think  that  they  should  be  protected  by  ex- 
cluding the  Canadian  lines,  to  the  great  detriment  of  New  England 
and  the  Northwest. 

The  Chairman.  No  one  in  this  country  thinks  of  putting  up  a  wall 
between  this  country  and  Canada,  I  suppose,  to  keep  out  the  Canadian 
roads.  The  only  question  that  we  are  directed  to  consider  esi)ecially  is 
whether  there  is  anything  that  can  be  done,  or  whether  anything'  is 
necessary  to  be  done,  and  if  anything  is  necessary,  what  it  is,' that  will 
protect  the  American  roads  and  stop  the  Canadian  roads  getting  an 
undue  advantage  of  the  American  roads  because  of  any  regulation  we 
may  have  in  this  country.  So  that  you  conclude  if  the  Canadian  lines 
could  be  placed  under  the  same  regulation,  by  any  arrangement  between 
the  two  Governments,  you  would  have  no  objection  to  it "? 

Mr,  Goodwin.  No,  sir;  I  would  not.  I  think  it  is  fair  that  the 
American  lines  should  be  ])rotected. 

The  Chairman.  You  think  something  of  that  kind  ought  to  be  done, 
in  fairness  to  American  capital "? 

Mr.  Goodwin.  Yes,  sir. 

operations  of   THE   INTERSTATE  COMMERCE  ACT. 

The  Chairman.  I  shall  ask  you  a  question  a  little  outsideof  the  line 
of  this  investigation  that  we  are  directed  to  make,  but  still  somewhat 
connected  with  it,  because  the  whole  subject  runs  together.  ^Vhat  spe- 
cific objections  have  you  to  the  interstate  commerce  act  as  it  is  ? 

Mr.  Goodwin.  As  affecting  New  England,  1  have  already  stated  one 
of  the  principal  objections.  Taking  a  larger  view  of  the  question,  it 
seemed  to  me  at  the  time  the  law  was  passed,  and  it  seems  to  me  now, 
that  the  tendency  of  the  interstate  commerce  act  is  to  iticrease  through 
rates  from  the  West  to  the  seaboard.  We  have  not  built  a  Chinese  wall 
around  America.  We  are  dependent  on  our  foreign  exports.  Wo  are 
in  very  close  competition  to-day,  and  it  is  growing  closer  all  the  time, 
with  all  the  foreign  cereal  producing  countries.  Take  Indian  corn,  for 
instance.  Here  is  the  Argentine  Eepublic,  which  is  becoming  (piite  a 
formidable  competitor  of  the  United  States  in  the  Liverpool  market 
with  respect  to  that.  So  with  the  Black  Sea  districts.  If  we  are  to 
continue  to  export  our  grain  and  wheat,  it  seems  to  me  that  our  inter- 
state law  has  to  be  elastic  enough  to  meet  that  foreign  competition. 
As  a  result  we  have  not  been  able  to  bring  grain  west  of  Kansas  City 
on  account  of  the  rates  being  too  high.  It  has  found  an  outlet  by  St. 
Louis  and  the  Mississippi  River. 

The  Chairman.  In  just  what  way  has  the  interstate  commerce  aet 
resulted  in  increasing  rates  on  the  long  hauls  on  thnmgh  shipments  ? 

Mr.  Goodwin.  I  am  not  a  railroad  man  and  can  not  state  what  rates 
are  remunerative  to  the  railroads. 

The  Chairman.  Is  it  the  long  and  short  haul  clause  which  operates 
against  3'ou? 

Mr.  Goodwin.  I  think  before  the  passage  of  the  law  the  railroads 


396  TRANSPORTATION    INTERESTS    OF 

were  iiK^liiicd  to  imike  such  ratps  on  forei<;n  business  as  would  euablo 
tlK'ir  customers  to  moot  the  markets  abroad. 

The  Chairman.  Leaving  out  the  raihoads  of  Massachusetts  1 

Mr.  OooDWiN.  Yes,  sir;  I  am  not  speaking  of  the  Massachusetts 
railroads. 

The  C'liAiiiMAN.  If  a  railroad  at  Chicago,  for  instance,  is  called  upon 
to  ship  a  thousand  carloads  of  corn  to  Boston  at  a  given  rate,  and  tbeu 
somebody  comes  along  and  wants  a  thousan<l  car-loads  shipped  to  a 
point  halfway  between  Chicago  and  Boston,  the  railroad  is  not  allowed 
to  charge  more  for  the  latter  shipment  than  they  did  tor  the  former. 
That  is  to  say,  the  railroad  is  not  allowed  to  charge  more  for  a  shorter 
distance  tiian  feu-  a  longer,  Now,  is  not  that  right f  If  the  railroads 
were  in  tiie  habit  of  i»iacticing  that  sort  of  thing,  charging  more  for  the 
shorter  distance  than  the  longer  distance,  do  you  not  think  it  should 
be  .stopped  as  a  matter  of  i)rotection  to  the  i)eoi>le  generally? 

Mr.  (Jooi)WiN.  I  think  it  is  a  benefit  to  the  whole  country,  and  the 
\\  estern  farmers  especially,  that  they  shouhl  be  enabled  to  move  their 
cioi)s  for  export  at  su(;h  rates  as  will  i-nable  them  to  comj)ete  with  any 
foreign  country. 

The  CiiAimiAN.  Is  it  not  e(pially  a  matter  of  prot<M'tion  to  theWest- 
ern  farmer  iliat  he  shall  not  be  charged  mow  generally  lor  the  sh()rter 
distance  than  he  is  Ibr  tlu'  longrM?  Theexport  interest  of  this  country 
i-;,  neitiier  in  \alne  nor  in  (pnmtity,  ecpnd  to  tlie  internal  commerce  of 
the  country,  nor  nearly  so. 

Mr.  ( looDWiN.  lam  not  aware  of  that,  sir;  but  it  is  necessary  to 
move  the  surplus  of  our  croi)s  out  of  the  country. 

The  CiiAiKMAN.  J>ut  the  suri)lns  is  oidy  5  or  <>  \)or  cent,  of  the  total. 

Mr.  (looDWiN.  I  am  aware  that  it  is  sniall,  but  we  are  incn'asing  our 
])rodiuMion,  and  whatever  the  surplus  is  it  is  very  desirable  that  it 
should  be  moved. 

The  CiiAiKMAN.  That  is  true,  but  at  the  same  time  the  rights  of  the 
l»eople  as  to  tliat  which  is  not  surplus  ought  to  be  jjrotected.  The  point 
I  want«'d  to  get  at  is  to  know  Just  what  i)rovision  of  the  interstate  com- 
nterce  act  ]>eople  at  I'.oston  comi»I:Tin  of,  so  that  if  there  is  anything 
wrong  in  tlie  act  it  <'an  be  remedied,  or,  if  the  act  is  entirely  wrong,  it 
ought  to  be  n^pealed. 

Sir.  (btoDWiN.  As  far  as  it  affects  New  England,  I  think  I  have 
state<l  the  i)rinci]ial  objection,  timt  it  affects  us  unfavorably  in  coiuimj- 
tition  witli  New  York.  Not  only  New  York,  but  Philadelphia  and  Bal- 
timore have  com]teting  lines  also.  Everything  that  comes  into  New 
England  is  subji'ct  to  the  interstate  law. 

The  Chaiuman.  Being  subject  to  the  interstate  rules  is  no  reason 
in  itself  why  the  interstate  commerce  law  is  not  right.  The  great  body 
of  the  products  that  come  from  the  West,  over  any  of  the  trunk  lines, 
is  subject  to  the  interstate  commerce  act. 

Mr,  ilooDWiN.  Well,  hardly;  with  the  water  routes  in  the  summer 
tiiiu^  it  can  be  easily  avoided.  New  York  has  the  advantage  of  the 
canal.     We  in  Boston  can  not  use  the  canal. 

The  CiiAimrAN.  No,  of  course  not,  except  as  a  common  cJirrier.  I 
suppose  it  is  used  by  everybody  who  desires  to  ship  over  it. 

Mr.  (iooDWiN.  It  rs  of  no  advantage  tons  to  use  the  canal.  We  can 
bring  our  grain  by  canal  as  far  as  Albany. 

TIm'  Ciiaihman'.  doing  back  to  the  substantial  rpiestion,  you  feel  that 
nothing  shouhl  be  done  that  would  so  interfere  with  the  Canadian  lines 
as  to  cut  off  your  light  to  the  advantage  you  get  by  their  competition 
with  the  American  lines t 


A 


THE    UNITED    STATES    AND    CANADA.  397 

Mr.  Goodwin.  Yes,  sir;  that  is  the  point.  I  feel  that  no  restriction 
should  be  placed  upon  the  Canadian  lines  that  would  do  awav  with 
this  competition. 

The  Chairman.  But  if  any  regulation  could  be  brought  about  that 
would  I  dace  the  roads  of  the  United  States  and  those  of  Canada  upon 
the  same  level,  you  would  not  object  to  it? 

Mr.  Goodwin.  Not  at  all,  sir;  I  think  our  American  roads  should  be 
protected. 

Senator  Hiscock.  You  would  object  to  it  if  putting  the  Canadian 
roads  on  the  same  level  and  under  the  same  regulation  as  the  Ameri- 
can roads  would  be  to  discriminate  in  favor  of  New  York,  Baltimore, 
and  Philadelphia  as  against  Boston? 

Mr.  Goodwin.  Certainly.  I  would  object  to  any  step  that  would  cut 
off  the  competition  of  the  Canadian  roads.  But  I  would  like  to  have 
such  amendments  made  to  our  own  law  as  would  Icose  the  hands  of 
our  own  roads  and  put  them  on  a  fair  competing  basis. 

Senator  fliscocK.  If  that  were  done  the  rivalry  between  you  and 
Canada  is  destroyed.  You  do  not  want  that.  Of  course  the  argument 
is  made,  if  there  is  any  argument  at  all,  that  on  the  international  trade 
between  United  States  and  Canada  the  Canadian  roads  recoup  enough 
so  that  they  cau  afford  to  carry  through  from  our  western  points  to 
Boston  at  a  lower  rate  and  give  you  better  terms  than  you  can  get  by 
way  of  New  York.  That  is  all  there  is  of  it.  The  question  is  whether 
you  want  that  interfered  with. 

Mr.  Goodwin.  It  seems  to  me  there  are  two  ways  of  doiiig  it.  If  the 
Interstate  Commerce  Commission  are  not  sufficiently  powerful  to  bring 
the  Canadian  roads  into  line  and  prevent  unfair  competition,  then  I 
say  do  not  exclude  the  Canadian  lines,  but  make  amendments  to  our 
own  law  so  that  the  American  roads  can  recoup. 

Senator  Hiscock.  In  other  words,  provide  that  the  same  recoupment 
can  go  on  in  this  country. 

Mr.  Goodwin.  Yes,  sir.  I  am  not  prepared  to  say  how  the  law  can 
be  amended  to  secure  that  result.  It  seems  to  me  that  this  very  diver- 
sion of  traflSc  to  the  Canadian  lines  is  one  of  the  outcomes  of  the  inter- 
state law. 

Senator  Blair.  If  you  make  the  interstate  law  api)licable  to  so  nun-h 
of  these  Canadian  lines  as  is  within  the  United  States,  why  have  you 
not  done  all  that  justice  requires"?  Are  we  under  the  necessity  of 
raising  the  cost  of  living  to  the  people  of  New  England,  as  a  whole,  by 
providing  that  a  foreign  jurisdiction  shall  enact  laws  for  the  benelit  of 
its  own  corporatioris  within  its  own  jurisdiction  ? 

Mr.  Goodwin.  Perhaps  not,  sir.     I  think  that  would  regulate  itself. 

Senator  Blair.  ])o  you  think  it  is  right  lor  the  people  of  New  Eng- 
land to  be  denied  the  natural  advantages  of  their  geographical  situa- 
tion in  order  to  protect  railroad  capital  which  is  doing  business  and 
which  is  located  in  other  parts  of  this  country  ? 

Mr.  Goodwin.  I  think  New  England  is  entitled  to  all  she  can  gam 
from  her  geographical  situation. 

Senator  Blair.  The  tendency  of  all  this  seems  to  be  to  make  Boston, 
instead  of  being  a  distributing  station,  nothing  but  a  local  station. 

Mr.  Goodwin.  That  seems  to  be  the  tendency. 

Senator  Blair.  Why  do  you  concede  that  it  is  fair  that  siu-h  legisla 
tion  should  be  enacted  or  such  things  should  be  done  as  will  increase 
the  cost  of  living  to  the  people  of  New  England  and  deprive  them  ot 
their  natural  distributing  point? 

Mr.  Goodwin.  1  think  that  would  be  very  much  to  be  regretted. 


398  TRANSPORTATION    INTERESTS    OF 

Senator  Blair.  Do  you  tliiiik  it  is  inciimlieiit  upon  llio  people  of  this 
coiiiitiy  as  a  whole  to  so  leijislale  as  that  tlu'  trunk  lines,  whose  natural 
terminus  is  at  New  York  or  some  i)oint  further  south,  shall  i)rosper  at 
the  expense  of  theloeal  interests  of  the  people  who  live  outshle  of  their 
jurisdiction  in  New  Kn^hnuH 

Mr.  OooDWiN.  I  <lo  not  think  it  is  policy  for  this  country  to  do  that. 

Senator  Blaiu.  Do  you  think  it  is  justice  f 

Mr.  (JoonwiN.  I  do  not  think  it  is  rij^ht  that  the  American  roads 
should  he  i)laced  at  a  dis;idvaiita,<;e  as  compared  with  the  ('anadian 
lines,  liut  1  do  lulieve  that  it  is  hut  justice  that  New  En^hunl  should 
be  prote(;ted. 

Scuiitor  Blaiu.  What  rights  ha\i'  these  roails  to  the  prohts  of  New 
lOuj^land  ?  \\'e  ar«'  ouLsidc!  of  their  jurisdicticm.  Their  natural  termi- 
nus is  at  New  ^'(u•k  or  fuither  south. 

Mr.  (lOODWiN.  Wv  have  our  own  lines  connecting;  at  Boston  with 
the  truidv  lines. 

Senator  Blah:.  To  he  sure;  and  we  are  connecting  with  the  trunk 
lines  throu^di  Canada,  too. 

Mr.  ClooDWiN.  Yes,  sir.  I  claim  that  these  Canadian  roads  are  vitally 
important  to  keep  the  rates  on  a  fair  and  reasonable  basis. 

Senator  Blaii{.  Suppos»>  these  Canadian  lines  were  canals  and  water 
ways,  why  >shoidd  we  not  make  connection  with  them  ? 

Mv.  (JooDWiN.   I  know  <»f  no  reason  why  we  should  not. 

Senator  r>LAil{,  \'ery  jiood.  Then  why  should  there  be  such  lejjisla- 
ti<Mi  toucliiui;'  thcsi'  Canadian  roads  as  will  increase  the  <;ost  to  ourown 
pe()i)le  of  transportation  of  <xoo<ls  that  come  through  Canatla  ? 

Ml'.  (looDWLN.  It  s<>ems  to  be  no  more  than  fajr  that  it  the  hands  of 
our  own  roads  are  tied  that  the  Canadian  roads  be  jjut  under  the  sanu', 
restrictions. 

Senator  Klaik.  But  our  own  roads  have  no  ri^'ht  to  feed  ui»ou  the 
l)eople  of  New  England. 

Mr.  Goodwin.  I  think  if  the  hands  of  the  American  roa<ls  were  not 
tied  we  should  '^vl  better  rates  from  them. 

Senator  Blair.  1  do  not  know  how  that  woidd  t)e.  Do  you  think 
that  we  had  better  rates  before  the  enactment  of  the  interstate  com- 
merce law  than  now  t 

Mr.  (JooDWiN.  We  had,  at  times. 

Senator  Blaik.  But  jjem^rally  speakinp. 

Mr.  Goodwin.  The  tendency  seemed  to  be  towards  lower  throu},di 
rates  year  by  year  belbre  the  passaire  of  the  inteistate  commerc*'  law. 

Senator  Blaiu.  Then  the  remedy  that  you  really  suj^j^est  would  ho 
the  repeal  of  the  interstate  commerce  act  rather  than  the!  a<lditional 
api)lication  of  it  to  ro'.ds  outside  of  this  couMtry.  Would  not  that  in- 
ciease  lather  than  lessen  the  evil! 

Mr.  Goodwin.  1  think  not. 

Senator  Blair.  If  the  operation  of  the  interstate  commerce  act  upon 
the  roads  of  our  own  country  has  been  to  increase  the  rates  to  New 
En<;land,  would  not  that  evil  be  still  more  increased  by  applyinj;  the 
same  law  to  the  Canadian  roads  ? 

Mr.  Goodwin.  On  the  i^round  that  theCanadiau  roatlscan  not  afford 
to  tlo  the  business  on  the  same  basis  ? 

Senator  Blair.  If  the  American  roads  can  not  do  the  business  as 
cheaply  undeithe  interstate  commerce  act  as  before,  liow  can  theCana- 
diau roads,  if  you  apply  the  a'ct  to  them  I 

Mr.  tiooDWiN,  1  have  always  maintained  that  the  American  trunk 


TTIE    UNITED    STATES    AND    CANADA.  399 

lines,  in  holding  this  5  cents  arbitrary,  are  holding  the  niaatorv  over  all 
lines  that  want  to  come  into  the  business  and  get  the  i)rofit.  ' 

Senator  Blair.  And  why  should  not  the  Canadian  roads  ilo  business 
on  the  same  ground  as  the  American  roads  ?  You  say  that  the  ellV'ct 
of  the  interstate-commerce  act  as  applied  to  the  American  railroads  lias 
been  to  increase  the  cost  and  charges  of  transportation  to  New  lOng- 
land. 

Mr.  Goodwin.  That  has  been  the  tendency. 

Senator  Blaie.  That  has  been  the  tendency  of  the  interstate  m't. 
Now,  if  yon  apply  the  same  act  to  the  Canadian  roads  why  will  it  not 
prevent  the  Canadian  roads  from  doing  the  business  for  us  as  cheaply 
as  now  1 

Mr.  Goodwin.  I  think  this  is  the  most  profitable  business.  Their 
New  England  business  is  more  profitable  than  their  business  to  New 
York. 

Senator  Blair.  The  Commission  has  decided  that  it  is  not. 

Mr.  Goodwin.  Yes,  sir. 

Senator  Blair.  And  the  Commission  has  decided  that  the  interstate 
act  as  it  stands  and  this  5-cent  discrimination  against  New  England 
are  just  things. 

Mr.  Goodwin.  So  it  would  seem. 

Senator  Blair.  And  that  increases  charges  to  us.  Now,  if  you  api)ly 
the  same  interstate  commerce  law  to  the  Canadian  roads  doing  business 
with  us,  why  would  it  not  have  a  tendency  to  increase  rates  ? 

Mr.  Goodwin.  Possibly  it  might. 

Senator  Blair.  Then  are  you  not  driven  to  this  statement  that  the 
interests  of  New  England  require  the  repeal  of  the  interstate  commerce 
law  within  our  own  territory  rather  than  its  extension  to  c()mi)eting 
lines  outside  of  our  own  territory  ? 

Mr.  Goodwin.  That  is  the  i^osition  on  which  I  am  willing  to  stand 
and  one  I  should  favor. 

Senator  Blair.  Then,  when  you  say  that  you  wouldlikc  the  Canadian 
roads  and  our  own  roads  subject  to  the  same  restrictions,  you  mean 
that  you  would  repeal  the  interstate  commerce  act  and  let  all  compete 
freely? 

Mr.  Goodwin.  Yes,  sir;  I  think  the  interstate  commerce  law  has 
been  a  disadvantage  to  New  England. 

Senator  Harris.  Do  you  regard  the  maintenance  of  a  Canadian  or 
foreign  system  of  railroads  in  this  country  as  an  absolute  coininercial 
necessity  ? 

Mr.  Goodwin.  Yes,  sir.  It  has  developed  the  country,  and  is  a  eoiu- 
mercial  necessity. 

Senator  Harris.  Is  there  any  practical  method  by  which  that  system 
can  be  maintained  except  to  make  the  consumers  of  the  country  pay 
such  prices  as  will  support  and  maintain  it! 

Mr.  Goodwin.  Probably  not,  sir;  but  it  seems  to  me  the  rates  charged 
are  not  excessive.  If  we  had  not  that  system  of  roads  we  would  be 
worse  off  than  we  are  and  the  price  of  commodities  higher. 

Senator  Harris.  Then  I  understand  you  to  say  that  theoidy  method 
by  which  it  can  be  maintained  in  this  country  is  for  the  consumers  of 
transportation  to  pay  such  prices  as  will  maintain  and  support  that 
railroad  system.  Now,  that  being  true,  is  it  fair  or  proper  that  wo 
should  allow  a  foreign  corporation  to  compete  with  our  home  roads  upon 
terms  more  favorable  than  are  extended  to  our  home  roads  .' 

Mr  Goodwin.  Perhaps  not,  sir;  but  I  take  the  ground  that  our  law 


400  TRANSPORTATION  INTERESTS  OF 

should  be  so  ujodilk-d  that  our  railroads  could  compete  with  thein.  I  am 
against  the  ])oli(\v  of  exclusion. 

Seuator  Harris.  You  want  them  to  compete  upon  precisely  equal 
terms,  if  1  understand  you  ? 

Mr.  (iooDWiN.  IJelbre  the  passajre  of  our  restrictive  legislation  our 
roads  were  able  to  take  care  of  themselves  ami  to  compete,  and  the  con- 
sumers were  certainly  no  worse  otfthan  they  are  today. 

Senator  Harris.  Then  your  methodof  reaching:  the  pointof  ecpiality 
of  terms  would  be  the  repeal  of  the  interstate  commerce  act  and  to 
leave  all  roads  free  and  without  rej^ulation,  as  they  wore  before  tlie 
passable  of  the  act. 

Mr.  Goodwin.  Yes,  sir;  and  lookinj;  at  it  from  the  consumers'  i)oint 
of  view  1  think  they  would  get  thi'ir  products  cheaper. 

RATES  ON   CANADIAN  ROADS  FIXED  BY   AGREEMENT. 

Senator  lliscocK.  If  these  dillerential  rates  are  given  to  this  trunk 
line  through  Canada,  of  course  the  American  trunk  lines  know  it  just 
as  well  as  yim  know  it  ami  the  Lake  Shore  road  knows  it  and  the  New 
York  C'enlial  knows  that  you  get  your  freight  over  that  liiu' cheaper. 

Mr.  (i(M)i)WiN.  I  am  not  elaiming  that  we  get  cheaper  rates  ;  I  say 
the  competition  of  the  Canadian  roads  t«'n»ls  to  keep  down  the  rates  on 
our  trunk  lines.     The  rates  are  the  same  on  export  freight. 

Senator  lliscocK.  Do  you  not  su|>posetliat  it  isjx'rfectly  well  under- 
stood, and  more  than  that,  that  it  is  actpiiesced  in  by  the  American 
liiu's  that  it  shouhl  i)e  so,  and  that  they  are  entirely  willing  to  do  so, 
considering  the  sympathy  between  the  American  trunk  lines  and  the 
Cana<lian  trunk  lines  all  tlie  way  from  hero  to  St.  Paul,  and  all  the  Amer- 
ican roads  are  satisfied  to  give  them  this  discrimination  f  If  our  lines 
were  not  in  favor  of  that  discrimination  it  wouhl  result  in  a  tight  be- 
tween the  AnuMican  trunk  lines,  and  a  reduction  of  rates. 

Mr.  (lOODWiN.  I  understand  that  they  are  members  of  the  Trunk 
Line  Association. 

Senator  IIisrocK.  Have  you  any  doubt  but  that  the  whole  arrange- 
ment is  onelixed  between  them  ?  Do  you  not  know  that  roads  attempt 
to  regulate  rates  on  the  other  roads,  not  by  crushing  them  out,  but  by 
agreement  *. 

Mr.  Goodwin,  1  understand  that  they  are  regulated  by  harmonious 
action. 

Senator  HiscoCK.  By  giving  them  a  portion  of  the  traffic  rather  than 
by  resorting  to  a  war. 

Mr.  Goodwin.  1  understand  that  the  railroads  try  to  regulate  rates 
in  that  way. 

Senator  HiscocK.  Do  you  know  of  any  advantage  that  New  England 
has  by  reason  of  the  Canadian  routes  that  if  unsatisfact<)ry  to  the  Amer- 
ican trunk  lines  they  would  not  meet  by  re<lucing  their  rates  and  com- 
peting with  them  ? 

Mr.  Goodwin.  I  understand  that  they  give  the  Canadian  lines  an 
advantage  by  way  of  agreement. 

Senator  Hiscock.  On  westbound  they  practically  acquiesce ;is  well 
as  on  east-bound  freight. 

Mr.  Goodwin.  I  am  not  saying  that  the  Canadian  lines  give  lower 
rates  than  the  American  lines,  but  they  serve  as  a  regulator.  They 
charge  the  same  rate,  including  that  5  cent,  arbitrary  per  hundred 
against  Boston,  that  the  American  trunk  lines  do.    Tliey  have  made 


THE  UNITED  STATES  AND  CANADA.  401 

the  rates  cat  points  through  northeastern  New  Eughiiid  to  which  the 
American  lines  are  bound  to  conform.  Their  rates  to  Boston  on  tifieht 
lor  local  consumption,  however,  are  the  same  as  to  New  York. 

The  Chairman.  You  do  not  think  that  any  railroad  ought  to  extort 
from  the  shipper,  do  you  ? 

Mr.  Goodwin.  No,'  sir. 

The  Chaieman.  And  that  the  road  ought  to  be  allowed  a  reasonable 
rate. 

Mr.  Goodwin.  They  ought  to  maintain  a  reasonable  price  to  enable 
them  to  su|)port  themselves  and  aflbrd  a  fair  income  to  investors. 

The  Chairman.  You  do  not  think  a  railroad  ought  to  pay  a  secret 
rebate  to  one  man  and  not  to  another  ? 

Mr.  Goodwin.  I  do  not  claim  that.  That  partof  the  interstate  com- 
merce law  I  admit  is  just. 

The  Chairman.  You  do  not  claim  that  a  railroad  ought  to  charge 
more  for  a  10-mile  haul  than  it  does  for  a  50-mile  haul,  do  you! 

Mr.  Goodwin.  No,  sir  5  not  under  similar  conditions. 

The  Chairman.  Not  under  the  same  circumstances  and  conditions. 

Mr.  Goodwin.  No,  sir. 

At  1  o'clock  p.  m.  the  committee  took  a  recess  until  2  o'clock. 

At  the  expiration  of  the  recess  the  committee  resumed  its  session. 

The  Chairman.  The  committee  is  now  prepared  to  hear  such  gentle- 
men as  are  ready  to  be  heard. 


STATEMENT  OF  W.  L.  PUTNAM. 

William  L.  Putnam,  a  member  of  a  committee  representing  the 
Board  of  Trade  of  Portland,  Me.,  appeared. 

The  Chairman.  You  may  proceed,  Mr.  Putnam,  with  your  statement 
without  waiting  to  be  questioned  by  the  committee. 

Mr.  Putnam.  In  what  I  have  to  say  to  you  I  will  try  to  be  as  brief  as 
possible. 

The  Chairman.  You  will  be  afforded  ample  time  to  make  a  full  state- 
ment.    We  do  not  wish  to  hurry  you. 

Mr.  Putnam.  We  are  a  committee  of  the  Board  of  Trade  of  Portland, 
appearing  here  under  instructions. 

The  Chairman.  It  is  due  to  the  city  of  Portland  to  say  that  the  com- 
mittee very  much  desired  to  go  to  thai  city,  but  we  found  that  the  funds 
subject  to  our  control  were  so  limited  that  we  were  compelled  io  lorego 
visiting  Portland  and  other  cities,  and  asked  you  gentk^men  to  come 
here,  feeling  that  you  ought  to  be  heard  on  this  question  before  we  con- 
cluded our  hearings.  That  is  our  apology  and  explanation  for  not  visit- 
ing Portland  as  a  body. 

Mr.  Putnam.  We  are  much  obliged  to  you,  and  I  think  wo  will  ar- 
range for  you  to  visit  Portland  before  we  get  through,  notwithstanding 
your  shortness  of  funds. 

We  appear  here,  as  I  said  before,  as  a  committee  of  the  Board  of 
Trade  of  Portland,  and  what  we  have  to  say  is  in  reference  to  the  clos- 
ing paragraph  of  the  resolution  under  which  you  are  sitting.  1  have 
in  my  hand  two  sets  of  resolutions  of  the  Board  of  Trade,  one  passed 
March  3,  1888,  and  one  passed  a  few  weeks  ago.  I  will  not  read  them, 
but  simply  ask  the  stenographer  to  put  them  in  the  record, 
6543 26 


402  TRANSPOliTATlON    INTERESTS    OP 

The  resolutious  are  us  follows: 

UKSOLUTIONS   BY   I'UUTLANU   BOAUD   OF  TUA1>E. 

BOAKU  OF  Tjjadk  Kooms, 

VorUand,  March  3,  1888. 

At  a  full  ineetiug  of  tbo  Board  of  Tradt^  of  tliu  City  of  Portlaud,  Me.,  the  follow- 
ing preanil)lo  iiiul  losolutious,  which  were  iircscutcd  at  a  former  uicfting,  and  laid 
over  lor  jmbliratiou  in  tho  daily  newspapers  of  this  city,  were  adoi)tcd  : 

Whereiw  interested  parties  are  ur;;ing  Con;^re.ss  to  enact  NHth  legislation  as  will 
practically  jjrohibittho  trans]>i»rtation  of  nierehandiso  through  Canada,  between  the 
New  Kngbuid  .States  and  tho  West,  and  thereby  th).>>0  up  two  great  railroad  routes, 
over  which  grain  freights  and  other  breadstuffs  are  brought  to  New  England,  in  com- 
petition Willi  other  trunk-lines  ;  and 

Whereas  tho  Dominion  of  Canada  has  for  numy  years  permitted  the  carriage  of 
Canadian  merchandise  in  bond  throMgh  I  he  territories  of  tho  LJnite«l  States  to  jjoints 
and  ports  within  the  Dominion  ofCanada,  by  means  of  United  States  railroads,  under 
similar  restrictions  as  thoio  now  imposed  concerning  tho  carriage  of  American  pro- 
duets  over  Canadnm  railways  ;  and 

When  as  tlie  no\r  existing  facilities  and  privileges  for  the  carriage  of  freight  aro 
anil  shoulil  bo  in  keeping  with  theadvanced  stateof  international  comity  and  com- 
mercial ])rogress  existitig  between  the  l,'nite<l  States  and  foreign  countries;  and 

Whereas  notwithstainling  great  natural  obstacles  which  during  the  winter  months 
substantially  shut  up  the  portsof  Canada,  the  Canadian  routes  to  the  West  atford  fa- 
vorable facilities  for  the  transportation  of  the  immrns<'  grain  products  of  tho  West  to 
the  sea-board,  aiul  especially  are  suitable  to  the  transpdrtation  of  dressed  meats  and 
other  niercliaiidise  rcciuiring  a  <'ool  <'liiriate,  iiiid  hav«*  for  many  years  past  been  car- 
rying a  very  large  amount  «)f  mcrchaudiho  to  I'ortlaud,  Boston,  and  other  sea-ports  ou 
the  Atlantic  coast  ;  and 

Wln-reas  the  facilities  atl'orded  by  the  Government  for  the  transportation  of  snch 
merchandise  through  Canaila  in  bond,  whereby  sneli  transportation  is  made  possible, 
has  i)roved  highly  beiielicial  to  the  western  jiroducer  by  allorilinjr  n  market  for  liis 
grain  and  breadstutls,  ami  to  the  t-asti'm  <onsumer  by  albuding  him  cheaiMr  jtrovis- 
ioiis  ancl  necessaries  <d'  lite,  and  has  greatly  aided  in  the  building  up,  not  imly  of  the 
West,  but  (d  the  New  Eu.i,'laiid  Sl.itcs  and  cities,  and  has  given  new  imimlse  to  business 
enterprise,  and  enlarged  and  subtuiued  the  commercial  uudertukiuga  of  both  sections 
of  the  country  ;  and 

Whereas  the  cities  and  business  centers  of  the  State  of  Maine,  and  esjteeially  tho 
city  of  I'ortland,  have  for  many  y«'ars  exiu-rieiiced  the  benelils  gniwiug  out  of  the 
facilities  alloided  by  the  IJraiid  Trunk  U'ailwayof  L'anada  for  the  transpoi tation  of 
breailstulls,  woods  of  all  descriptions  coming  from  Kentucky,  Tennessee,  and  other 
Sonthernand  Wistern  States,  and  transshipped  from  I'ortland  and  the  Atlantic  sea- 
board to  other  countries,  saltetl  provisions,  and  other  merchandise  to  and  from  tho 
West,  at  reasonable  rates  ;  and 

Whereas  the  said  (JraiKl  Irunk  Hallway  has  at  all  times  so  regnlattMl  freight  and 
rates  <d"  transportation  asto  prevent  tlu^  possibility  of  monoi»oly  by  other  'runk-lines 
to  the  West,  and  baa  added  greatly  to  the  commercial  growth  and  prosperity  of  this 
city  and  Stale  ;  ami 

Whereas  the  Canadian  Pacific  Railway  has  just  opened  up  a  new  route  extending 
across  the  continent,  and  connecting  the  I'acilic  coast  with  the  New  England  States 
and  maritime  ])roviuees  of  Canada,  ami  has  made  railroad  connections  with  Minne- 
apolis and  other  points  in  the  West,  whereby  the  commercial  prosperity  of  both  sec- 
tions of  the  country  promises  to  be  gn-atly  advanced  ;  and 

Whereas  the  host  lie  legislatiiui  sought  will  not  only  cut  off  thes«i  facilities  for  trade 
and  commerce,  but  will  operate  in  a  great  measure  to  prevent  all  interchange  of  com- 
modities between  the  two  adjoining  countries,  thereby  depriving  New  England  and 
the  West  of  a  market  for  their  products,  and  interrupting  the  i»resent  condition  of 
commercial  good  feeling  existing  between  the  United  States  and  Canada,  ami  tend 
todestroy  the  lommercial  relations  which  are  alike  benelicial  to  both  :  Therefore,  be  it 

/ie.so/rt'(f.  That  this  Board  protests  against  the  enactment  t)f  any  lei;islation  which 
will  deprive  our  <  iti/ens  of  the  facilities  tor  transportation  of  bieadstnlf  and  other 
manulactuies  now  offered  by  these  gri'at  eomiiier<ial  highways  through  Canada  and 
between  the  Atlantic  sea-board  and  the  West,  and  esiiecially  ])rotests  against  any 
amendment  of  existing  laws  for  the  purpose  of  throwing  obstacles  in  the  way  of  snch 
transportation,  and  against  the  withdrawal  of  the  privilege  of  carrying  merchandise 
of  the  United  StatciJn  bond  through  Canaila  as  now  practiceil,  and  against  any  ac- 
tion which  will  lend  to  olistnict  or  destroy  com|ietit  ion  in  the  t  rans|)ort,'ition  of  such 
merchandise,  and  thereby  build  up  monopolies  to  the  detriment  of  tho  cities  and  com- 


I 


THE    UNITED    STATES   AND    CANADA.  403 

luercial  iuterests  now  receiving  the  benefits  of  free  ami  unobstructc.l  trausi.ortutiou 
to  and  from  the  West  over  Canadian  railroads. 

liesolved,  That  a  copy  of  these  resohitions  be  sent  to  each  member  of  the  Uijil«<l 
States  Senate  and  House  of  Representatives  from  the  State  of  Maine,  aud  one  copy  to 
the  honorable  Chairmau  of  the  Senate  Interstate  Commerce  Committee 


ascertain  and  report  to  the  Senate  whether  any  railroad  lines  located  in  tlie  United 
States  are  owned,  operated,  or  controlled  by  the  Grand  Trunk  Railway  or  any  other 
Canadian  railway  corporation  ;  whether  commerce  originating  in  the' United' Statics 
is  diverted  from  American  to  Canadian  lines  of  transportation,  and  if  so,  to  what  ex- 
tent and  by  what  means;  and  whether  there  is  any  discrimination  in  the  chargi-s 
made  for  tolls  or  otherwise  against  American  vessels  which  pass  through  the  Wellaiid 
and  St.  Lav^'rence  Canals. 

Said  committee  is  further  directed  to  inquire  fully  into  the  question  of  the  regula- 
tion of  commerce  carried  on  by  railroad  aud  water' routes  between  the  United  s7ate» 
and  the  Dominion  of  Canada,  and  to  report  what  legislation  on  the  Hubject,  if  any, 
is  necessary  for  the  protection  of  the  commercial  interests  of  the  United  States,  or  to 
promote  the  act  to  regulate  commerce,  approved  February  4,  1887. 

Now,  therefore,  be  it 

Resolved,  That  this  board  protests  against  the  enactment  of  any  legislation  which 
will  deprive  our  citizens  of  the  facilities  for  transportation  of  breadstulis  and  other 
manufactures  now  ofl'ered  by  our  great  commercial  highways  through  Canada  and 
between  the  Atlantic  sea-board  and  the  West,  and  especially  protest  against  any 
amendment  of  existing  laws  for  the  purpose  of  throwing  obstacles  in  the  way  of  such 
transportation  and  agaiust  the  withdrawal  of  the  privilege  of  carrying  merchandise 
of  the  United  States  in  bond  through  Canada  as  now  practiced,  aiid  against  any  ac- 
tion which  will  tend  to  obstruct  or  destroy  competition  in  the  tranN]iortatioi'.  of  such 
merchandise  and  thereby  build  np  monopolies  to  the  detriment  of  cities  and  commer- 
cial interests  now  receiving  the  benefits  of  free  and  unobstructed  transportation  to 
and  from  the  West  over  Canadian  railroads. 

Resolved,  That  Capt.  J.  S.  Winslow,  Charles  J.  Chapman,  George  P.  Wescott, 
Charles  \l.  Milliken,  John  W^.  Deering,  Nathan  Cleaves,  George  S.  Hunt,  Woodlniry 
S.  Dana,  John  Q.  Twitchell,  George  Walker,  Payson  Tucker,  Tlieodore  C.  Woodlmry, 
S.  W.  Tliaxter,  M.  N.  Rich,  Seth  L.  Larrabee,  Phillij)  H.  Brown,  William  L.  I'm  nam, 
D.  W.  Clark,  John  M.  Adams,  aud  Holmau  S.  Molcher  be  hereby  ai)ii()inted  to  jneseut 
these  resolutions  and  in  behalf  of  this  board  to  make  such  further  representations 
before  Seuator  Cullom's  committee  as  may  seem  necessary  to  ])revent  the  recommen- 
dation of  any  measure  to  Congress  tending  to  interrupt  our  present  commercial  rela- 
tions with  Canada. 

TRANSPORTATION   IN  BOND   THROUGH   CANADA. 

Mr.  Putnam.  The  Board  of  Trade,  and  1  luaj  say  tlie  whole  city  of 
Portland,  and  I  will  go  farther  before  1  get  thioiigh.  is  ojjposcd  without 
any  reservation  to  any  legishition  whatever  which  directly  or  indirectly 
will  interfere  with  the  present  bonding  system  of  doing  business  over 
the  Canadian  roads,  under  any  excuse  or  pretext  whatever.  The  real 
position  can  not  be  stated  too  strongly,  and  I  wdl  say  that  we  speak  with 
uo  hostUity  whatever  to  the  American  roads.  In  fact,  gentlemen  like 
myself,  who  have  as  large  interest  m  our  domestic  roads  as  any  one,  do 
not  concur  in  anything  of  that  kind.  But  we  do  not  admit  that  this 
system  affects  the  position  of  American  roads  in  aiiy  regard  whatever. 

The  Chairman.  State,  for  the  purpose  of  putting-  it  in  the  record, 
what  this  bonding  system  is. 

Mr.  Putnam.  It  is  difficult  to  state  it.  It  is  ptirtly  a  growth  of  a 
certain  custom-house  practice,  and  partly  a  growth  from  a  system  of 
legislation  that  commenced  in  1851,  and  partly  from  the  construction 
of  customs  regulations.  The  hist  act  >vas  i)assed  in  183 1.  If  1  should^ 
undertake  to  go  through  the  whole  subject  I  would  take  too  nmch  of 


404  TRANSPORTATION   INTERESTS    OP 

your  time.  I  can  fjive  von,  if  you  desire,  at  the  dose  of  what  I  have 
to  say,  a  list  of  the  statutes  pertalulnji:  to  this  matter.  I  have  been 
compelled  recently,  as  counsel  for  the  New  England  roads  east  of  here, 
to  get  lip  this  data  and  I  can  <;ive  it  to  you. 

Senator  IIaeuis.  Yon  can  tersely  state  the  methods  that  are  being 
adopted  under  those  regulations,  can  you  not? 

]\]r.  Putnam.  I  proposed  to  state  what  is  being  done  practically. 
But  to  undertake  to  explain  the  system  would  recjuire  a  statement  of 
customhouse  i>rocecdings,  which  is  very  complicated  and  would  recjuire 
too  nnich  elaboration  and  take  too  much  of  your  time.  1  will  submit  to 
the  committee  at  the  close  of  my  remarks  what  1  think  are  the  statutes 
bearing  on  this  subject. 

The  Chairman.  That  is  what  we  would  like  to  have. 

Mr.  Putnam.  What  I  have  to  say  is  merely  historical. 

In  tlie  forties  Portland  was  a  small  city  of  sixteen  thousand  inhabit- 
ants, and  they  undertook  to  open  a  route  from  Portland  to  Montreal, 
and,  after  grt-at  ellorts,  succeeded  in  pushing  the  tiling  through.  That 
was  the  opening  of  the  (Irand  Trunk  system,  but  fortunately  theCirand 
Trunk  took  it  olVour  hands  or  we  should  have  been  crushed  eiitirt'Iy. 
Th(^  (Irand  Trunk  took  it  from  our  hands,  and  has  faithfully  performed 
its  obligations.  tSo  far  as  we  know  the  (Iranil  'i'runk  is  a  road  that 
keeps  its  obligations  in  all  directions,  although  we  complain  that  they 
are  governe«l  by  a  good  deal  of  red  tape  and  are  therefore  slow. 

In  1H5S  the  system  commenced  of  through  billing  to  Liverpool  over 
th«'  (Irand  Trunk  road  from  jjoints  in  (.'anada  ami  points  in  the  West. 
I  sui)pose  the  system  as  originally  commenced  was  a  somewhat  exi)eu- 
sive  and  laborious  and  troublesome  one,  as  it  had  to  be  done  under  the 
old  laws  i>rovi(ling  for  warehousing  for  the  i)urpose  of  exporting.  Ibit 
it  eomnu'iiced  at  that  time,  and  since  then  it  has  been  constantly  grow- 
ing, Portland  being  the  winter  port  of  the  \arious  Dominion  lines  of 
steamers.  Take  the  last  season  for  instance.  We  had  one  or  two 
steamers  a  week  during  last  winter.  It  takes  a  good  deal  of  our  water 
front,  a  larg«>  part  of  our  pe<»ple  are  occupied  thereby,  and  in  many  ways 
it  is  an  important  interest  to  us,  and  many  minor  interests  have  grown 
up  iVom  it. 

Any  disturbance  of  the  existing  system  would  destroy  us,  and  so  far 
as  that  is  concerned  we  are  contesting  with  the  (lovernment  ot  the  Do- 
minion of  Canada  at  all  times.  The  whole  ])olitical  force  of  the  Domin- 
ion of  Canada  is  thrown  in  favor  of  the  port  of  Halifax,  especially  as 
against  Portland,  and  she  has  taken  in  some  portion  of  our  business, 
although  this  last  winter  it  has  come  back  to  us. 

If  the  action  of  this  committee  or  the  action  of  Congress  is  adverse 
to  the  bonding  principle,  in  so  far  as  it  is  adverse  to  that  this  committee 
and  Congress  act  hand  in  hand  with  the  Canadian  (iovernment  as 
against  the  city  of  Portland.  That,  however,  is  perhajis  of  minor  in- 
terest, because  by  the  aid  of  the  (irand  Trunk  roa<l  our  city  has  become 
a  billing  jiuint,  and  we  receive,  as  we  are  entitled  to  receive,  Western 
products  at  Portland  at  the  same  rat«'S  they  are  n'ceived  at  P.oston. 
So  long  as  the  (Irand  Trunk  road  is  kept  o])en  and  permitted  to  do  its 
business  as  it  does  to-dav,  we  shall  undoubtedly  be  able  to  maintain 
ourselves  as  a  billing  point.  Other  jjoints  in  ^Maine  are  billing  i)(>ints, 
aiul  thenumber  of  points  going  east  will  rapidly  be  increased.  Of  course 
that  is  an  imi)ortant  matter  for  Portland,  and  it  is  an  important  nnitter 
to  the  whole  State  of  Maine. 

We  have  roughly  gone  over  the  amount  of  Western  products  received 
jn  the  State  of  Maine  from  the  West  ;ind  Northwest,  and  we  make  it  j 


i 


THE    UNITED   STATES   AND   CANADA.  405 

equivalent  to  about  2,225,000  barrels  of  Hour ;  not  2,225,000  barrels  of 
flour  received,  but  the  whole  amount  of  Western  products,  including 
grain  and  beef  and  all  other  Western  products,  received  in  T^Iaine  uu- 
nually  is  equal  to  about  2,225,000  barrels  of  flour. 

Now,  we  in  Maine  all  know  perfectly  well  that  the  moment  the  Cana- 
dian roads  are  interfered  with— the  moment  this  bonded  business  is  ob- 
structed—the arbitrary  rate  that  will  be  put  upon  us  will  be  not  less 
than  10  cents  a  barrel,  costing  the  people  of  Maine  $225,000  a  year, 
which  we  can  not  very  well  afford,  besides  breakiug  up  the  business  at 
the  ports  of  Portland,  Bangor,  etc.,  the  leading  billing  points  of  the 
State. 

PORTLAND'S  LINE   TO   CANADA. 

To  show  what  the  purpose  of  the  people  was,  following  out  the  policy 
that  was  outlined  by  the  opening  of  the  ]^ortland  and  «t.  LawrtMic'e 
Eailroad  in  1849,  and  for  the  purpose  of  making  sure  that  tliey  woukl 
maintain  their  position  with  reference  to  western  freights,  juul  for  ex- 
tending and  increasing  the  business  of  exporting  from  their  i)ort,  they 
commenced  the  construction  of  a  line  from  Portland  through  the  White 
Mountains,  running  across  the  State  of  Vermont,  looking  to  a  connec- 
tion with  the  lines  then  in  contemplation  through  Canada,  which  have 
since  crystallized  into  the  Canadian  Pacific  Eailroad. 

I  know  the  purpose  of  our  people  in  that  matter.  I  learned  that 
while  we  were  endeavoring  to  reach  certain  i)oiuts  in  New  England. 
Our  main  i^urpose  was  to  make  sure  that  we  held  ourselves  firm  as  a 
billing  point,  and  that  we  were  able  to  increase  our  export  trade  to  Eu- 
rope. The  city  of  Portland,  in  its  municijial  capacity,  some  twenty 
years  ago,  invested  in  that  property  about  $2,020,000.  It  has  lost  tlie 
interest  on  that  investment  and  received  lately  what  amounts  to 
$1,000,000,  which  makes,  saying  nothing  of  the  investment  of  citizens 
of  Portland,  over  $3,000,000  for  the  i)urpose  of  securing  a  uiore  com- 
plete western  connection  through  Canada.  So  we  are  reaciiing  the 
whole  Canadian  Pacific  by  that  line,  and  we  are  thus  doubly  guarded 
by  the  exertions  of  this  small  city,  and  we  feel  that  we  have  there  made 
an  investment  for  the  purpose  of  securing  to  ourselves  this  route  tiirough 
Canada,  which  is  as  much  entitled  to  be  protected  by  the  United  States 
as  any  investment  which  our  citizens  have  made  on  our  side  of  the  line. 

PORTLAND'S    POSITION. 

The  city  of  Portland  is  farther  west  than  the  city  of  Boston  ;  that 
is,  to  reach  the  extremes  of  our  State,  and  those  extremes  are  among 
the  most  important,  it  requires  from  150  to  500  miles  less  carriage  than 
to  Boston,  and  if  these  Canadian  lines  are  broken  up,  by  wliicli  we 
rightfully  and  naturally  reach  the  West  as  clieapiy  as  Boston  can,  and 
almost  as  cheaply  as  New  York,  and  you  will  understand,  Mr.  Cliair- 
man,  we  are  as  near  to  the  Northwest  as  New  York,  we  are  placed  at  a 
disadvantage  to  which  we  think  we  ought  not  to  be  placed. 

We  apprehend  that  any  interference  whatever  with  these  i>resent 
routes,  under  any  pretense,  by  any  action,  direct  or  indirect,  will  lose 
us  the  advantage  of  our  investment,  made  as  a  municipality;  will  be  an 
injury  to  the  State  of  Maine,  and  subject  every  man  in  the  State  ot 
Maine  who  uses  a  barrel  of  flour  or  any  other  Western  product  to  an 
arbitrary  rate  of  at  least  10  cents  a  barrel,  if  not  more.  We  tlnnk  that 
we  have  made  an  investment  for  the  purpose  of  securing  these  advan- 
tages in  which  we  are  entitled  to  be  protected. 


406  TRAN?;PORTATION   INTERESTS   OV 

Now,  fjentiemen  of  the  committee,  there  are  here  Mr.Wescott,  Colonel 
Adams,  Mr.  Thaxter.  Mr.  ])aiiii.  These  gentlemen  niulerstand  practi- 
cally all  these  commercial  (juestions,  which  1  <lo  not  assume  to  under- 
stand. My  friend,  -ludfje  Cleaves,  is  also  here,  and  has  a  special 
messafje  for  the  committee. 

Tile  Chairman.  IJave  you  been  before  the  Interstate  Commerce  Com- 
mission ? 

Mr.  J'UTNAM.  I  have  been  before  the  Commission  on  several  occa- 
sions, but  not  with  rclcreiice  to  this  (piestion  at  all.  althoujrh  I  have 
been  comp^'llcil  to  follow  it  very  closely  on  acH'ount  of  my  connection 
with  tilt'  railroads  in  tlic  eastern  jiart  of  New  England. 

IIISTOUV  OF  THE  BONDING   SYSTEM. 

The  ('iiAiiiMAN.  Can  you  give  us  the  laws  un<ler  which  this  jirac- 
tice  has  grown  up  ? 

Mr.  Putnam.  The  first  act  seems  to  have  been  that  of  1S54,  now 
Kevised  Statutes,  section  M,()(l(),  which  provi<led  for  transportrtion  in 
bond  of  im])orted  goods  from  a  jiort  in  the  United  States  to  another 
l)ort  in  Ihe  I'niled  States,  partly  by  hind  aixl  ]>art]y  by  water;  likewise 
over  foreign  territory. 

That  act  looked  to  what  is  called  mon>  p;irtienlarly  bonding  for  im- 
mediate trans|>ortation,  but  i»ern.itte<l  the  transjiortation  through 
Canada,  and  it  is  utuh'r  that  statute  and  the  old  war«'house  statute 
that  this  biisimss  in  Portland  has  grown  up.  I  think  I  am  (|uiti'  right 
in  saying  that  the  business  of  billing  through  originatetl  over  the 
Grand  Tiunk  road  to  Portland.  1  may  not  be  entirely  right  about  it, 
but  I  think  it  is  so. 

Next  is  the  act  of  ISOO,  now  Kevised  Statutes,  3,(H>r),  ])roviding  for  tiie 
transportation  of  merchandise  arriving  at  New  York,  lioston,  Portland, 
or  other  ports  spectially  designated  by  the  Secn*tary  of  the  Treasury 
and  destined  for  jdaces  in  the  P.ritish  I'rovinces. 

'Jills  fiuiiished  a  simple  method  for  the  old  cundiersotne  method  of 
witlidrawing  goods  trom  the  warehouse  for  the  juirposo  of  re-exporta- 
tion. 

The  same  act  of  ISOU,  now  Kevised  Statutes,  section  .3,(KK»,  jtrovidt'd 
for  trans])orting  from  any  ]>ort  in  the  I'nited  States,  through  ('anada 
or  Mexico,  to  another  ])ort  in  the  United  States. 

This  enlarged  the  provisions  of  the  act  of  1854,  section  3,000  of  the 
lievised  Statutes,  which  applied  only  to  merchandise  withdrawn  from 
bond. 

Of  course  this  section  3,005  above  named,  un<ler  the  authority  of  the 
Secretary  of  the  Treasury  to  tlesignate  ports,  permits  goods  to  l>e  car- 
ried in  transit  from  oiu'  [)art  of  ('anada  to  another  part  of  ( 'anada  through 
any  ])art  of  the  United  States. 

Then  came  the  act  of  March  1,  1873,  now  Revised  Statutes,  secti(»n 
2,8GG,  under  the  treaty  of  Washington,  which  authorizes  the  transii 
through  the  United  States  of  merchandise  from  one  jiart  of  Canada  to 
another  i)art  of  Canada,  and  also  from  Canada  through  the  United 
States  for  exi)ort. 

This  was  to  remain  in  fonre  as  long  as  article  18  to  25  of  the  treaty 
remained  in  force. 

Treasury  regulations  of  1884,  articles  845  to  802,  inclusive,  N<'em  !■ 
relate  to  the  transit  of  merchandise  under  the  hjws  existing  prior  to  tlh 
treaty  of  Washington. 

Articles  707  and  sequence  expressly  refer  in  the  margin  to  the  a<'t  ot 
18GG,  and  article  845  of  the  regulations  of  1884  is  a  re-enactment  oi 


THE   UNITED   STATES   AND    CANADA.  407 

this  article  707,  by  wbicb  articles  of  merciiandise  are  now  carried  across 
from  oue  point  m  Canada  to  another  point  in  Canada  throu-^di  our  ter- 
ritory. '^ 

Article  SG3  of  the  Treasury  regulations  relates  exr)ressly  to  the  transit 
of  merchandise  through  the  United  States  under  the  treaty  of  Wash- 
ington; and  article  844  seems  to  have  been  made  under  the  treaty  of 
Washington,  as  it  was  expressly  suspended  for  that  reason  bv  ".Air. 
Manning,  when  Secretary  of  the  Treasury. 

That,  as  you  recollect,  permitted  the  carrying  of  merchandise  from 
one  point  in  the  United  States  to  another  point  in  the  United  States 
partly  in  Canadian  bottoms  across  the  lakes,  and  so  far  as  I  know  and 
can  ascertain  that  is  practiced  to  day  in  reference  to  all  these  matters, 
either  of  transporting  merchandisefrom  a  ])oiut  in  the  United  States! 
through  Canada,  to  another  point  in  the  United  States,  or  from  a  point 
in  the  United  States  to  a  point  in  Canada;  or  from  a  point  on  the  At- 
lantic to  a  point  in  Canada:  or. from  a  ])oint  in  Canada,  through  the 
United  States,  for  export.  In  fact,  all  forms  of  transit  are  as  iVee  to- 
day as  they  were  under  the  treaty  of  Washington,  except  tliat  Secre- 
tary Manning  decided  that  from  the  time  those  articles  of  the  treaty 
expired  merchandise  bound  from  a  Western  point  in  the  United  States 
to  another  point  in  the  United  States  could  not  be  carried  partly  in  a 
Canadian  bottom  across  the  lakes. 

My  friend  Judge  Cleaves  is  surveyor  of  the  port  of  Portland,  and  can 
give  the  committee  more  information  on  this  subject  than  I  can. 

The  Chairman.  Is  it  your  opinion  that  those  laws  ought  to  be  over- 
hauled and  made  more  definite  and  plain  to  the  executive  officer  as  to 
what  his  duty  is  under  them,  so  as  to  get  rid  of  instructive  orders  from 
the  Secretary  of  the  Treasury  ? 

Mr.  Putnam.  I  think  there  might  be  some  codification  of  the  laws, 
though  I  do  not  understand  that  there  is  any  practical  difficulty  at  tiie 
present  time  at  the  custom  house.  I  have  lately  seen  some  orders  from 
Washington  which  seemed  to  indicate  that  there  was  no  trouble  what- 
ever ;  I  have  been  compelled  within  a  few  days  to  make  inquiry  at  the 
customhouse  at  Portland,  and  I  find  there  is  no  difficulty.  I  admit,  if 
a  person  sat  down  to  study  the  law  that  in  conse(iuence  of  the  suspen- 
sion of  the  articles  of  the  treaty  of  Washington  he  might  find  the  law  ob- 
scure, but  there  seems  to  be  no  practical  trouble. 

The  Chairman.  When  the  general  subject  was  under  discussion  in 
the  United  States  Senate  in  connection  with  the  fisheries  treaty  it  was 
with  great  difficulty  that  I  was  able  to  determine  just  what  the  law  was, 
or  that  I  could  find  anybody  who  could  tell  me. 

Mr.  Putnam.  I  agree  with  you  that  for  one  to  take  the  law  and  under- 
take to  understand  it  from  the  statutes  and  the  regulations  he  would 
become  very  much  puzzled;  but  the  customs  authorities  seem  to  have 
no  difficulty  with  reference  to  it. 

One  thing  is  very  plain,  and  that  is  that  certain  practices  have  grown 
up  under  the  treaty  of  Washington  which  were  never  authorized  by  the 
statute.  The  Treasury  Department  at  Washington  when  the  treat.v 
was  ratified  issued  their  regulations  in  conformity  with  the  treaty.  A 
portion  of  the  provisions  of  the  treaty  was  covered  by  tlie  statute  and 
other  portions  were  i,not,  and  it  is  not  impossible  tliat  to-day  a  certain 
amount  of  bonded  business  is  being  done  under  section  2S0()  which,  on 
close  inspection,  may  be  found  not  to  be  in  force. 

The  Chairman,  that  was  my  impression,  that  some  of  the  regnla 
tions  of  the  Treasury  Department  were  based  upon  old  statutes  wLicb 
possibly  had  been  repealed. 


408  TRANSPORTATION    INTERESTS    OF 

Mr.  Putnam.  That  is  not  more  than  possible,  and  I  agree  with  you 
that  the  statutes  are  obscure  ;  but  we  are  very  desirous  lliat  you  shall 
not,  if  you  touch  the  statutes  at  all,  hamper  the  business  as  it  is  now 
conducted. 

REGULATIONS  OF  THE   CANADIAN  ROADS. 

The  Chairman.  Do  you  suppose,  leaving  out  all  this  question  of 
bonded  business  with  respect  to  the  ordinary  commerce  which  is  car- 
ried on  now  by  the  truidc  lines  in  the  United  States  and  in  Canada,  if 
the  Canadian  roads  were  i)ut  ujxni  the  same  level  and  under  the  same 
regulatiou  as  the  American  roads  that  that  would  in  any  way  interfere 
with  your  interests? 

Mr.  Putnam.  I  can  not  say  about  that. 

The  Chairman.  The  specilic  jioint  I  have  in  mind  is  this.  The  inter- 
state commerce  act  is  in  force  in  the  Cnitcd  States  so  far  as  it  is  obeyed. 
I  do  not  know  how  nearly  it  is  obeyed.  The  railroads  in  the  United 
States  complain  that  they  are  subject  to  regulation  in  this  interstate 
conimerce,  while  the  Canadian  roads  doing  business  in  the  United  States 
are  not,  and  that  therefore  the  American  lines  are  at  a  disadvantage, 
and  that  it  is  unfair  to  them  that  they  slioidd  be  regulated  whih'  the 
Canadian  lines  aic  not.  Now,  if  the  Cana<lian  roads  and  tin-  American 
roads  w«'re  all  i)ut  upon  the  same  level,  <lo  you  suppose  you  people  in 
New  England  would  sutler  from  it  i 

Mr.  Putnam.  1  do  notcaie  to  answer  a  contingent  question.  I  have 
carefully  read  everything  that  has  been  said  upon  tliis  ])()int,  and  1 
have  yet  to  see  a  i)aiticle  «)f  proof  to  sustain  the  position  taken  by  the 
I^Iicliigan  Southern  upon  that  point.  I  am  morally  certain  that  the 
Canadian  roads  have  not  recouped  in  any  sense  of  the  word  as  against 
the  long  and  short  haul  clause.  I  do  not  believe  they  can.  1  do  not 
believe  they  can  collect  on  local  fares  and  freight  in  Canada  one  cent 
more  than  they  collect  today  at  any  point. 

The  Chairman.  Suppose  the  ('anadian  roads  make  a  shijjment  from 
their  western  termnius  to  Portland  at  a  given  rate,  do  you  supi)ose  that 
they  observe  the  provisions  of  the  interstate  commerce  act,  as  enforced 
in  the  I'nited  States,  on  that  shipment  / 

INIr.  Putman.  Not  on  their  local  shij)ments  in  Canada. 

The  CiiAiKMAN.  Do  you  supi)ose  they  observe  the  law  as  to  through 
shipments  in  the  United  States? 

Mr.  PuTMAN.  Yes,  sir. 

The  Chairman.  Do  you  know  whether  or  not  the  Canadian  roads 
make  their  rates  very  much  higher  from  the  western  terminus  to  Mon- 
treal, for  tlie  same  distance,  than  our  American  roads  do  ? 

Mr.  PuTMAN.  No,  sir;  not  to  ^lontreal.  There  is  one  of  the  dangers. 
If  the  Congri'ss  of  the  United  States  undertakes  to  meddle  with  tlies(> 
Canadian  roads,  they  are  going  to  turn  the  traffic  from  our  ports  to 
]\Iontreal;  they  are  not  going  to  give  the  business  to  the  American 
roads,  but  they  are  going  to  give  it  to  the  Canadian  roads.  The  Amer- 
ican Congress  will  play  into  the  hands  of  Sir  .U)hn  MacDonald  ;  they 
are  going  to  give  it  to  the  Canadian  roads  if  they  attempt  to  meddle 
with  this  <piestion. 

THE   ATVIERICAN  ROADS  NOT  SUFFERING. 

The  American  roads  are  not  sufl'erinp".  There  are  four  lines  to  San 
Francisco  today,  and  two  more  are  be:  ig  built.  Possibly  three  new 
roads  to  San  Francisco  may  be  built.  This  overbuilding  n-sults  iu 
railroad  fights  which  are  very  ex[)ensive  to  the  entire  <'ouiitry. 


THE  UNITED  STATES  AND  CANADA  409 

A  few  years  ago  a  Boston  corporation  built  a  lino  from  St.  Louis  to 
Chicago,  a  line  good  in  itself,  but  a  bne  which  invited  (;;.ini)etiti()n  with 
the  whole  Jay  Gould  system  tlie  moment  it  was  bunr.  The  stock  of 
that  company  was  above  par  at  one  time,  and  now  it  sells  tor  less  than 
40.  The  American  roads  do  not  ncid  protection  from  the  Unite.l  States. 
They  want  to  look  alter  themselves.  They  are  not  sufteiiug  tiom  the 
Canadmn  roads,  but  from  tlie  Ameri(;au  roads. 

The  Chairman.  From  what  are  the  American  roads  sulferini,^? 

Mr.  Putnam.  From  the  Americ;in  roads.  Why,  it  seems  iih'sobitely 
absurd!  The  Union  Pacific  road,  which  has  reci'ived  tnorc  aid  from  the 
Government  of  the  United  States  than  the  Canadian  Pacific  has  re- 
ceived from  the  Canadian  Government,  comes  in  here  and  complains  «»f 
the  Canadian  Pacific.  It  is  to-day  building  a  new  line  to  soutliein 
Cabforuia.  There  are  already  four  lines  from  the  Missouri  River  to  the 
Pacific  coast.  The  Union  Pacific  is  building  one  more,  and  t«-o  other 
lines  are  surveying  and  getting  through  to  the  Pacihc  coast  as  fast  as 
they  can. 

The  Chairman.  So  that  your  judgment  is  that  neither  the  Cana<lian 
Pacific  nor  the  Grand  Trunk  is  interfering  with  the  business  of  the 
American  roads  as  mucli  as  their  own  folly  ? 

Mr.  Putnam.  Yes,  sir.  The  difficulty  is  among  the  American  roads 
themselves. 

PORTLAND'S   CONNECTION   WITH   ST.   PAUL. 

However  that  may  be,  we  desire  that  our  investment,  which  is  as  dear 
to  us  as  these  investments  in  Western  roads,  should  be  i)rotected ;  at 
any  rate,  not  destroyed.  We  simply  ask  that  this  system,  which  has 
a  prescription  now  of  thirty  years,  shall  not  be  disturbed.  We  are  as 
near  St.  Paul  to-day  as  is  New  York,  by  rail ;  we  will  be  in  ])ecend)er, 
at  least.    We  are  to-day  within  30  miles  as  near  St.  Paul  as  is  New  York. 

The  Chairman.  Describe  the  specific  route.  • 

Mr.  Putnam.  W^e  run  from  Portland  to  St.  Johnsbury,  from  St.  Johns- 
bury  to  Newport,  where  we  strike  the  Canadian  Pacific;  follow  the 
Canadian  Pacific  to  "the  Soo,"  and  from  "  the  Soo"  we  strike  St.  Paul 
or  Duluth.  We  are  today  within  30  miles  as  near  St.  Paul  as  is  New 
York  City.     As  soon  as  this  little  link  is  built 

The  Chairman.  What  link  do  you  refer  to? 

Mr.  Putnam.  Simply  a  little  link  up  in  the  mountains,  which  brings 
us  within  10  miles  as  near  St.  Paul  as  is  New  York.  That  little  link  is 
in  Canadian  territory,  and  we  have  opene<l  that  road  at  an  expense  of 
$3,000,000  to  the  corporation  of  Portland. 

The  Chairman.  How  many  miles  of  that  road  are  in  your  own 
State  ? 

Mr.  Putnam.  Only  about  G  miles. 

The  Chairman.  Then  it  strikes  Ciwiadian  soil  ? 

Mr.  Putnam.  No,  sir;  it  strikes  New  Hampshire,  Vermont,  and  then 
Canada. 

The  Chairman.  How  much  of  the  line  is  within  the  United  States  i 

Mr.  Putnam.  One  hundred  and  sixty  miles. 

The  Chairman.  Wliat  is  the  route  to  Duluth  i 

Mr.  Putnam.  We  go  right  down  to  "  the  Soo." 

The  Chairman.  By  rail  ? 

Mr.  Putnam.  Yes,  sir,  by  rail,  and  then  take  the  ''  Soo"  line. 

The  Chairman.  Can  you  give  the  distances  f 


410  TRANSPORTATION   INTERESTS   OP 

Mr.  Putnam.  I  bolicve  these  fifrnres  are  correct,  but  I  bave  not  veri- 
fied them  myself,  so  that  J  only  give  tliem  on  my  belief. 

By  the  "  Koo"  route  from  Minneapolis  to  Boston  it  is  1,420  miles;  to 
New  York,  1,373  miles ;  to  Portland,  1,392  miles.  By  the  Grand  Trunk 
it  is  140  miles  farther. 

I  shouM  like  to  put  into  the  record  in  this  connection  an  extract  from 
the  remarks  of  Governor  Washburn,  delivered  to  the  city  authorities 
of  Portland,  in  connection  with  this  enterprise  in  1S72,  and  this  meet- 
injj  was  what  led  to  tiiis  investment  of  which  I  si)eak.  The  extract  will 
be  found  on  ])ag('s  13  and  14,  and  I  think  any  one  who  reads  that  part 
of  the  record  will  be  snr[)rised  to  see  how  j)rophetic  Governor  Wash- 
burn was  in  this  instance. 

The  extract  is  as  follows: 

But  this  is  not  all.  Pioimration  is  licinf;  inadf  for  const  met  inj;  in  Canada  a  groat 
roail  callt'd  tlie  NortluTii  Colonization  Roail,  of  which  Sir  }ln<ih  Allan  is  president, 
and  I  have  no  douht,  from  wliat  I  read  in  the  Montreal  papers,  tliat  work  upon  the 
lino  is  to  he  vifioroiisly  and  speedily  jirosecnted.  It  is  to  pass  np  on  the  north  side 
of  the  Ottawa  Kiver  to  Ottawii,  through  to  renilindvo,  and  linall.v  l>y  Lake  Xei)issing 
to  the  Sanlt  Ste.  Marie.  A  roarl  troui  Toronto  will  nlliniately  connect  with  if  near 
Lake  Nei)issing.  This  lim-  will  form  a  jiart  of  the  Caiiaila  I'.k  ilic  IJailroad,  if  such 
shall  ever  he  Imilt,  which  is,  I  think,  a  niatt<r  of  considcrahle  donht.  lint  tlier((  is 
to  he  a  Northern  Pacilic  Ivaiiroad  mton  onr  side  of  the  line,  if  not  upon  tin- other.  It 
is  now  in  the  i)rocess  of  consi  ruction,  and  the  work  is  moviiij;  with  vigor  ami  rapidity. 

When  in  the  West,  a  year  ago  last  fall,  I  met  Mr.  Rice,  of  St.  Paul,  formerly  a 
Senator  in  Congress,  and  now  jnesident  of  a  railroad  being  eonstrncted  from  St. 
Paul  eastwanl  towards  Sanlt  Ste.  Marie,  and  wlii<  h  it  is  intended  to  reach.  Ho 
said  it  was  an  easy  road  to  construct,  and  that  ther^^  is  no  dillicnlty  in  coiiHtriicting  a 
bridge  across  the  Sanlt. 

If  you  will  take  a  inaji  of  the  United  States  yon  will  find  that  when  this  great  line  is 
com])lefed,  of  which  onr  line  will  tbrin  the  base,  the  distance  between  St  Paul  and 
I'ortland  will  be  HO  miles  shorter  than  it  is  fo-day  by  the  shortest  lino.  Tin-  freight 
from  that  line  must  always  come  to  Montreal  or  Ottawa,  and  therefore  it  will  always 
l)c  shorter  to  cimie  to  Portland  to  reach  tlu^  sea-board.  This  great  fact  i- om-  that 
can  not  !>(>  Hanked  or  got  rid  (d";  it  is  a  lact  wiiltcn  by  the  geography  of  the  conn- 
try;  it  makes  Portland  forever  nearer  to  the  true  Northwest  than  any  other  ixut  on 
tli«Atlantic. 

If  a  man  in  Minnesota  wishes  to  come  to  Boston  or  Portland  now  by  railroad  lie 
must  come  arouinl  Lake  Michigan  and  through  a  ])art  of  the  Static  of  Indiana.  But 
when  these  lines,  in  continuation  of  our  own,  arc  ••ompleted  he  can  come  by  rail 
directly  to  INtrtl.md,  and  with  a  saving  of  sf)me  -100  niiles  travel. 

Now,  what  is  tlnre  for  us  atU'r  that  country  is  open  f  Why,  it  is  the  greatest  grain- 
growing  region  on  the  earth.  Tike  tin?  great  and  prosperous  Sta.te  of  Minnesota, 
take  northern  Iowa,  Dakota,  the  Ke<l  River  region,  and  it  forms  tHe,  largest  and  best 
country  for  wheat  that  the  sun  shines  upon.  It  is  settling  rapidly.  Minnesota  has 
gained  over  ;3(U»,()00  people  in  the  last  ilecade.  TIk^  Northern  Pacific  Railroad,  with 
its  vast  connections  extending  through  many  States,  must  have  an  outlet  by  way  of 
Montreal,  and  when  its  trallic  reaches  Montreal  it  will  eonie  to  Portland  over  this 
road  or  the  Grand  Trunk,  or  both. 

DIVERTING  BUSINESS  TO   CANADIAN  TORTS. 

Mr.  Putnam,  ^ry  point  sirapl^^s  that  we  are  entitled  and  the  whole 
State  of  Maine,  under  the  circni^tances,  is  entitled  to  this  protection. 
Wo  do  not  think  we  ou<;lit  to  l)e  sulijccted  to  this  arbitrary,  which,  as  I 
say,  will  cost  the  State  of  Maine  at  least  822."), 000  a  year,  besides  tlirow- 
iug;  lines  of  steam-shi[)s  which  now  go  into  and  out  of  Portland  into 
Canadian  jiorts. 

Senat<ir  IvEAGAN.  Do  you  understand  that  anybody  desires  legisla- 
tion that  would  interfere  with  the  interests  of  the  roads  through  Maine 
or  New  England  ? 

Mr.  Putnam.  Yes,  sir;  I  do.  I  know  there  is  a  very  strong  tendency 
in  that  direction.    The  Portland  Boaid  of  Trade  understood — perhaps 


THE   UNITED    STATES   AND   CANADA.  411 

improperly,  but  they  certainly  so  understand— that  these  resolutions 
tended  in  that  direction.  Of  course  we  know  perfectly  well  that  there 
is  a  strong  interest  to  break  up  the  whole  system  of  Canadian  roads. 

Senator  Reagan.  If  such  action  were  taken  by  this  (Joveniincnt  as 
would  place  the  American  roads  on  an  exact  equality  with  the  ny.uU 
running  through  Canada^the  Canadian  roads — would  that  be  objec- 
tionable ? 

Mr.  Putnam.  Yes,' sir;  I  think  it  would. 

Senator  Reagan.  In  what  respect  ? 

Mr.  Putnam.  I  think  the  Canadian  roads  wonld  then  take  the  traflic 
which  they  now  bring  to  Boston  and  Portland  and  put  it  through  their 
own  i^orts. 

Senator  Reagan.  If  the  Canadian  roads  were  simply  compelled  to 
act  on  an  equality  with  the  American  roads  ? 

Mr.  Putnam.  Yes,  sir;  that  is,  if  it  proved  to  be  a  burden  upon 
them. 

Senator  Reagan.  If  they  are  disposed  to  turn  over  the  tratiic  in 
the  way  you  have  described,  would  it  not  be  to  their  interest,  their  con- 
nections being  completed,  to  go  to  St.  rfolin  or  Halifax  ? 

Mr.  Putnam.  It  is  for  the  interest  of  the  i)resent  Dominion  Govern- 
ment— what  you  may  call  the  "present  Dominion  Government,"  as  tliey 
call  it  down  there,  the  Tories  as  against  the  Grits — to  turn  all  this  traflic 
on  to  the  Canadian  roads.  They  are  political  roads.  But  no  road  de- 
sires to  do  it.  The  Grand  Trnnk  desires  to  keep  the  traflic  as  it  is.  Tlie 
Canadian  Pacific  road  is  like  any  other  railroad,  it  to-day  may  be  under 
the  thumb  of  the  Canadian  Government,  but  its  managers  are  largely 
Americans,  it  is  largely  owned  on  this  side  of  the  line.  Unless  it  is 
forced  by  the  Congress  of  the  United  States,  in  connection  with  the 
jjresent  Dominion  Government,  it  will  not  change  the  present  plan  of 
doing  business. 

Senator  Reagan.  Do  you  understand  that  there  is  a  subsidized  line 
of  steamers  belonging  to  the  Canadian  Pacific  running  between  Van- 
couver and  China  and  Japan  ! 

Mr.  Putnam.  I  think  their  line  from  Vancouver  is  on,  The  Govern- 
ment has  lately  made  a  contract  to  subsidize  a  line  of  steamers  from 
Halifax  to  Europe. 

Senator  Reagan.  Does  not  that  all  mean  that  the  Canadians  intend 
to  turn  their  traffic  through  their  own  territory  without  reference  to  the 
United  States  ? 

Mr.  Putnam.  It  means  that  the  Canadian  Government  nitends  to  do 
that  if  it  can,  and  we  do  not  want  you  to  help  them  do  it.  The  Canadian 
lines  run  in  and  out  of  American  ports  in  winter.  The  Canadian  Gov- 
ernment has  tried  to  divert  them  from  those  i)orts,  and  can  not  succeed 
without  the  aid  of  the  American  Congress.  With  our  aid  they  can  do 
it.  We  do  not  fear  that  any  Senator  is  disposed  to  break  up  by  direct 
and  open  action  the  present  bonded  system  of  transportation.  What  we 
do  fear  is  that  it  is  necessary  to  do  something  to  protect  the  Ainencan 
roads  against  Canadian  competition,  and  that  some  action  will  be  had 
of  an  indirect  character,  the  effect  of  which  is  remote  and  not  seen  by 
Senators,  but  which  will  have  that  eli'e(it. 

The  Chairman.  To  drive  the  Canadian  roads  out,  you  mean  . 

Mr.  Putnam.  Yes.  . 

The  Chairman.  And  to  divert  the  trade  to  their  own  ports  . 

Mr.  PUTNA.M.  Yes,  sir.  A  year  ago  this  season  the  Canadian  Uo\- 
ernment  did  succeed  in  getting  the  steamers  in  the  port  ot  llalitax. 


412  TRANSPORTATION  INTERESTS  OF 

One  (Iny  tliere  were  tliree  steamers  at  the  port  of  IlaUfax  and  they 
transported  in  one  day  two  or  three  thousand  i)assengers.  This  hist 
winter  those  steamers  came  back  into  our  port.  They  couhl  not  and 
can  not  maintain  themselves  up  there  unless  you  help  them. 

Senator  Eeagan.  Would  not  the  open  seas  for  a  long  period  during 
the  year  naturally  draw  the  commerce  to  Portland  rather  than  divert  it 
from  there  ? 

Mr.  Putnam.  Yes,  sir. 

Senator  IIeagan.  On  terms  of  perfect  equality  ? 

Mr.  Putnam.  Yes,  on  terms  of  ])erfect  equality,  if  let  alone.  Alarge 
portion  will  come  to  l^ortland  and  thence  to  Baltimore,  unless  that 
trade  is  forced  out  of  its  natural  channels  i)y  legislation  on  the  i)art  of 
the  Dominion  of  Canada  or  the  United  States.  Of  course  (-anada  has 
opened  a  short  line  through  Maine  with  a  view  to  forcing  this  bnsiness 
from  our  j)orts.  It  does  not  seem  to  be  understood  that  they  already 
have  two  complcte<l  lines  fiom  St.  .lohn  to  Halifax  on  their  own  terri- 
tory. 

The  Chairman.  Descrilte  those  lines. 

Mr.  Pl'TNAM.  She  has  the  Intercolonial  Line  running  from  T^oint 
Levi,  o])posite  Quebec,  along  what  is  called  the  norlli  shore,  np  where 
your  friend,  Senator  Frye,  goes  to  catch  salmon,  lie  istelUng  biglish 
stories  now  in  Maine.  Then  tln^  line  follows  aronnd  the  (lulf  of  St. 
Lawrence.  That  is  the  line  on  which  they  did  their  business  hereto- 
fore. Then  they  have  a  weak  lijie,  but  whi<'h  is  capabh'  of  being  nnide 
a  strong  line,  down  through  iMlnionston  and  connecting  with  the  New 
Brunswick  Kailway  and  down  through  St.  John  and  Halifax. 

Seinitor  liLAiR.  Which  is  the  strong  line? 

Mr.  Putnam.  T1m>  upi)er  line. 

Senator  P>LA1R.  What  will  be  their  terminal  point  in  Maine?  Has 
not  the  ('anadian  Pacilic  a  i)roject  to  build  uj)  a  jtort  on  the  coast  of 
INIaine? 

Mr.  Putnam.  They  <lisclaini  it  if  they  have,  but  in  fact  the  Canadian 
l^acnfic  has  a  ]>oit  here,  1'hey  are  siiipping  an  innnense  quantity  of 
merchandise  here,  and  there  is  a  good  <leal  of  its  trafhc  that  c<unes  into 
Portland  over  tlie  Portland  and  Ogdensbnrgh  Line  down  through  New- 
port. 1'hey  have  through  i)assenger  lines  through  there,  and  a  good 
deal  of  freigiit  comes  down  there. 

Senator  J^lair.  I  was  not  in  when  you  began  your  statement,  and 
you  may  have  suggested  to  the  committee  legislation  that  would  be 
hurtful  and  of  whicli  you  are  apprehensive.  If  you  have  not,  what  leg- 
islation do  you  rliink  Congress  might  be  apt  to  indulge  in  that  would 
be  injurious  to  the  State  of  Maine  ? 

]Mr.  Putnam.  We  think  that  inasmuch  as  the  business  is  being  done 
on  so  close  a  margin  as  it  is  to-day  that  any  legishition,  direct  or  in- 
direct, which  can  ])ossib]y  aHect  this  l)onde<l  business  will  be  injurious 
to  Portland  and  to  the  whole  State  of  Maine.  Anything  that  blocks  up 
those  lines  ])Uts  us  on  arbitrary  rates,  and  of  course  tliere  is  nobody  who 
snpi)oses  that  the  arbitrary  rate  for  Maine  would  be  less  than  10  cents, 
which  will  cost  us,  as  J  have  shown  members  of  the  committee,  about 
$L'L'.j,(K)U  annually.  There  are  other  gentlemen  here  who  are  familiar 
with  these  practical  details,  which  I  am  not. 


THE    UNITED    STATES   AND    CANADA.  413 


STATEMENT  OF  GEORGE  B.  WESCOTT. 

Mr.  George  B.  Wescott,  a  member  of  the  committee  from  Port- 
land, appeared. 

The  Chairman.  Where  do  you  reside,  Mr.  Wescott  f 

Mr.  Wescott.  Portland. 

The  Chairman.  What  is  your  business  ? 

Mr.  Wescott.  I  am  president  of  the  Porthmd  and  Kochester  Rail- 
road. 

The  Chairman.  If  you  have  any  views  to  present  to  the  committee 
you  may  proceed  to  give  them  in  your  own  way. 

Mr.  Wescott.  I  came  here  for  the  purpose  of  re-enforcing,  if  i)0s.sible, 
the  statements  that  Mr.  Putnam  made  regarding  the  bonding  system 
through  Maiue  and  New  England,  and  to  impress,  so  far  as  jjossiltU', 
upon  the  committee  the  importance  of  the  continuation  of  that  bonding 
system  to  our  State.  I  have  been  connected  with  trans[)ortation  inter- 
ests in  New  England  for  some  twenty  years,  and  I  believe  that  other 
lines,  that  some  other  bug-bear  beside  the  Canadian  lines,  the  great 
trunk  lines  running  to  the  sea-board,  for  instance,  would  be  quite  as 
great  an  obstacle  as  the  Canadian  lines  to-day. 

The  Chairman.  What  are  the  connections  of  your  road  ? 

Mr.  Wescott.  We  are  a  part  of  the  Boston  and  Maine  system  now. 
Originally  we  tried  to  build  a  line  from  Portland  to  Worcester,  ]\Ia.ss., 
and  to  make  it  aline  from  the  South  to  transport  through  the  Pennsyl- 
vania Eailroad  and  its  connections  into  Maine.  Of  course  we  were  side- 
tracked and  became  a  part  of  the  Boston  and  Maine  system. 

But  I  come  here  as  a  citizen  of  Portland,  and  represent  Portland  and 
not  the  railroad,  and  only  to  give  you,  from  my  experience  for  nnuiy 
years  past,  what  the  practical  operation  of  the  bonding  system  has 
been. 

The  Chairman.  So  that  you  want  to  ai)prove.of  what  has  been  said 
by  Mr.  Putnam,  namely,  that  any  interference  with  the  present  state 
of  affairs  would  be  injurious  to  Portland  and  your  State? 

Mr.  Wescott.  Yes,  sir;  to  the  whole  State  of  Maine. 

The  Chairman.  Do  you  think,  if  it  could  be  done  and  an  attempt 
were  made  to  put  the  Canadian  roads  upon  the  same  basis  and  under 
the  same  regulations  as  the  United  States  roads,  that  it  would  inter- 
fere in  any  way  with  the  interests  of  your  State? 

Mr.  Wescott.  I  have  this  idea,  that  in  order  to  make  it  a  practical 
question,  if  we  could  consolidate  the  different  systems  of  roads  into  two 
systems,  one  in  (Janada  and  one  in  the  United  States,  with  one  head  to 
the  Canadian  system  and  one  head  to  the  American  system,  we  all  would 
have  a  system  we  could  live  under ;  but  when  you  i)ut  iu  a  third  system 
I  think  the  third  demoralizes  the  entire  system. 

The  Chairman.  What  do  you  mean  by  the  third?  ,     tt  •     i 

Mr.  Wescott.  I  believe  in  consolidating  all  the  roads  in  the  United 
States  into  one  system,  and  if  they  make  enough  money  they  will 
buihl  up  another  system,  and  then  we  go  back  to  the  position  we  iire  in 
today.  Legislation  will  not  attect  things  unless  yon  stop  the  luiilding 
of  railroads  and  put  all  the  roads  here  under  one  management,  it 
seems  to  me  that  is  the  practical  way  of  settling  the  question. 

The  Chairman.  What  you  want,  then,  is  to  let  everything  remain 
as  it  is? 

Mr.  Wescott.  That  is  about  the  size  of  it. 

Tlie  Chairman.  Do  you  not  auticii)ate  t:hat  iu  the  course  ot  time,  auu 


414  TRANSPORTATION  INTERESTS  OP 

probably  very  soon,  tlie  drift  of  affairs  in  Canada  will  be  siidi  as  to 
make  it  the  policy  of  that  government,  without  any  reference  to  the 
action  of  the  United  States,  to  keep  on  its  own  soil  the  transportation 
of  all  its  foreign  shipments'? 

Mr.  Wescott.  1  think  that  is  tlie  tendency,  so  far  as  I  have  ob- 
served. 

Mr.  Putnam.  The  present  policy  of  John  MacDonald  is  a  Canadian 
system,  lie  is  liable  to  go  out  at  any  time  and  the  Chits  come  in,  when 
the  policy  will  be  reversed. 

Tiie  CuAillMAN.  Who  do  yon  call  the  (Irits? 

Mr.  ruT.NAM.  They  are  the  Outs.  1  snpi)ose  they  correspond  with 
us  Democrats  in  this  country. 

The  Chaiuman.  Are  they  the  (Irits  in  this  country  If 

Mr.  Putnam.  They  are  tiie  Onts;  that  is  sullicicnt. 

The  CUAIUMAN.  It  seems  to  me  that  with  tlw  method  that  the  Cana- 
dian (lovcrnnu'ut  has  already  adopted  of  subsitlizing  their  railroads  and 
their  steam  ship  lines  on  the  west  coast  as  well  as  on  the  Atlantic,  the 
inevitable  result  will  be  that  they  will  take  care  of  their  commerce  on 
their  own  soil  and  keej)  to  their  own  p<nts. 

Mr.  Putna:m.  Then  our  roads  (^aii  not  complain. 

The  ('iiaikman.  I  mak*^  that  suggestion  because  it  seems  to  me  that 
it  is  drifting  in  that  direction  without  any  reference  to  the  action  of  our 
Government. 

Mr.  Putnam.  They  never  can  do  it  in  the  world  unless  they  are  helped 
from  this  side  of  the  iine. 

The  CilAiioiAN.  You  geiitlenuMi  of  course  understand  that  we  are 
making  inquiry  to  gain  information  and  not  with  a  purpose  of  express- 
ing any  i)rogramme  on  the  part  of  this  committee  or  the  body  it  rei)ro- 
sents. 

Senator  Ulaiu.  Even  if  the  export  tradeof  Canada  went  over  Cana- 
dian soil  and  out  through  Canadian  ports,  is  it  not  still  true  as  to  her 
as  well  as  to  us  that  the  domestic  trade  tif  the  two  countries  with  each 
other  is  vastly  of  greater  im[>ortance,  and  prospectively  so,  than  the 
Cauadain  export  trade  ? 

iMr.  Putnam.  I  tiiink  the  Canadian  export  trade  is  about  the  same 
as  the  United  States.  1  think  of  all  their  exports  about  half  jome  to 
the  United  States. 

Senator  l>LAiii.  I  do  not  make  myself  understood.  I>y  export  trade 
I  mean  to  Kurope.  Necessarily  her  export  trade  to  the  Unittnl  States 
wouhl  have  to  come  to  the  United  States  under  any  circumstances, 
would  it  not  ? 

Mr.  Putnam.  Of  all  her  expo-ts  about  half  come  to  the  United  States. 

Senator  Dlair.  So  that  if  one  lialf  of  her  trade  is  with  the  United 
States  a  policy  that  would  exclude  her  trallic  from  the  United  States 
would  be  injurious  to  her  to  that  extent,  would  it  not  ? 

Mr.  Putnam.  That  is  my  opinion  about  it,  but  at  the  same  time  1 
can  not  say  what  they  have  over  there. 

Senator  Hlair.  1  am  thinking  of  the  damage  to  the  two  ])eople  by 
anything  that  breaks  up  the  interchange  of  their  trallic,  and  1  uii(b'i- 
staiid  yon  to  say  that  any  legislation  that  will  lead  to  the  exclusion 
of  the  Canadian  line  will  be  injurious  to  Portland  and  the  State  of 
Maine. 

Mr.  Putnam.  Yes,  sir. 

Senator  IILAIR.  That  means  non  intercourse. 

My.  I'UTNAM.  Certainly. 

Senator  i3LAiB.  And  the  result  of  that  iion  intercourse  is  not  as  to 


THE  UNITED  STATES  AND  CANADA.  415 

the  export  trade  alone,  but  both  coimtries  will  suller  In. in  the  loss  of 
their  iuterchaugeable  commerce. 

Mr.  Putnam.  Certainlj-. 

Senator  Blaik.  And  as  Canada  develops  and  becomes  a  great  nation 
we  would  teel  it  more  and  more,  would  that  not  be  so  "i 

Mr.  Putnam.  Yes,  sir;  but  ab  the  same  time  I  do  not  like  to  put  in 
my  personal  opinion  ;  but  I  put  into  the  case  the  crystallized  opinion 
of  the  people  m  Portland,  like  Governor  Washburn,  and  the  crystallized 
opinion  of  the  people  of  Portland  and  the  whole  people  of  Maine,  as 
shown  by  the  tact  that  in  Portland  we  have  twice  invested  beyond  what 
many  persons  regard  the  ability  of  the  city  for  the  purpose  of  opening 
up  these  Canadian  lines  which  we  desire  to-day  to  keep  up.  1  (k'sire 
to  put  that  in  rather  than  my  own  personal  oi)inion,  which  I  do  not 
consider  of  much  consequence. 

Senator  Blair.  Perhaps  others  may  think  it  of  more  conseciueuce 
than  you  do. 

STATEMENT  OF  S.  W.  THAXTER. 

Mr.  S.  W.  Thaxter,  a  merchant  of  the  city  of  Portland,  appeared. 

The  Chairman.  You  may  proceed,  Mr.  Thaxter,  to  make  any  state- 
ment you  desire. 

Mr.  Thaxter.  I  am  a  merchant  of  Portland  and  am  in  the  grain 
business,  and  have  some  familiarity  with  the  jjosition  of  tlie  Grand 
Trunk  with  reference  to  the  business  of  Portland  and  the  whole  State 
of  Maine,  and  also  the  distribution  of  western  products  through  the 
State  of  Maine. 

Mr.  Putnam  has  dwelt  very  largely  upon  the  interest  that  Portland 
has  in  the  Grand  Trunk,  and  of  course  the  whole  State  of  Maine  has 
equal  interest.  It  is  a  community,  as  you  all  know,  that  <lraws  heavily 
upon  the  West.  There  is  no  community,  perhaps,  in  the  United  States 
that  draws  so  largely  on  the  Western  States  as  Maine,  owing  to  the 
course  of  business  at  home,  such  as  lumber,  ice,  etc.,  and  it  requires  a 
great  amount  of  Western  iiroducts  to  feed  the  men  and  horses,  and  it  is 
of  great  importance,  being  comparatively  a  poor  coniinunity,  that  we 
should  get  our  breadstuffs  as  cheaply  as  possible.  I  think,  therefore,  that 
any  discrimination,  as  Mr.  Putnam  says,  either  directly  or  indirectly,  that 
would  tend  to  enhance  the  value  of  this  western  produce  wouhl  work  an 
injury  to  the  whole  State  of  Maine.  The  whole  State  of  .Maine  is  hir^'ely 
dependent  on  the  Grand  Trunk  for  its  sujjplies.  It  timches  our  Maine 
Central  system  at  two  points,  at  Yarmouth  Junction  and  at  Danville 
Junction. 

From  those  two  points  the  distribution  of  Western  products  is  made. 

Even  our  agricultural  portions  take  a  large  amount  of  Western  i>ro- 
duce  for  the  reason  that  Western  produce  has  become  so  cheap  by  the 
cheapening  of  producing  and  transporting,  that  our  farmers  are  in  the 
same  position  as  the  English  farmers;  they  are  driven  out  of  certain 
kinds  of  agricultural  production,  such  as  wheat  and  Indian  corn.  Such 
corn  as  is  raised  in  Maine  is  only  used  for  canning  purposes,  and  where 
oats  used  to  be  raised  in  great  abundance  they  are  now  brought  in 
largely  from  the  Western  States. 

The  Chairman.  Why  do  you  not  raise  oats  ? 

Mr.  Thaxter.  When  oats  are  a  cent  a  pound,  as  they  now  are,  the. 
Maine  farmer  will  turn  his  attention  to  something  more  prolitable. 

The  Chairman.  What  is  more  prolitable  1 


416  TRANSPORTATION    INTERESTS    OF 

Mr.  Thaxter.  Kaisiiijj:  liaj'  and  ])otatoes  ou  the  farm,  aud  dairyiug. 
Dairying:  liii«  increased  largely  in  the  State.  The  farmers  help  out  in 
the  winter  by  working  in  the  woods  aud  in  other  ways. 

Farming  in  Maine  is  rather  a  precarious  way  of  getting  a  living. 
That  is  the  i)osition  of  our  State  and  the  people  in  it,  and  as  I  said  I 
doubt  if  there  is  any  community  that  use  so  much  of  staple  Western 
l)r<)ducts  i)er  cai)ita  as  the  State  of  Maine.  As  1  estimated  the  other 
day,  with  the  aid  of  some  Portland  merchants,  the  amount  brought  into 
the  State  of  ]\Iaine  — and  1  have  made  a  low  estimate— is  fifteen  thou- 
sand cars,  of  which  I  reckon  three  fourths  come  in  over  the  Grand 
Trunk.  Practically  the  (hand  Truidc  has  been  our  only  connection 
with  the  West.  It  has  been  our  only  tiirough  line.  We  have  had  at 
times  other  through  routes,  but  they  have  been  given  up.  We  are  de- 
pendent on  the  rates  that  i)revail. 

The  i)oint  that  has  not  been  touched  on  fully  is,  as  Mr.  Putnam  said, 
that  there  are  railroad  movements  going  on  that  are  important  to  the 
State  of  Maine,  and  Maine  nnist,  by  reason  of  its  geograi)hical  situation 
beconnected  with  the  West  through  Canada. 

The  Chairman.  You  are  seeking  the  shortest  route. 

Mr.  TiiAXTEU.  Wc  are  seeking  the  shortest  route.  This  road  that 
has  recently  been  completed  is  no  doubt  going  to  make  a  great  dilfer- 
ence  to  the  northern  jiart  of  our  State,  it  runs  through  timber  lands 
that  heretofore  it  has  not  been  ]»racticable  to  reach  and  operate.  I  un- 
derstand that  since  that  road  has  gone  there  luml)er  is  brought  out 
througii  Canada  down  through  \'erm<jntand  New  Hampshire  an<l  then 
to  the  sea -e.oast.  1  thiidv  that  the  State  of  Maine  is  more  interested  in 
this  (juestion  than  jjerhajts  any  other  community  in  the  United  States, 
for  we  are  more  dependent  upon  the  (Jrand  Trunk  road  at  the  present 
time  than  upon  all  the  other  roads  combined. 

The  CiiAiii.MAN.  What  proportion  of  your  purchased  products  comes 
from  Chicago  i)roi)er  f 

Mr.  TiiAXTEU.  When  the  trallic  is  open  the  largest  part  of  it  comes 
from  Chicago;  our  corn  and  oats  come  from  that  city  almost  entirely 
during  lake  navigation. 

The  C'iiair:\ian.  When  lake  navigation  is  closed  where  do  you  get  it? 

]Mr.  TiiAXTKH.  Since  the  interstate  commerce  act  has  gone  into  effect 
it  largely  coujes  from  Chicago.  Formerly  it  came  from  points  further 
south  and  west  of  Chicago. 

The  Chairman.  So  that  you  are  largely  dependent  for  what  you  live 
on  upon  the  West,  in  a  sense.  You  are  dependent  on  foreign  grain 
and  meats,  etc.  i 

Mr.  TuAXTER.  Y'es,  sir. 

The  Chairman.  Does  much  dressed  beef  come  from  the  West  to 
your  State  ? 

Mr.  Thaxter.  Y^es,  sir ;  and  that  lias  been  a  business  that  has  been 
very  largely  increasing  m  the  past  few  years,  and  it  comes  principally 
over  the  (irand  Trunk.  I  have  here  a  memorandum  taken  from  the 
Crand  Trunk  books.  There  were  handled  year  l)efore  last,  in  1887,  in 
Portlan<l  alone,  'M'u  cars  of  dressed  beef,  ami  in  1888  7(J<)  cars,  or  more 
than  double  that  of  the  year  previous. 

Senator  Ueagan.  Was  that  for  local  consumption  or  for  export? 

Mr.  Thaxter.  Local  eonsum]ttion.  1  think  the  export  of  dn'ssed 
beef  by  way  of  Portland  has  been  little  or  none.  At  least  there  wa*i  no 
export  the  last  year. 

In  addition  to  points  touched  on  by  Mr.  Putnam,  I  will  say  that  wo 
have  at  Portland  live  months  of  the  year,  whe4i  the  port  of  Montreal  iy 


THE   UNITED   STATES   AND   CANADA.  417 

closed  for  navigation,  a  steamer  a  week  that  probably  takes  4,000  car 
loads  of  products,  half  each  of  American  and  Canadian  products  to 
ship  abroad.  ' 

The  Chairman.  So  that  substantially  your  wisti  is  to  let  matters  re- 
main as  they  are. 

Mr.  Thaxteb.  Yes,  sir;  the  city  of  Portland  is  well  satisfied  and 
always  has  been  with  the  Grand  Trunk ;  it  has  proved  to  be  a  rc'liiil)lc 
road.  We  get  at  the  present  time  and  have  for  the  past  ten  years  ex- 
cellent dispatch.  It  is  equipped  at  both  ends  to  do  business  pronii.tiy 
and  regularly,  and  affords,  I  think,  for  Chicago  shippers  facilities  tlia"t 
hardly  any  other  road  furnishes. 

The  Chairman.  State  Just  what  American  connections  you  have 
there.  Suppose  the  Grand  Trunk  did  not  exist,  what  would  be  your 
communication  with  the  western  country  ? 

Mr.  Thaxter.  We  would  be  under  obligation  to  our  friends  in  P.os- 
ton.  We  would  have  to  come  around  by  way  of  Boston  at  an  ail)itrai-y 
rate,  probably,  and  we  also  have  what  is  known  as  the  I'ortlaml  anil 
Ogdensburgh  road,  now  under  the  control  of  the  Maine  Central,  which 
promises  to  be  a  strong  and  powerful  corporation  or  combination,  that 
strikes  down  into  New  York  by  way  of  Syracuse,  and  also  the  Water- 
town  and  Ogdensburgh  Eailroad  to  the  West  and  southwe>it. 

The  Chairman.  Have  you  any  fear  of  the  Canadian  Goveinment 
drifting  this  foreign  trade,  this  foreign  commerce,  to  its  own  i)oris,  in- 
stead ot  allowing  it  to  come  down  to  Portland  for  foreign  shipment  .' 

Mr.  Thaxter.  That  is  something  I  am  not  very  well  aequainteil  with 
and  my  opinion  would  not  be  of  much  account.  I  think  that  the  pliys- 
ical  obstacles  are  against  it,  however. 

The  Chairman.  What  is  the  amount  of  the  foreign  trade  at  Portland  ? 
Have  you  any  idea  of  its  magnitude  ? 

Mr.  Thaxter.  Do  you  mean  the  exportations? 

The  Chairman.  Yes,  sir. 

Mr.  Thaxter.  We  only  export  for  five  months  in  the  year.  I  shonld 
say  it  amounts  to  a  steamer  a  week;  sixty  to  seventy-live  thousand  tons 
during  the  season. 

The  Chairman.  Do  you  have  many  steamers  coming  there  loadetl 
with  cargoes  from  other  countries'? 

Mr.  Thaxter.  All  the  steamers  which  come  in  are  loaded,  largely 
with  Canadian  freight  shipped  through  Maine  into  Canada;  cargoes  of 
from  one  to  three  thousand  tons. 


STATEMENT  OF  NATHAN  CLEAVES. 

Mr.  Nathan  Cleaves,  surveyor  of  the  port  of  Portland,  api)eared. 

The  Chairman.  What  is  your  name,  sir  ? 

Mr.  Cleaves.  Nathan  Cleaves. 

The  Chairman.  Y"ou  are  from  Portland,  I  suppose? 

Mr.  Cleaves.  Yes,  sir. 

The  Chairman.  Proceed  to  state  whatever  you  tliink  is  pertinent  to 
this  inquiry. 

Mr.  Cleaves.  I  have  nothing  to  add,  Mr.  Chairman  and  gentlemen 
of  the  committee,  except  to  corroborate  what  has  already  been  sai«l ; 
but  1  am  charged  with  a  very  pleasant  duty  by  the  members  of  the  com- 
mittee of  the  Portland  Board  of  Trade,  in  which  the  Board  of  Trade  and 
the  leading  citizens  of  Bangor  join,  and  that  is  to  urge  upon  the  com- 
mittee to  visit  Portland,  l  will  say  that  Eastern  Maine  is  very  much 
6543 27 


418  TRANSPORTATION  INTERESTS  OP 

interested  in  the  matters  before  your  comraittee,  and  tbe  Board  of 
Trade  of  Bauffor  desire  to  be  heard.  The  cliairtnan  of  our  (loniinitteti 
received  a  telej,aaiii  to-day,  asking;  the  Interstati-  C'oiiitiierce  Coininitlec 
to  fix  a  time  ibr  a  lu^arin^,  and  he  has  also  received  a  telegram  from  a 
piomineut  member  of  the  Board  of  Trade  saying  that — 

Portluntl  would  be  much  preferred  for  the  hoarin};,  and  \vc  will  ;;o  tlu-n-  Moiidnv, 
if  arrai)j;eim'nt8  can  be  made. 

I  was  going  to  suggest  to  the  committee — and  I  hope  yon  will  recon- 
sid«'r  your  former  (letermination,  genilemen — that  a  train  leaves  here 
on  Sunday  night  at  7  o'clcx-U,  ai  riving  at  Portland  at  11  o'clock,  and 
there  is  also  a  train  on  Montlay  morning  wliicli  U»aves  at  S  o'clock  and 
arrives  in  Portland  at  11  o'clock.  If  the  committee  (;ould  oidy  remain 
in  Portland  until  (>  o'clock  in  the  afternoon,  when  you  could  return  to 
Boston,  1   think  it  w«)idd  accomplish  the  object  of  the  P>angor  jieople. 

Semitor  HiscoCK.  What  is  their  object ! 

Mr.  Cleavks.  To  have  tijc  committee  give  them  a  hearing,  as  1  have 
mentioned. 

iSenator  IIisr<irK.  Would  they  contril)ute  any  new  fa(;t«  ? 

Mr.  Clkavios.  The  Canadian  i'acitic,  you  will  remember,  goes  near 
them,  and  they  are  very  much  interested  in  the  sultject  which  is  before 
your  column  t»'e.  They  are  desirous  of  being  heaid,  and  would  <'omo 
lieie,  if  it  is  necj'ssary. 

'Jhe  CiiAiKMAN.  1  believe  t  here  is  already  (Hie  gentleman  herefrom 
Bangor,  who  ilesircs  to  be  heard.  The  committee  would  not  IV'cl  at  lib- 
erty to  lea\(>  Boston  until  it  completes  its  work  here,  and  I  am  inclinetl 
to  think  that  the  committee  can  procure  all  the  information  from  those 
cities  that  they  desire  to  contribute.  If  we  can  not,  they  can  furnish 
their  views  in  writing,  whiirh  will  be  embodied  in  the  report,  so  that 
they  will  not  sutler  in  that  respect. 

.Mr.  ('lkavks.   I  will  so  inform  them,  tlien. 

The  CiiAiWMAN.  \\>u  are  now  collccrtor  of  tlu'  port,  are  you  not  ! 

Ml',  (i.kavks.  No,  sir;  1  am  surveyor  of  the  port. 

The  CiiAiioiAN.  Vou  are  entirely  familiar  with  the  laws  governing 
this  bonding  system,  and  with  tin*  manner  of  doing  business  under  itt 

.Mr.  Ci.KAVE.^.  I  have  the  Kegiilatious  of  tlu^  Tn-asiiry  Department 
in  my  pocket,  which  give  the  law,  ami  also  the  manner  of  doing  busi- 
ness. 

The  CxiAiiiMAN.  Can  those  Begnlations  be  i)rocurcd  f 

Mr.  Cleavks.  I  can  let  you  have  this  set. 

The  CUAiUMAN.  Thank  you. 


STATEMENT  OF  L.  M.  SARGENT. 

Mr.  L.  M.  Saiigent,  representing  the  Arkwright  Clul>,  of  Boston, 
ajtpeared. 

The  Chairman.  What  is  your  name? 

Mr.  Sargent.  L.  M.  Sargent. 

The  Chairman.  Whom  do  you  rcpri'sent  especially? 

Mr.  Sargent.  The  Arkwright  Club,  of  Boston. 

The  Chairman.  You  can  proceed  with  your  remarks. 

Mr.  Sakgent.     Mr.  Chairman  and  gentlemen  of  the  committee: 
Arkwright  Club,  of  Boston,  is  a  club  fornu'd  of  N'ew  ICnglaml  manufac 
urers.    They  represent  the  principal  industries  of  New  England,  an^ 
hearing  that  there  was  some  proposition  to  curtail,  in  a  way,  the  meai 


THE    UNITED    STATES    AND   CANADA.  410 

of  transportation  over  the  Canadian  lines  tliey  met  togetlicr  iind  adoptoil 
the  following  resolutions : 

RESOLUTIONS  BY   THE   ARKWHIGUT   CLUIJ. 

Bt'solved,  That  the  Arkwright  Cluh  adopt  the  following  resolutions: 

(1)  That  for  luauy  years  a  cousiderahle  quaulity  of  jiroduce  irom  theWosteni  States 
has  beeu  earned  through  Canada  to  Boston,  not  only  for  home  consnniiition,  l>iit  also 
for  export  from  the  port  of  Boston,  and  a  large  amount  of  maiuil'aetnred  and  impr>rte(l 
goods  have  been  sent  from  Boston  to  Canada,  and  thiough  Canada  to  the.  Western 
States,  mueh  to  the  advantage  of  Boston  and  New  England  interests. 

(2)  That  the  route  throughCanada  to  and  from  Boston  is  geographically  the  natural 
route  for  many  places  of  importance  in  the  Western  and  Northwestern  Slates. 

(a)  That  for  the  long  period  during  which  business  has  been  oi)en  to  the  nierchanls 
and  niannfaeturers  of  Boston  and  New  England  by  this  ehauni-l,  it  has  been  carried 
on  by  the  Canadian  railway  companies  undertaking  it  in  a  fair  and  greatly  advan- 
tageous manner. 

(.4)  That  a  competitive  route  througli  Canada,  independent  of  other  trunk  lines  in 
America,  has  beeu  of  great  heuelit  to  the  merchants,  manufacturers,  and  the  com- 
munity generally  of  Boston  and  New  England,  as  by  that  means  any  tendency  that 
might  otherwise  have  been  to  charge  exorbitant  rates  has  been  held  "in  cheek. 

(5)  That,  by  reason  of  this  route  being  available  lor  adoption  by  traders,  it  has 
beeu  also  a  direct  benefit  to  the  port  of  Boston,  from  the  fact  that  large  shipments  of 
Canadian  produce  have  been  exported  through  it,  and  imports  lor  Cauaila  made, 
which  would  not  have  been  received  had  there  beeu  any  such  restriction  upon  the 
free  interchange  of  such  business;  and  it  is  most  desirable  to  lay  betbro  the  Senate 
committee  this  expression  of  opinion,  in  the  hope  that  what  has  been,  and  is,  of  so 
miK.h  benefit  to  Boston  and  New  Englaud  will  be  continued  in  the  future. 

1 1  EN  14  V  F.  COK, 
Secretary  Arkuriqhl  Cluh. 

July  1,  1889. 

The  general  interests  of  the  members  of  this  club  are  all  it  will  bo 
necessary  for  me  to  touch  upon,  as  I  am  not  familiar  with  railroad  mat- 
ters. 

It  is  very  essential,  indeed,  to  the  mills  of  New  England,  esjiecially 
to  those  in  Maine,  Kew  Hampshire,  and  Massachusetts,  that  every  pos- 
sible means  of  transportation  should  be  kept  open.  Business  is  under 
sharp  competition,  and  any  regulation  of  the  Canadian  roads  which 
would  tend  to  increase  the  cost  of  transportation  would  be  a  serious  in- 
jury to  the  mills. 

The  business  of  making  freight  contracts  is  done  by  the  customers, 
by  the  buyers  who  live  in  the  Northwest  and  West— speaking  now  of 
the  business  that  goes  to  the  Northwest.  They  are,  therefore,  laniiliar 
with  the  rates  of  freight,  and  the  managers  of  the  mills  here  in  New 
England  are  not,  as  a  general  rule.  Our  customers  i)refer  to  use  the 
Grand  Trunk  for  certain  portions  of  their  shipment,  particularly  in  the 
winter  season.  The  Canadian  Tacific  is  used  principally  on  business 
for  export  to  China. 

I  do  not  know  that  I  have  anything  more  to  say  especially  on  this 
matter.  , 

The  Chairman.  You  speak  of  exports  to  China;  do  you  do  mnen  ol 
that  business  ? 

Mr.  Sargent.  The  mills  which  are  represented  in  this  club  do  a  good 
deal  of  it. 

The  Chairman.  How  much  in  the  aggregate  I 

Mr.  Sargent.  Thirty  thousand  bales  of  goods  a  year  are  exportetl 
to  China  via  the  Canadian  Pacific. 

The  Chairman.  Do  you  send  any  goods  to  the  Pacific  coast  on  any 
other  line  for  export  to  China  ? 

Mr.  Sargent.  1  doubt  very  much  whether  any  of  the  other  Hues  are 
used  for  that  purpose. . 


420  TRANSPORTATION    INTERESTS    OF 

The  CnAiRMAN.  IIow  does  that  bnppon  ? 

]Mr.  Sargent.  I  do  uot  know  liow  it  happeus.  The  purchaser  makes 
the  rates  ;  we  do  not. 

Senator  IIiscocK   You  saj-  the  purchaser  makes  the  rates  ? 

Mr.  Sargent.  Yes,  sir. 

The  Chairman.  Where  is  he  ? 

Mr.  Sargent.  Tlie  purchaser  of  the  j^oods  which  are  exported  to 
China  is  a  broker  in  New  York. 

The  Chairman.  Why  do  yon  not  make  the  rates? 

Mr  Sargent.  We  tind  it  more  i)n)tital>le  and  better  to  allow  the  ])nr- 
chasers  to  make  their  own  arranjrements.  The  jjreat  ellbrt  of  the  West- 
ern buyers  has  been  to  compel  tlie  New  England  mills  to  deliver  then- 
goods  iu  Chicago  free.  That  is  resisted.  Trobably  one  of  the  laig- 
est  articles  of  cotton  goods  sent  West  is  a  sheeting  known  as  LL  sheet- 
ing, which  is  made  by  the  company  1  represent.  That  sheeting  is  sold 
at  exactly  the  same  price  in  Cliicago  as  we  get  for  it  here.  I  sujjpose 
that  may  be  true  of  a  number  of  other  lines  of  cotton  products. 

The  Chairman.  So  that  nearly  everything  that  is  exported  to  China 
goes  by  the  Canadian  Pacific  f 

Mr.  Sargent.  I  think  that  is  jjrobably  true.  The  i)rincipal  exports 
to  China  are  heavy  sheetings  and  (hills.  Those  are  made  by  ih«'  mills 
iu  Maine  and  Nrw  Ilanipsliire,  and  to  .some  extent  by  comi)anies  in 
Lowell  and  Lawrence. 

The  Chairman.  None  are  made  in  IWtston  ? 

Mr.  Sargent.  There  are  no  cotton  factories  in  Boston.  The  factories 
which  have  business  headquarters  in  Boston  are  located  in  Lowell  and 
Lawrence. 

The  Chairman.  How  far  are  those  two  cities  from  Canadian  railroad 
connections  ? 

Mr.  Sargent.  I  could  not  tell  you  exactly.  They  get  through  bills 
of  lading. 

The  Chairman.  What  is  the  speci tic  route  from  Lowell,  for  instance, 
to  the  point  of  ex|)ortf 

Mr.  Sargent.  1  <lo  not  know. 

The  Chairman.  The  gocnls  do  not  come  to  Boston,  do  they  t 

Mr.  SARtJENT.  No,  sir. 

Senator  Blair.  They  go  by  the  Merrimac  Valley! 

;Mr.  Sauc^ent,  Yes,  sir. 

Senator  Blair.  Over  the  Vermont  C«'ntral ! 

Mr.  Sargent.  Yes,  sir;  probably.  I  am  not  familiar  with  that  part 
of  the  business;  1  merely  know  in  a  general  way  that  through  bills  of 
lading  over  the  Canadian  roads  are  given  at  the  mills. 

Senator  Keacan.  In  shipi)ing  cotton  goods  over  the  Canadian  lines 
from  Lowell,  do  yon  know  whether  through  bills  of  lading  are  given  to 
Vancouver  ? 

Mr.  Sargent.  My  impression  is  that  through  bills-  of  lading  are 
given. 

Senator  IIeagan.  Do  you  know  by  what  route  the  goods  go  to  get  to 
the  Canadian  line  ? 

Mr.  Sargent.  They  are  taken  in  Lowell  and  Lawrence  by  the  Bos- 
ton and  i\Liine  and  taken  to  the  Canadian  road  connection. 

Senator  Keagan.  You  are  not  certain  as  to  whetiier  through  bills  of 
lading  are  given  or  not. 

I\lr.  Sargent.  I  feel  pretty  confident  that  they  are. 


THE    UNITED    STATES   AND    CANADA.  421 

STATEMENT  OF  T.  S.  EDMANDS. 

Mr.  T.  S.  Edmands,  a  cloth  manufacturer  of  Dover,  N.  H.,  appeared. 

The  Chairman.    Please  state  your  name. 

Mr.  Edmands.   T.  S.  Edmands. 

The  Chairman.  We  will  be  glad  to  hear  anything  you  may  wish  to 
say. 

Mr.  Edmands.  The  company  I  represent,  located  at  Dover,  N.  II., 
manufactures  cloths  and  also  prints  the  cloths  which  we  manufactun;  he- 
sides  buying  cotton  prints,  also  satins,  calicoes,  etc.,  from  other  mills. 

The  Chairman.   Where  do  you  find  a  market  for  your  goods  f 

Mr.  Edmands,   They  are  sold  all  over  the  country. 

The  Chairman.  Do  you  have  much  of  an  export  business? 

Mr.  Edmands.  We  have  exported  a  few  goods,  but  very  few. 

The  Chairman.  You  do  not  export  very  nuich  ? 

Mr.  Edmands.  No,  sir;  we  sell  our  goods  either  in  Boston  or  New 
York,  and  elsewhere,  principally  Boston  and  New  York.  We  8hii)ped 
about  800  cases  last  year  to  Chicago  over  the  Grand  Trunk. 

The  Chairman.  You  are  interested  in  the  Grand  Trunk,  too,  then  ? 

Mr.  Edmands.  Very  much;  but  more  than  that  we  are  more  inter- 
ested— all  the  cotton-mills  are — on  account  of  the  arbitrary  on  our  cot- 
ton bales.  Formerly,  before  the  Canadian  roads  came  in,  we  bad  to 
pay  a  5-cent  arbitrary. 

The  Chairman.  On  raw  cotton  from  the  South  ? 

Mr.  Edmands.  Yes,  sir.  That  amounted  to  20  cents  a  bale,  in  round 
numbers,  and  20  cents  a  bale  in  the  aggregate  amounts  to  sometliing. 

The  Chairman.  You  are  not  i)aying  that  arbitrary  since  the  Canadian 
Pacific  has  been  doing  your  transportation  ? 

Mr.  Edmands.  It  was  the  efiect  of  the  Canadian  Pacific  that  did 
away  with  the  arbitrary.  Very  little  cotton  goods  come  that  way.  It 
is  simply  the  eftect  of  the  Canadian  Pacific  being  able  to  bring  it  that 
has  induced  the  other  roads  to  cut  oft"  the  arbitrary. 

The  Chairman.  The  American  roads  do  not  charge  it  now,  either  ? 

Mr.  Edmands.  No,  sir. 

The  Chairman.  They  did  until  the  Canadian  Pacific  came  to  your 
relief? 

Mr.  Edmands.  Yes,  sir. 

The  Chairman.  How  much  do  you  manufiicture  a  year  in  value  ? 

Mr.  Edmands.  From  $;3,5U0,000  to  $4,000,000  worth. 

The  Chairman.  How  many  persons  do  you  employ  ? 

Mr.  Edmands.  About  1,800,  in  round  numbers. 

The  Chairman.  Are  they  largely  adults? 

Mr.  Edmands.  About  equally  divided  betwixt  males  and  females, 
and  I  should  think  perha})S  one-quarter  under  age.  That  is  simply  in 
the  cotton-mill.  Then  in  the  print-works  the  employes  are  nearly  all 
adult  males.     We  have  a  cotton-mill  and  print-works  besides. 

The  Chairman.  From  where  does  your  cotton  come? 

Mr.  Edmands.  From  Texas  and  Arkansas. 

Then,  as  regards  the  export  business,  even  if  the  goods  wliicli  are 
shipped  to  China  did  not  go  on  the  Canadian  Pacific,  they  would  not  go 
on  the  Union  Pacific.  When  they  are  not  sent  by  way  ot  Vancouver 
they  are  sent  to  New  York,  and  from  there  to  Liverpool,  and  then  over 
the  Suez  Canal.  They  would  not  go  over  the  Union  Pacific  to  San 
Francisco  at  all. 

The  Chairman.  They  never  did? 


422  TRANSPORTATION    INTERESTS    OP 

Mr.  Edmands.  Yes,  sir;  I  tbiuk  it  was  tried;  but  it  was  not  a  suc- 
cess. 

The  Chairman.  Then  it  is  not  only  the  rate  at  wbich  the  goods  are 
shipped,  but  the  manner  of  shipment. 

Senator  Blair.  Do  you  reside  at  Dover  ? 

Mr.  Edmands.  No,  sir.     I  do  business  in  Dover,  but  I  live  here. 

Senator  Blair.  Tlie  mills  you  personally  represent  are  uot  the  entire 
matmfactnrinfj  interest  of  the  city  ? 

Mr.  Edmands.  No,  sir. 

Senator  Blair.  What  other  mills  are  there? 

Mr.  Edmands.  Governor  Sawyer  hits  a  larjre  woolen  mill  there. 

Senator  Blair.  Do  you  know  anythin<;  about  the  outlet  of  his  mill  ? 

Mr.  IOdmands.  I  do  not.  It  is  i)resumably  throughout  the  West  and 
East. 

Senator  Blair.  That  mill  would  naturally  use  the  same  roads  that 
you  <lo. 

Mr.  Edmands.  Yes,  sir;  the  National  Dispatch  liiu\ 

Senator  HiscocK.  V()U  say  that  your  shijunents  to  China,  if  tlioy 
were  not  made  over  the  ('amida  road,  would  be  made  to  I'^umpe,  and 
tluMM'e  throujL;h  tlie  Suez  Can;il,  and  that  tliere  seems  to  be  some  ob- 
stacle in  the  way  of  their  K<»i"J?  to  San  Francisco.  IMease  describe 
that  obstacle. 

Mr.  lCi)>L\.\DS.  1  can  not  speak  (rom  my  own  exp«'rience.  We  do  not 
ship^'oods  to  China.  I  understand  fVom  the  manufacturers  and  shipi»ers 
of  drills  that  tliey  p't  better  facilities  over  the  Canadian  Pacific  than 
they  have  ever  been  able  to  petover  the  Union  Pacilic. 

Senator  HiscoCK.  I  understand  you  to  say  that  the  Canadian  route 
only  comi)ete<l  with  the  European  route,  and  that  the  ship])er8  have  not 
been  accustonu'd  to  patronize  tin-  San  I'lancisco  route  at  all;  and  I  did 
not  know  but  you  mi;,^ht  kimw  what  I  In*  obstacles  were  that  inteileicd 
with  the  business  fjoinj;  to  San  Francisco.  That,  to  my  mind,  is  (juite 
an  important  ()uesti(Ui. 

Mr.  ICdmands.  I  do  not  think  we  have  more  than  a  halfadozen  cus- 
tomers who  ship  to  China.  One  party  makes  all  his  shiiunents  that 
way  ;  tlu'  other  parlies  ship  by  the  Sue/  Canal. 

Scnat(U-  lliscocK.  Can  you  i:iv»'  a  reason  why  the  San  Francisco 
roads  do  not  compete  tor  tliis  trathc  ? 

Mv.  Edmands.  I  think  the  reason  is  that  the  service  is  not  as  jrood 
ovt  r  the  Union  Pacific  as  over  the  Canadian  Pacilic,  and  tiu^  Ameri«;au 
roads  know  it.  If  you  ship  by  the  Canadian  Pacilic  they  run  a  car  rijjiit 
into  your  mill-yard,  where  it  is  loaded  and  sealed  and  it  goes  to  Van- 
couver without  any  trouble  whatever. 

Senator  IIiscock.  Is  the  bulk  not  broken  ? 

Mr.  Edmands.  I  have  known  it  to  be  broken  at  Albany  and  again  at 
Chicago. 

Senator  lIiscocK.  Your  understanding  is  that  those  shipments  would 
be  made  over  the  Canadian  Pacilic  rather  than  over  the  American  roads 
even  if  there  were  no  dilVerence  in  rate? 

Mr.  Edmands.  The  shippers  would  prefer  the  American  roads,!  should 
think. 

Senator  FIiscorK.  At  the  same  rate  t 

Mr.  Edmands.  Yes,  sir. 

Senator  IIiscocK.  Do  you  know  whether  the  rates  are  (he  same  on 
the  Canadian  Pacific  as  on  the  American  niads  ? 

Mr.  Edmands.  I  do  not  know  ;  I  am  not  a  shipper. 

At  4  o'clock  p.  m.  the  committee  adj<uirned  until  Monday,  July  8, 
lJS8t),  at  U)  o'clock  a.  m. 


THE    UNITED   STATES   AND   CANADA.  423 

Boston,  Mass.,  July  S,  1889. 

The  committee  met  at  10  o'clock  a.  m.,  pursuant  to  adjourumeut. 

The  Chairman.  I  am  informed  that  there  is  a  delectation  here  Irom 
Bangor,  Me.,  who  would  like  to  be  heard  for  a  brief  time.  If  tlii-v  do 
not  have  full  opportunity  to  say  to  the  committee  at  this  time  all  tlicv 
desire  to  state,  they  ask  leave  to  follow  it  up  with  a  written  statj-mcnt, 
which  is  entirely  agreeable  to  the  committee.  The  committee  is  now 
ready  to  listen  to  whatever  the  Baugor  delegation  desires  to  submit. 


STATEMENT  OF  EDWARD  B.  NEALLEY. 

Mr.  Edward  B.  Nealley,  a  member  of  the  committee  of  the  Board 
of  Trade  of  Bangor  and  of  the  committee  of  the  Bangor  and  Piscatafpiis 
Railroad,  appeared. 

The  Chairman.'  Where  do  you  reside,  Mr.  Nealley  ? 

Mr.  Nealley."  Baugor,  Me.  My  associates  and  myself  appear  here 
to-day,  in  the  first  place,  for  the  purpose  of  representing  a  committee  of 
the  Board  of  Trade  of  Baugor,  and  to  present  their  resolutions,  which 
I  submit  now  without  reading. 

The  Chairman.  They  will  be  embodied  in  the  report  of  these  i>ro- 
ceedings. 

The  resolutions  are  as  follows : 

RESOLUTIONS  OF  TUE  BANGOR  BOARD  OF  TRADE. 

Bangor,  July  3, 1889. 
At  a  special  meeting  of  the  Bangor  Board  of  Trade,  held  July  2,  the  following  reso- 
lutious  were  passed : 

Whereas  the  Canadian  Pacific  Railway  Company  has  constructed  a  railroad  through 
the  State  ofMaiue,  under  a  charter  granted  hy  our  Legislature,  which  makes  connec- 
tion with  the  railroadfi  of  our  State: 

Eesolvffl,  That,  in  our  judjiment,  good  faith  requires  tliat  that  com])any  should  have 
all  the  privileges  now  allowed  hy  the  laws  of  the  United  States  for  the  transportation 
of  merchandise  through  this  State  to  and  from  points  in  the  Dominion  of  Canada,  ami 
that  all  facilities  should  be  given  for  the  transportation  of  breadstutfs  and  other  mer- 
chandise to  and  from  all  points  in  our  Western  States  over  railroads  lu  Canada  to  aud 
from  all  points  in  this  State  and  connecting  railroads. 

J\'esoh-c(l,  That  Mayor  C.  F.  Bragg,  Hon.  J.  S.  Wheelwright,  ITon.  E.  B.  Nealley,  Hon. 
I/ysiiiider  Strickland,  Hon.  Lewis  Barker,  Hon.  J.  P.  Bass,  Hon.  .John  L.  Ciithr,  Hon. 
D.  F.  Davis,  C.  P.  Stetson,  esq.,  B.  B.  Thatcher,  esq.,  John  S.  Jenncss,  esq.,  and  Jjiincs 
Tobin,  esq.,  be  appointed  a  connnittee  to  appear  before  Senator  Culloni's  committee  to 
present  this  rettolve  aud  make  such  representations  as  may  seem  to  them  to  be  neces- 
sary, and  to  act  in  conjunction  with  a  similar  committee  already  appointed  by  the 
Bangor  and  Piscataquis  Eailroad. 

Henry  Lord, 

President. 
J.  P.  Bass, 
Searetary  pro  icm. 

Mr.  Nealley.  We  appear  also  as  a  committee  of  the  Bangor  and 
Piscataquis  Kailroad  Company,  which  lias  a  short  line  of  about  '.•()  miles 
running  from  Bangor  to  a  point  on  the  Canadian  racitic,  which  line  has 
been  built  almost  entirely  by  the  city  of  Bangor  and  controlled  by  the 
city  of  Bangor.  The  line  was  built  for  the  purpose  of  connecting  with 
the  Canadian  Pacific  when  completed.  We  shall  probably  avail  our- 
selves of  your  privilege  to  file  some  statement  hereafter  in  connection 
with  this  matter.  At  present  we  will  not  take  up  your  time  only  so  far 
as  one  of  our  number  is  concerned,  and  ftuther  than  that  we  desire  to 
appear  by  counsel,  Mr.  Charles  P.  Stetson. 


424  TRANSPORTATION    INTERESTS    OP 


STATEMENT  OF  CHARLES  P.  STETSON. 

Charles  P.  Stetson,  an  attoruey-at-law,  of  Bangor,  Me.,  appeared. 

The  Chairman.  You  may  proceed,  Mr.  Stetson,  without  interruption 
from  the  cominittt'e. 

Mr.  Stetson.  Mr.  Chiiirman,  and  jrentUMnen  of  the  cointnittee,  the 
city  of  Bant,'or,  the  principal  town  of  e;istern  Maine,  and  the  Jian<;or 
anii  Pist-atacjuis  Kailroad  Company,  wliich  has  a  railroad  extendniir 
from  lianjjor  to  Moo.sfliead  Lake,  al»ont  IH)  miles  in  h'n<,Mh,  have  full  in- 
terest in  tiie  sul»jee.t matter  of  y«»ur  investijration.and  liave  thuu^dit  that 
their  views  and  position  nii^dit  be  worthy  ot  your  consideration  witli 
refereuce  to  tlie  matter  before  you.  , 

BANGOR'S  CONNECTION   WITH   THE  WEST. 

We  are  intereste<l  in  connection  with  tlie  Canadian  PAcific  Railroad  in 
this  manner:  lianiror.on  the  Penobscot  liiver,  the  i)rinci  pal  city  of  eastern 
Main«>,  many  yearsa^'o  embarked  in  the  enterpriseof  l>uiidin;;the  Hanjror 
and  I*iscata(piis  Kaihoad  in  a  northwesterly  direction  toMooseiiead  Lake, 
and  put  into  that  enterpris*'  in  all over.i^hbiHi.ooo, between  sl,()(H»,(KK>and 
$1, .■)(»(),((()().  Oue  object  of  buildin;,'  this  road  was  to  form  a  connection 
with  a  contemplated  route  westerly  from  Moosehead  Lake  to  the  West- 
ern States,  coniu'ctiu};  with  the  railroad  system  of  Canada.  The  city 
of  lian;,'or  had  not  the  abdity  to  carry  out  this  scheme  and  it  lay  dornumt 
for  a  considerable  length  of  time.  They  finished  their  roatl  to  tl'.e  lake. 
Afterward  the  Canadian  Pacilic  Pailroad  became  juissessed  of  the 
charter  which  had  been  {jranted  by  the  State  of  Maine  for  buildinj;  the 
railroad  from  Moost-head  Lake  to  the  western  line  of  the  State,  and  they 
have  just  finished  the  constructiim  of  a  line  of  railroad  from  the  western 
line  of  the  State  to  the  foot  of  M(»osehead  Lake,  about  70  miles,  thence 
in  a  southwesterly  (lirection  conne<-tin^'  with  the  Maine  Central  Kailroad, 
whicli  is  the  principal  railroa<l  system  of  the  State  of  ^Liine,  at  a  place 
calle<l  Mattawamkea;;-,  and  thence  to  tin'  city  of  St.  John. 

Now  the  city  of  lianj^or  is  interested  in  its  counection'u  ith  this  road 
in  this  way,  tliat  it  {jfives  them  a  short  route  to  the  \Vest.  The  distance 
over  this  lineof  railroad  and  its  connections — especially  the  road  called 
the  "vSoo"  route— is  ab*>ut  the  same  distance,  Minneapolis  to  Lan- 
fjor,  as  from  Minneai)olis  to  Boston  by  the  American  routes,  and  about 
the  same  distance,  within  40  miles,  as  the  shortest  distance  to  the  port 
of  Portland  by  the  (Irand  Truid<.  We  are  interested,  may  it  i)lease  the 
committee,  in  havin,:,ahe  intercourse  ami  c(Uinection  with  this  Canadian 
I'acitic  road  free  from  restrictions  as  luuch  as  possible. 

The  city  of  Banjjor  is  a  distributinj;  i)oint  in  the  eastern  part  of  the 
State.  We  want  to  be  free  from  any  hindrance  to  a  free  passaf,'e  of 
freifjhts  to  I'angor,  and  we  mainly  appear  in  the  same  view  as  our 
friends  from  Portland  who  were  before  you  on  Saturday,  as  our  position 
is  very  similar  to  theirs. 

I  will  then'fore  not  occujty  your  time  by  fjoineover  the  same  ground 
which  they  did,  because  1  think  it  must  be  evident  to  the  committee 
that  a  statement  of  our  position  shows  our  interest  in  th\s  nnitter  and 
demonstrates  that  we  should  have  as  favorable  connections  with  the 
Canadian  Pacific  as  possible,  in  order  to  brin<j  us  as  near  as  jiossible  to 
the  <rreat  West,  that  we  may  have  its  products  an<l  ri'ach  a  market  in 
the  West   that  must  have  certain  of  our  products,  ami  it  wouhl  be  for 


THE    UNITED    STATES    AND    CANADA.  425 

the  benefit  of  onr  railroad,  the  benefit  of  our  city,  iir,<\  the  bcnelit  of 
that  part  of  the  State  of  Maine  that  the  connection  should  be  a«  un- 
trammeled  by  any  laws  and  regulations  as  may  be. 

THE   CANADIAN  PACIFIC  BRANCH  IN  MAINE. 

The  question  has  been  discussed  here  as  to  competition  with  Canadian 
points,  such  as  St.  John,  but  that  does  not  stand  in  the  way  of  inter- 
course and  a  connection  without  shackles  and  without  legislation  wliich 
might  impose  restrictions,  because  by  the  charter  granting  the  i)rivilege 
to  this  road  to  pass  through  the  State  of  Maine  a  provision  is  made 
which  we  think  protects  us  in  the  matter. 

The  Chairman.  That  is  a  State  charter,  1  suppose. 

Mr.  Stetson.  A  State  charter.  The  charter  was  originally  given  to 
another  international  railroad  company,  and  was  granted  to  citizens  (tf 
Bangor,  principally,  with  a  view  that  with  the  Bangor  and  IMscatacpiis 
liailroad  they  should  have  a  close  connection  to  the  West.  But,  as  1 
stated  before,  this  road  afterward  came  under  the  control  of  the  Cana- 
dian Pacific  and  they  built  an  independent  line  from  Moosehead  Lake 
easterly,  against  the  wishes  of  the  Bangor  and  Piscataquis  liailroad 
Company. 

The  Canadian  Pacific  went  to  the  Legislature  of  Maine  and  asked  for 
a  charter  for  a  road  which  they  said  would  aftbrd  a  more  direct  route 
from  Mooseliead  Lake  easterly.  The  Legislature,  in  granting  them  this 
right  against  the  protest  of  the  Bangor  and  Piscataquis  Raihoad  Com- 
pany, which  expected  to  be  a  i)art  of  the  through  line,  placed  upon  them 
certain  restrictions  which  prevent  any  competition  with  St.  John  or 
the  provincial  i)orts,  and  with  the  permission  of  the  committee  1  will 
state,  as  it  may  be  germane  to  the  subject-matter  of  this  hearing,  that 
it  was  provided  that — 

Said  luternational  Railway  Compnny,  its  lessees  and  assi<!;ns,  shall  freely  deliver 
to  and  receive  from  connecting  railroad^,  tlieir  lessees  and  assifiiis,  iiassciijit-is  und 
also  cars,  with  or  without  merchandise  loaded  therein,  and  shall  iitfurd  nasoiniMe 
facilities  at  its  connection  with  said  railroads  for  exchange  of  said  passi  ngcis  and 
cars;  and  said  International  Railway  Company,  its  Uissees  and  assigns,  .•shall  deliver 
passengers  and  freight  to  and  take  the  same  from  connecting  railroads  in  this  Slate, 
its  lessees  and  assigns,  without  discrimination,  and  shall  make  ami  maintain  their 
rates  with  all  connecting  railroads  in  this  State,  their  lessees  and  assigns,  i>ro  rata 
and  according  to  the  distance  carried  on  the  railroad  of  said  corporation,  its  lessees 
and  assigns. 

Nothing  herein  contained  shall  deprive  any  railioad  contracting  with  said  Inter- 
national Railway  of  the  benelit  of  the  general  laws  relating  to  connecting  railroads. 

That  provision  in  the  charter,  we  think,  protects  us  and  gives  us  fiiir 
rates  over  the  Canadian  Pacific,  so  that  no  trade  will  be  diverted  to 
the  ports  of  the  Lower  Provinces  to  the  prejudice  of  our  citizens,  as  tlu-y 
are  called. 

With  the  permission  to  file  a  brief  of  our  case,  I  will  rest  the  matter 
here. 

The  Chairman.  Suppose  you  had  not  this  Canadian  connection,  how 
would  you  get  to  the  West  ? 

Mr.  Stetson.  Our  route  is  by  what  is  called  the  Maine  Central  bail- 
road  Company,  which  has  its  connections  at  Boston  and  Portland  by 
the  Grand  Trunk,  and  by  the  railroads  centering  m  Boston  and  >ew 
York. 

The  Chairman.  Your  outlet,  then,  wonld  be  by  way  of  Boston,  as  1 

understand  you  1 


426  TRANSPORTATION    INTERESTS    OF 

Mr.  Stetson.  It  would  be  by  the  Maine  Central  Kailroad  by  the  way 
of  Jjoston,  Porthind,  and  New  York.  We  have  water  couuection,  as 
you  know,  and  are  protected  in  that  manner. 

The  Chairman.  Jlowlon<;have  you  had  these  connections  you  speak 
of  with  ihe  Cana«lian  roads! 

Mr.  Stetson.  Jt  is  proper  to  state,  in  answer  to  your  question,  that 
tliis  road  lias  just  been  finislied,  aiul  our  advantages  are  in  the  future, 
and  are  prosi)e('tive  rather  than  based  on  a  judjjfinentof  what  lias  taken 
j)la('e.  Tlie  road  has  hitely  been  eoinideted,  and  has  cx)ninieiiced  the 
runnin<;  of  its  trains  this  spring.  1  therefore  say  that  our  advantages 
are  prospective. 
The  CiiAiuMAN.  You  have  not  realized  the  advantages  as  yet? 
Mr.  Stetson.  No,  sir. 

Tiie  Chairman.  Do  you  think  it  will  make  any  great  dillerence  to 
you  in  the  way  of  cheapening  transportation  t 

Mr.  Stetson.  We  anticipate  tliat  it  will.  We  expect  that  it  will 
give  us  lower  rates  and  will  benetit  our  road  from  liangor  to  the  lake, 
alVording  cheaper  rates  on  all  western  jtroducts  for  BangOr  aiul  that 
l)art  of  lilt'  Slate. 

Sfiiatoi-  (lOiOiAN.  What  is  the  length  of  this  International  road  which 
the  Canadian  Pacific  controls  ! 

Mr.  Ste'ISON.  It  is  about  14.5  miles,  extending  from  the  western 
l)ouiidary  of  the  State  to  a  junction  with  the  Maine  ('entral  Railroad  at 
a  i)lacc callc<l  Mattawanikeag,  thence  continuing  under  a  tratli(r  arrange- 
ment on  that  road  about  !.")(»  miles,  making  a  distance  of  something 
over  3((0  ndles. 

Senator  CJoKMAN.  That  is  a  railroad  subsidized  by  the  Canadian 
Cioveniment  ? 

Mr.  Stetson.  Y'es,  sir;  subsidized  by  the  Canadian  Government. 
The  amount  and  conditions  of  the  subsidy  are  not  clearly  in  my  mind 
now,  but  it  is  a  considerable  subsidy,  grantctl  to  the  company  for  the 
puiposc. 

Senator  (ioraian.  You  do  not  know  the  amount  of  that  subsidy! 
I\Ir.  Stetson.  No,  I  do  not. 

Mr.  Neaeeev.  I  Ihiuk  the  Ciovernnient  gave  $L'.')0,(HK>  a  year  for 
twenty  years. 

Mr.  Stetson.  The  annuity  was  capitalized  for  the  purpose  of  ena- 
bling the  building  of  the  roail.  The  main  purpose,  I  suppose,  of  the 
Dominion  is  to  make  a  close  connection,  or  a  short  route,  between  the 
Upper  and  Lower  Provinces,  and  the  building  up  ol  the  ports  of  ]NIon- 
treal,  St.  John,  and  Halifax. 

Senator  Corman.  It  has  been  stated  that  there  is  a  subsidized  line 
of  steamers  at  St.  John  running  in  connection  with  the  Canadian 
Pacific.  Would  not  the  natural  tendency  of  the  controlleis  of  the  road 
be  to  run  tlu'ir  freight  through  to  the  end  of  their  line  at  Halifax,  or 
St.  John,  and  then  ship  abroad  by  steamers  rather  than  from  your 
l)ort  f 

Mr.  Stetson.  That  is  a  matter  that  hardly  comes  within  our  view  of 
tluM-ase,  because  we  are  not  an  expoiting  port.  It  would  not  alVect  us 
as  it  would  the  city  of  Portland.  Our  advantage  by  this  line,  as  we 
imagine,  is  the  giving  to  us  of  cheap  rates  on  western  products  destined 
to  Hangor  ami  our  j)art  of  the  State. 

'J'iie  Chairman.  Foryttur  own  consumi)tion  ? 

Mt.  Sti'/tson.  For  our  own  coiisumi)tion,  and  it  gives  us  more  busi- 
ness on  the  line  of  railroad  in  which  the  city  is  largely  interesteil. 
There  is  one  road,  and  perhaps  more,  chartered  from  IJangor  to  the  sea- 


THE  UNITED  STATES  AND  CANADA.  427 

coast  of  Maine.  Castine  is  one  of  the  ports  whicb  uiav  be  aflVctcd  but 
I  Lave  not  the  facts  with  reference  to  all  this  in  my  mind  at  this  time. 

The  Chairman.  How  near  does  this  connection  yon  speak  of  briii" 
you  to  Dnluth  as  compared  with  the  American  lines  ? 

Mr.  Stetson.  I  think  the  difference  is  70  or  80  miles.  As  I  .stated 
we  are  as  near  to  St.  Paul  by  this  route  as  is  Boston,  or  within  H)  miles 
as  near. 

Senator  Blair.  Do  you  understand  that  the  principal  termiims  of 
the  Canadian  Pacific  on  the  Atlantic  is  to  be  Ilalifaxor  St.  John  ? 

Mr.  Stetson.  St.  John  or  Halifax.  I  snppose  there  is  ccnnpetition 
between  those  two  ports  in  reference  to  the  steamers,  to  which  I  under- 
stand the  Canadian  Government  has  granted  a  subsidy.  Pjiriics 
representing  St.  John's  interests  went  this  spring  to  Ottawa  to  get  the 
benefit  of  that  subsidy  and  make  St.  John  the  terminus,  but  I  do  not 
know  with  what  success. 

Senator  Blair.  Is  tnere  understood  to  be  any  competition  between 
Portland  and  St.  John  or  Halifax  for  the  transportation  of  tiie  trallic 
coming  over  the  Canadian  Pacific  which  goes  across  the  ocean  i 

Mr.  Stetson.  I  think  not. 


STATEMENT  OF  J.  P.  BASS. 

Mr.  J.  P.  Bass,  secretary  ot  the  Board  of  Trade  of  Bangor,  appeared. 

The  Chairman.  We  are  ready  to  hear  you,  Mr.  Bass. 

Mr.  Bass.  I  will  state  to  the  committee,  as  secretary  of  the  Board  of 
Trade  of  Bangor,  in  reference  to  what  Mr.  Stetson  said  with  respect  to 
our  not  being  an  exporting  port,  that  we  have  and  always  have  liad  an 
arbitrary  as  between  the  billing  points  of  the  Grand  Trunk  and  the 
roads  terminating  at  Boston.  Now,  we  believe  that  we  should  get  all 
the  rights  that  we  are  entitled  to  have  by  this  road  being  built  a  moss 
Maine,andifwehadourrights  we  would  be  an  exporting  port  lor  lumber 
and  even  for  the  i^roducts  from  the  West,  excepting  in  the  wintei'.  Two 
thousand  ton  ships  can  load  at  the  wharves  at  Bangor  and  not  ground, 
and  with  freight  carried  through  to  the  Provinces  as  cheajylv  as  it  is  we 
would  become  an  exporting  point,  and  the  same  would  apply  to  Castine. 
That  is  as  good  a  port  as  there  is  on  the  coast  of  JMaine. 

There,  on  the  Penobscot,  is  just  as  good  a  port  as  Boston,  and  it  only 
freezes  there  when  it  freezes  at  Boston.  Vessels  of  any  size  can  load 
there.  It  seems  to  us  if  there  is  to  be  any  legislation  willi  respect  to 
these  Canadian  roads  for  the  protection  of  American  ports,  that  the 
Canadian"  lines  should  be  obliged  to  deliver  freight  as  cheaply  i)er  mile 
to  connecting  lines  in  the  United  States  as  they  carry  it  through  to 
the  ciiies  in  the  Lower  Maritime  Pioviiujes.  Then  the  American  roads 
and  American  ports  could  not  be  interfered  with,  because  aconnecting 
road  at  Newport  could  take  the  freight  over  their  line  as  cheaply  ju-r 
mile  as  the  Canadian  roads  could.  Bangor  and  Castine  and  the  port  at 
Mount  Desert  are  better  ports  than  St.  John  for  that  business. 

The  Chairman.  And  they  are  all  in  the  United  States? 

Mr.  Bass,  All  in  the  United  States. 

Senator  Blair.  Would  you  make  that  a  condition  upon  the  r:.m- 
merce  coming  from  Canada  for  exportation  ? 

Mr.  Bass.  If  I  had  the  power  I  would  make  it  that  the  (\inadian 
roads  should  not  carry  freight  of  the  same  class  per  mile  through  any 
section  of  the  United  States  for  themselves,  whether  it  was  Canadian 


428  TRANSPORTATION  INTERESTS  OF 

or  United  States  freiglit,  at  a  less  rate  per  mile  tbau  that  frei;,'bt  could 
be  taken  oil"  and  delivered  to  a  connect iiij;-  road  at  this  end;  that  is,  the 
people  of  the  United  States  and  ihe  American  ports  should  be  given 
just  as  low  a  rate  i)er  mile  lor  passengers  and  freight  coming  to  Ameri- 
can jwrts  find  points  as  the  ( -aiiadian  roads  carry  it  through  to  their 
own  jirovinccs.  The  i)rincii»le  of  that  is  applied  in  the  charter  from  the 
State  of  Maine,  if  not  in  the  United  States  law. 

Senator  Gouman.  Is  there  any  route  going  entirely  through  Cana- 
dian territoiy  to  reach  St.  John  f 

Mr.  15ASS.  I  think  there  is,  by  the  Intercolonial  road,  but  it  is  300  or 
400  miles  longer.  They  could  avoid  the  United  States  entirely  by  run- 
ning above  the  northeast  corner  of  Maine  through  Canada.  In  winter 
the  snow  is  so  deep,  however,  that  tiiey  eould  not  Ueepsuch  a  road  open 
without  great  expense,  and  winter  is  trie  time  when  tliey  would  want  to 
use  th<*  road  to  reach  poits  in  the  Lower  Provinces.  Tiiat  wouldbean 
impracticable  route  with  which  to  compete  for  American  business,  and 
consecjuently  they  decided  to  run  tlirough  tin'  State  of  Maine,  it  was 
always  understood  that  this  road  was  to  go  overTiO  miles  of  the  IMscat- 
a(piis  road.  They  came  down  to  the  Maine  Legislature  with  a  great 
l<>bl)y,  and  the  legislature  ])asst'd  a  bill  granting  them  the  right  to  run  a 
road  through  Maine,  <piiti'  a  portion  of  which  is  parallel  to  tlu^  Uangor 
and  Piscataquis  Railway.  Tlien  the  Legislature, on  the  presentation  of 
tiie  tacts  before  them,  |)assed  an  amendtnenf  giving  all  the  connecting 
radroads  in  Maine  the  right  to  take  Ireigl.t  pro  rata  ac«'ording  to  the 
distance  carried.  Now,  if  that  principle  should  be  woven  into  the 
Unit«'d  States  law,  that  would  juotect  evt-ry  American  i)ort,  because 
<'v«'ry  American  i)ort  is  nearei- than  the  poitsin  the  Dominion.  IJangor 
is  oO  miles,  I  think',  from  IJro-wnville,  and  from  Lrownville  to  St.  .John 
is  ISO  mih's. 

Senator  GomiAN.  So  that  von  think  the  only  feasible  rout<'  is  through 
Maine  ? 

Mr.  I»Ass.  Yes,  sir.  Now,  if  our  American  ports  and  our  American 
railroads  coidd  have  the  right  of  bonding  ajid  the  |)rivilege  of  <loing 
business  through  our  own  country  at  the  same  rate  per  mile,  we  eoidd 
thi'ii  deliver  it  and  g«'t  it  into  our  ])orts  cheaper  than  the  Canadians 
<'ould.  That  wouhl  give  us  ample  jjrotection.  IJoston  would  get  the 
advantagi'of  it,  and  so  would  Portland. 

The  CiiAimiAN.  That  is  all,  Mr.  IJass. 


STATEMENT   OF  A.  M.  DEVEREDX. 

Mr.  A.  ]\r.  Dkvereux,  representing  the  Castine  Kailway  and  Navi- 
gation Company,  appeared. 

The  Chairman.  AVhere  do  you  reside! 
Mr.  Dkvereux.  1  live  at  liangor,  Maine. 
The  Chairman.  AVhom  do  yon  represent  f 

Mr.  Devereux.  I  represent  the  Castine  IJailway  and  Navigation 
Company,  and  the  inhabitants  of  Castine. 

CASTINE   AS  A  CANADIAN   PACIFIC    TERMINUS. 

The  principal  point  which  we  desire  to  make  is  the  advantage  of  Cas- 
tiiu^  as  a  terunnusfor  theCamnlian  Pacitic.  and  for  the  purpose  of  more 
fully  explaining  it   I  will  read  a  letter  addressed  to  the  committee  by 


THE  UNITED  STATES  AND  CANADA.  429 

the  selectmen  of  Castine,  which  voices  the  sentimeut  of  the  business 
men  in  Eastern  Maine.    The  letter  is  as  follows : 

To  the  Interstate  Commerce  Committee,  United  Slates  Senate,  Boston,  Mass.  : 

Gknti.emen  :  We  recommend  to  you  A.  M.  Devereux,  Koneral  mana^'er  of  tho  Cas- 
tine Railway  and  Navigation  Couiiiany,  wliich  compaiiv  propose  to  connect  tho  Can- 
adian Pacific  Railway  at  Brownville,  this  State,  with  tliis  harbor. 

Mr.  Deverenx  will  represent  to  yon  tho  vicwsof  this  section  in  rejrard  to  tin-  bond- 
ing privileges  desired  by  the  Canadian  Pacific  Itailwav,  and  the  advantages  to  eaht- 
ern  Maine  and  the  Canadian  Pacific  Railway  as  well  of  establishing  a  terminus  for 
that  road  here. 

If  they  cross  this  State  with  their  maiue  line,  encompassing  tho  world  in  compe- 
tition with  our  railway  and  steamship  routes  and  terminals,  on  both  sides  of  tliiscou- 
tiueut,  eastern  Maine's  interior  and  sea-coast  can  be  rapidly  developed  by  conned  ing 
the  Canadian  Pacific  Railway  with  this  harbor,  and  the  business  of  that  road  can  bo 
greatly  facilitated  by  the  advantages  of  this  harbor,  and  this  route,  which  is  tho 
shortest  through  route  from  the  Northwest  to  Europe. 

The  avowed  purpose  of  the  Cauadian  Government  is  to  steer  clear  of  our  Maine  sea- 
ports, continuing  on  with  their  main  line  to  provincial  sea-ports  for  a  terminus  for 
passengers,  mail,  and  freight. 

If  successful  in  securing  the  bonding  privileges  they  desire,  it  crushes  out  our  ef- 
forts to  establish  railway  and  steam-ship  t;ommunication,  upon  which  our  develop- 
ment depends,  and  capitalists  refuse  to  co-operate  with  us. 

Should  our  Government  grant  the  Canadian  Pacific  Railway  the  privilege  of  ope- 
rating a  fast  mail  and  passenger  route  through  the  State  of  Maine,  via  Halifax,  to. 
Europe,  and  grant  the  Ijonding  privilege  through  Maiue  on  all  freight,  the  final  des- 
tination of  which  is  in  the  Maritime  Provinces,  and  on  all  freight  originating  in  the 
Maritime  Provinces,  the  final  destination  of  which  is  beyond  the  western  limits  of  our 
State,  we  think  our  Government  should  protect  our  interests  and  encourage  tlio  de- 
velopment of  our  section  by  demanding  that  all  European-bound  freigiit  originating 
on  United  States  soil,  at  least,  should  be  shipped  from  a  United  States  terminus. 

L.    G.    PlIILBKOOK, 

Geokgk  L.  Wekks, 
Geo.  W.  Perkins, 

Selectmen  of  Castine,  Me. 

We  take  the  ground  that  the  shortest  route  to  Europe  from  our  North- 
west is  by  way  of  the  Canadian  Pacific,  Montreal,  Bangor,  and  Castiiu", 
and  by  steamer,  and  we  want  the  privilege  of  that  natural  advantage. 
We  feel,  as  far  as  we  are  concerned,  that  we  can  afford  to  be  luMgli- 
borly  and  allow  the  Canadians  to  communicate  between  their  Uppt-r 
and  Lower  Provinces  by  going  acrossour  State  with  their  productions  in 
bond. 

The  provision  in  the  charter  granted  by  the  legislatnie  of  tlic  State 
of  Maine  that  the  Canadian  Pacitic  shall  deliver  freight  prorata  !)y  the 
mile  to  our  connecting  roads,  1  do  not  think  is  quite  so  eflective  as  do 
some,  because  the  Canadian  Pacilic  liailway,  in  reality  as  a  railway,  will 
operate  a  fast  steamship  line  from  Halifax  to  Europe,  and  the  rate  of 
freight  will  be  a  rate  calculated  fVom  the  point  of  origin  to  its  Hn;d  des- 
tinatiou  over  railway  and  steam-ship  combined,  and  we  never  shall  know 
what  our  pro  rata  is  as  the  freight  passes  through  the  State  ol  Maine. 

If  the  freight  goes  through  to  Kuroi)e,  via  Ualifax,  at  a  certani  rate,  we 
never  shall  know  what  proportion  the  railroad  receives,  or  what  pro- 
portion the  steam-ship  receives. 

THE   PROTECTION   OF   AMERICAN  PORTS, 

From  a  national  point  of  view,  when  the  Canadian  Pacific  starts  from 
Australia,  China,  and  Japan,  crosses  the  Pacific,  cros.ses  this  continent, 
bound,  via  Halifax,  across  the  Atlantic  to  Europe,  to  the  exclusion  of 
our  steam-ships,  railways,  and  seaports,  the  only  chance  we  have  to 
protect  our  sea-ports  is  to  impose  conditions  upon  it  when  it  goes 


430  TRANSPORTATION  INTERESTS  OF 

through  the  State  of  Maiue,  to  stipnhite  wliat  chiss  of  freight  it  may 
cany  throujih  in  bond,  and  what  chis.s  it  may  not. 

1  wonhl  not  aUow  tlie  Canadian  Pacific  to  take  freight  in  the  United 
States,  transport  it  through  Canada,  and  then  take  it  through  the  State 
of  Maine  in  l)t>nd  to  reach  the  Lower  Provinces  lor  shipment  to  Europe. 

The  Chairman.  Unless  upon  certain  conditions? 

Mr.  Dkyereux.  1  would  not  allow  them  to  go  through  with  freight 
originating  in  the  United  States  at  all.  We  can  be  neighborly,  as  I 
say,  and  allow  the  Canadian  Pa<Mtic  to  carry  freight  tlirough  iMaine 
which  originates  in  the  Canadian  provinces;  but  we  do  not  propose,  if 
we  have  an,N  thing  to  say  about  it,  to  allow  them  to  do  a  business  in  com- 
j)etiti(>n  with  our  sea-ports. 

Senator  llLAiU.  Do  you  mean  an  export  business? 

Mr.  DioVKREix,  Yes,  sir;  we  do  not  want  the  Canadian  Pacific  to 
l)ick  up  freight  in  the  Unit«Ml  States  and  carry  it  to  Halifax  for  ship- 
ment to  l>uroi>e. 

The  argument  is  iliade  that  this  through  business  does  not  amount  to 
much  anyway.  It  anu)unts  to  a  gieat  deal  in  this  connection.  It  de- 
Vi'lops,  it  builds  up,  it  creates  a  large   business  at  the  terminal  point. 

We  liave  a  iiarlior  at  Castine  whicli  is  the  best  harbor  <ui  thisc(»n- 
tinent.  Theie  is  no  harbor  on  the  Ameiiean  continent  where  the  facil- 
ities are  so  ample,  an«l  which  is  so  ea.sy  of  approach.  We  take  the 
grouiul  that  if  yon  make  this  ruling  that  the  Canadian  Pacific  shall  be- 
obliged  tt»  receive  and  ship  United  States  freight  at  a  United  States 
sea-port,  by  (h  nying  the  bonding  privilege  acro.ss  the  State  of  Maine  on 
that  ela.ssof  freigiit,  then  the  interests  of  our  sea-p«)rts  will  be  protected, 
while  if  ("anadinn  roads  aiu*  granted  the  boiiiling  privileges  on  tiiis  (;lass 
of  freight  the  Canadian  i'aeitic  and  the  (Irand  Trunk  akso  will  crostT 
our  State  on  roads  which  they  have  already  built  or  will  build  or  hire 
from  the  Maine  Central  Pailroad,  and  by  the  aid  ()f  subsidies  divert 
business  from  our  sea  ports  to  theirs. 

Senator  P.LAIR.  How  far  is  it  from  Hrownville,  the  point  of  diverg- 
ence, to  llalilax  f 

Mr   Devkkei'X.  Four  hundred  ami  sixty-six  miles. 

Senator  liLAiu.   llow  far  is  Hrownville  from  Castine! 

Mr.  Dkvkreux.  Eighty-three  miles.  Should  the  Canadian  Pacific 
adopt  Castine  as  a  shij)ping  i)ort  there  would  be  3s;'>  miles  less  rail 
transportation  than  by  way  of  Halifax,  and  L'15  miles  moie  water  trans- 
l)ortalioii.  Ereight.  of  course,  is  mov«'d  more  cheaply  by  water  than 
by  r;iii. 

If  an  ocean  steamer  should  start  from  Liverpool  bound  to  a  connect- 
ing road  in  America,  coming  to  Halifax,  and  anotlu'r  steanu'r  should 
start  from  Liverpool  to  Castine,  those  two  steamers  to  connect  with 
trains  for  Montreal,  one  at  Halifax  ami  one  at  Castine,  there  would  be 
one  and  one-hall  hours'  difference  in  the  arrival  of  those  trains  at  Mon- 
treal, the  trains  running  M)  miles  an  hour  and  steam-boats  15  miles  aa 
hour.  A  railroad  can  not  aflonl  to  operate  liS'i  extra  miles  of  railroad 
to  save  the  ojieralion  of  215  miles  of  steam-boat.  The  Hendersons,  in 
agreeing  to  put  on  their  line  of  steam  ships,  stipulated  that  they  must 
be  allowed  to  continue  t»n  to  a  jiort  in  Maine.  They  will  not  make  Hal- 
ifax their  only  terminal  point. 

The  Chairman.  Who  are  the  Hendersons? 

Mr.  Deveuei'X.  They  :ire  London  capitalists.  The  Dominion  Gov- 
ernment offered  tlu'iii  a  half  a  mdlion  dollars  if  they  would  make  Hali- 
fax their  i)nly  terminal  point.     The  Hendersons  relu.se*!  to  do  it,  saying 


THE    UNITED    STATES   AND    CANADA,  431 

that  it  would  be  impossible  to  do  so  unless  tUey  could  continue  on  to  a 
j)ort  in  Maine,  also. 

THE  POLICY  OF   THE  CANADIAN  PACIFIC. 

You  asked  a  question  on  Saturday  of  Mr.  Putnam,  which  he  was  un- 
able  to  answer,  aud  which  I  think  1  can  answer. 

The  Chairman.  We  would  like  to  have  you  do  so. 

Mr.  Devereux.  Mr,  Van  Home,  the  president  of  the  Canadian  Pa- 
cific Kail  way,  was  interested  in  getting  a  charter  for  his  road  through 
the  State  of  Maine,  and  the  Maine  Central  was  also  interested  in  that 
way,  because  their  road  is  to  be  used  by  the  Canadian  Pacific  from 
Mattawamkeag  east  to  the  State  line,  50  miles,  and  they  all  api)eared 
before  the  Legislature  and  applied  for  this  charter.  1  "wanted  it,  roo, 
because  1  knew  that  Castine  possessed  great  advantages  in  point  of 
harbor,  etc.,  aud  that  via  Castine  was  the  shortest  route  Irom  the  North- 
west to  Europe.  I  know  this,  because  1  was  born  and  raised  there.  I 
know  its  natural  advantages.  Sol  favored  the  granting  of  the  char- 
ter in  the  liCgislature  of  the  State  of  Maine,  and  1  tried  to  get  I\Ir.  Van 
Home  to  favor  Castine. 

Now,  he  knows  the  advantages  of  Castine,  but  the  MacDonald  gov- 
ernment in  Canada  have  an  avowed  purpose  of  steering  clear  of  onr 
American  ports  and  favoring  Halifax,  and  I  suppose  Mr.  Van  Uorne  is 
acquainted  with  the  wishes  of  the  MacDonald  government.  But  I  titok 
the  ground  that  the  Canadian  Pacific  would  eventually  be  driven  to 
Castine  whether  they  wanted  to  come  there  or  not;  that  the  Govern- 
ment of  the  United  States  would  not  permit  any  such  thing  as  divert- 
ing our  freight  to  Canadian  sea-ports;  that  the  ('anadian  Pacific  would 
have  to  come  to  Castine  in  the  end. 

Mr.  Van  Home  takes  the  ground  that  the  shortest  route  will  absorb 
the  through  freight.  I  read  now  from  a  letter  addressed  to  me  by  him 
on  the  22d  of  January,  1887.    He  says: 

We  are  already  pretty  well  aware  of  the  advantgcs  of  Caatiiie  Harbor,  but  to  buibl 
and  operate  a  branch  to  any  of  the  Atlantic  seaports  would  be  outside  of  the  jwlicy 
of  this  company.  We  will  always  be  ready,  however,  to  interchange  business  on 
equal  teru)8  to  all  lines  building  to  a  connection  with  ours,  but  wo  can  not,  under 
.any  circumstances,  undertake  either  the  construction  or  the  operation  of  theliue  you 
propose. 

Senator  Reagan.  How  does  that  last  sentence  read? 
Mr.  Devereux.  He  says : 

But  we  can  not,  nnder  any  circumstances,  undertake  either  the  construct  itm  nr  llie 
operation  of  the  line  you  propose. 

Senator  Blair.  That  is  a  line  to  Castine! 

Mr.  Devereux.  Yes,  sir ;  but  it  means  any  line  leading  to  an  Ameri- 
can seaport. 

Senator  Gorman.  What  did  you  say  was  the  date  of  that  letter  I 

Mr.  Devereux.  It  is  dated  the  22d  of  January,  1887.  I  have  re- 
ceived other  letters  embodying  the  same  idea,  but  that  is  rather  chsirer 
than  the  others,  and  so  I  brought  it.  . 

Now  then,  Mr.  Van  Home  has  always  stated  that  the  Canadian  1  a- 
cific  would  connect  with  us  and  give  us  the  same  terms  that  they  wonhl 
give  any  connecting  road.  He  has  always  been  fair  about  that,  and  it 
always  seemed  to  me  that  the  Canadian  Pacific  were  being  coerced  hy 
the  Canadian  Government  to  go  to  Halifax  against  their  own  will. 

I  wanted  Mr.  Van  Home  to  give  some  sort  of  an  idea  about  wliat 


432  TRANSPORTATION    INTERESTS    OF 

proportion  of  freight  we  might  reasonably  expect  if  we  built  our  road, 
and  80  wrot*5  him.    lie  replied  as  follows : 

The  Canadian  Pacific  Railway  Co., 

Montreal,  October  2A,  1887. 
Dear  Hiy. .  Absence  ami  pressure  of  busiuoss  have  proveuted  earlier  reply  to  your 
favor  of  tl-41  '21tli  ultimo. 

It  wonld  lu»  iiii]>ossil)l«  for  us  to  say  what  proportion  of  business  we  could  or  would 
give  your  line.  Wo  intend  to  treat  all  connectiuf^  lines  alike  in  the  matter  of  intcr- 
clian^^e  of  trallie,  and  the  one  that  atVords  th(^  greatest  adsantanes  to  shippers  will  nu- 
donbtedly  get  the  largest  share  of  the  business.  It  will  make  little  dilVerence  to  us 
whither  the  freight  for  the  Now  England  seji-board  goes  to  Castine,  or  Host  on,  or 
t'orUan<i.  Every  port  will  be  jdaced,  so  far  as  wo  are  concerned,  on  as  nearly  an 
P'jUul  footing  as  ])ossibli;. 
Yours  Irulv, 

W.  C.  Van  IIoknk, 

f'ice-rreaident. 
K.    M.    DKVKKKt'X,  ?'sq., 

Jlangor,  Maine. 

That  would  not  give  us  any  show  at  all.  If  we  get  any  advantage 
out  of  this  Canadian  racific  we  have  got  to  take  advantage  of  the  fact 
Uiat  thuy  cio.s8  our  ti'iiitoiy. 

THE   HARBOR   AT   CASTINE. 

Senator  Blair.  You  say  Castine  is  the  best  harbor  in  the  country? 

Mr.  DEVERErx.  Yes,  sir,  and  it  is.  I  have  the  exact  data  Jiere  so 
as  to  be  able  to  demonstrate  that  to  you,  and  1  leave  this  chart,  on  a 
large  scale,  on  tile  with  you. 

Senator  IJlaih.  Describe  the  harbor  at  Castine  as  compared  with 
other  harbors  throiiglioiit  the  country. 

Mr.  Deverei'X.  In  entering  Castine  frfun  the  sea  you  enter  the  East 
channel  ot  Penobscot  IJay  at  Saddle  Back  light  house  with  .">()  fathoms 
of  water  on  each  side  of  it,  and  you  can  run  a  steamship  light  on  the 
ledge  on  which  the  light-house  is  built.  There  is  a  broad,  <leep  <'han- 
nel.  perfectly  straight,  \vith  no  obstruct  ion  in  the  way,  l.{  rnih's  to  Eajjlo 
Island  light  house,  and  a  passage  2  miles  wide  there  with  Ki  fathoms 
of  water,  and  another  straight  course  from  there  without  any  obstruc- 
tion to  Castine.  The  banks  are  high  and  well  dcHiu'd,  water  deep  and 
never  fro/en,  and  navigation  is  j)erlectly  simple.  If  a  man  knows  how 
to  navigate  any  kind  of  a  vessel  he  can  navigate  that  channel  at  aii\ 
time.  At  Castine  the  harbor  is  land  locked.  Dilb'rent  portions  (>f  the 
harbor  are  land-locked,  as  well  as  the  harbor  itself,  and  the  channel  is 
wide  and  deep.  There  is  a  water  front  which  is  suitable  and  available 
at  a  low  prici;  for  a  terminus  for  the  largest  steamers.  The  harbor  never 
freezes.  It  is  not  fresh  water  which  Hows  into  the  harbor,  but  salt 
water  from  the  oiien  sea  that  flows  into  and  through  it,  15  miles  into 
the  interior.  It  flows  in  twice  every  twenty-four  hours,  and  the  natural 
drift  of  the  tide  is  by  the  water  front  of  Castine.  We  have  30  to  (JO 
feet  of  water  there  at  low  tide,  and  you  can  reach  that  depth  by  buiUl- 
ing  wharves  from  .^0  to  .iOO  feet  long.  It  is  open  all  the  time,  except 
wIu'U  everything  is  Irozeii  up.  That  harbor  has  only  been  frozen  twice 
in  its  history.  Then  Boston  Bay  was  closed  for  .'{0  miles  to  the  sea, 
and  Long  Island  Sound  was  frozen  the  whole  length. 

The  climate  of  Castine  compares  favorably  with  the  <limate  of  Boston, 
as  is  shown  by  the  temperature  for  the  tbrty  years  «luring  which  a  rec- 
ord was  ke])t. 

I  was  born  and  raised  at  Castine,  and  1  know  all  the  harbors  oC  which 
Mr.  Bass  spoke  just  as  well  as  any  man  who  lives  today.    Take  liock- 


THE    UNITED    STATES   AND    CANADA.  433 

land,  for  instance,  liockland  has  sboal  water,  and  it  is  right  open  on 
the  sea.  Sometimes  sliips  can  not  hind  on  account  of  rough  water,  and 
at  low  tide  they  can  not  land  ;  and  it  will  freeze  up  every  winter  when 
the  breakwater  is  finished.  13ut  at  Oastine  vessels  can  come  in  at  day 
or  at  night,  at  any  time  of  tide  or  any  part  of  the  year,  or  during 
foggy  or  storm. V  weather.  '  " 

The  Chairman.  It  is  a  good  port,  I  f.hould  say. 

Mr.  Devereux.  There  is  no  finer  port  in  the  countrv.  It  is  tlie  only 
very  deep-water  harbor  still  unused  as  a  terminus  for  a  trans-continental 
railroad.  For  a  terminal  point  for  the  Canadian  Pacific  Castine  is  the 
place.  The  Canadian  Pacific  is  pointed  toward  us,  and  we  do  not  want 
them  to  steer  ofl"  with  United  States  freight  to  build  up  Canadian  sea- 
ports at  the  expense  of  ours. 

Senator  Gorman.  What  do  you  know  about  the  subsidy  of  the  line  of 
steamers  owned  by  the  Canadian  Pacific  running  to  Halifax  ? 

Mr.  Devereux.  I  only  know  that  it  was  stated  in  the  Maine  Legis 
lature  that  a  subsidy  of  $5,000,000  was  offered  by  the  Canadian  Gov- 
ernment to  whoever  would  constructtheshortestline  between  the  upper 
and  lower  provinces.  Complaints  were  made  that  the  ui)per  provinces 
received  all  the  advantages,  and  ostensibly  this  was  brought  about  just 
to  favor  those  people  down  there. 

Senator  Gorman.  Then  you  regard  the  Canadian  Pacific  and  its  con- 
nection as  a  political  or  military  road,  rather  than  a  commercial  road  ? 

Mr.  Devereux.  Yes,  sir,  1  do  ;  but  I  regard  it  as  a  commercial  road, 
too,  because  they  use  these  great  subsidies  on  both  oceans  aiul  on  this 
continent,  and  they  can  handle  business  cheaper  than  can  the  United 
States  roads  of  the  same  length,  aiul  cheaper  than  can  United  States 
roads  which  are  even  shorter  than  the  Canadian  Pacific. 

I  regard  the  Canadian  Pacific  in  competition  with  the  Grand  Trunk 
just  as  much  as  it  is  in  competition  with  any  other  road.  They  are 
after  business,  and  the  Canadian  Government  are  after  i)olilical  ad- 
vantages, and  the  road  and  the  Government  unite  and  thus  accomplish 
those  purposes. 

Senator  Gorman.  Now,  your  theory  is  that  if  the  Canadian  Pacific 
utilize  any  portion  of  our  terrrtory  we  shall  make  the  conditions  on 
which  they  shall  do  sol 

Mr.  Devereux.  Yes,  sir. 

Senator  Gorman.  You  think  that  is  the  only  way  in  which  the  Anu-r- 
ican  roads  can  be  protected. 

Mr.  Devereux.  Yes,  sir.  It  seems  to  me  that  the  Canadnin  I  acdic 
can  do  as  they  are  a  mind  to  on  Canadian  soil,  and  this  whole  route 
from  Japan  to  Europe  is  all  under  their  control,  except  that  little  por- 
tion across  the  State  of  Maine. "  They  can  go  around  the  State  ol  Maine 
in  summer,  but  it  is  not  feasible  on  account  of  the  increased  distaiwe, 
and  they  could  not  go  around  in  winter  at  all  on  account  ol  the  (  eep 
snows  along  the  northern  routes  on  their  own  soil,  occasionnig  delays 
to  shippers,  so  they  built  across  the  State  of  Maine. 

AMERICAN  FREIGHTS   SHOULD   GO   TO   AMERICAN  PORTS. 


This  line  across  the  State  of  Maine  is  the  only  feasible  route  which 
they  can  use  in  winter.  It  looks  to  me  as  if  the  Canadian  I  acihc  \a  ere 
going  to  ship  freight  from  Halifax,  by  the  aid  of  a  great  subsi.ly  w  in-  . 
will  practically  annihilate  the  distance  between  ]\  a.ne  ports  ii"*V;;,  iv 
■fax  ;  but  they  can  not  do  it  except  by  this  short  line.  ^^^«;;-'  '';,;' '-^ 
•pbaace  we  get  at  the  Gauftiliai)  r^^C-ltlC  LS  o«  tlii't  line  through  Mimie, 


0043—28 


434  TRANSPORTATION  INTERESTS  OF 

and  I  tbink  Congress  should  consider  the  advisability  of  taking  some 
step  which  will  look  to  the  protection  of  our  sea-ports  as  far  as  our 
freight  is  concerned. 

Senator  Gorman.  You  are  ]>erfectly  satisfied,  as  I  untlerstand  yon, 
that  notwitlistanding  the  a<lvantages  of  your  harbor  at  Castinc,  that 
for  tht'ir  own  purposes  the  Canadian  Pacific  will  divert  the  freight  and 
send  it  to  Halifax,  unless  we  make  conditions  otherwise? 

Mr.  Deyeueux.  Yes,  sir.  The  letters  which  1  liave  read  show  that 
I  have  been  working  this  subject  for  three  years,  and  1  never  could  get 
any  conclusive  answers  from  the  Canadian  Pacilic  reganling  our  sea- 
])orts.  I  always  received  these  evasive  answers;  they  say  they  will 
place  every  port  on  the  same  basis  so  far  as  the  New  England  sea  coast 
is  concerncil,  and  studiously  avoid  saying  anything  about  Canadian 
seaports.  There  was  a  time  when  they  were  boomnig  St.  Andrews, 
]Sew  lirnnswick,  for  the  terminal  i)oint.  1  wrot«^  to  the  Canadian  I'acidc 
oflicials,  and  received  a  reply  that  they  had  not  ciianged  Iheii-  plans. 

Senator  (Ior.man.  Sii|>])ose  you  eoidd  iret  an  arrangement  by  which 
freight  would  be  delivered  at  the  harbor  at  Castine  at  the  same  aggre- 
gate rate  as  freight  would  be  (h'liveix'd  at  Ilalilax,  how  could  you  <'om- 
jx'te  with  Halifax  when  they  havi*  a  subsidized  line  ot  steamers? 

Mr.  l)KVi;KErx.  The  only  way  I  see  out  of  that  is  for  our  Congress  to 
subsidize  a  line  for  us,  and  deny  the  bonding  i)rivilege  to  the  Canadian 
l'a<'!lic  across  our  State  on  Ireight  originating  on  United  States  soil. 

Senat(M-  (ioKMAN.  You  believe  the  subsidy  given  to  the  line  of  steam- 
ers running  to  Halifax  is  live  millionst 

I\Ir.  Dkvkkeux.  a  half  million. 

Semifor  (loKMAX.  Per  annum  ? 

Mr.  I)evei:eix.  Yes,  sir. 

Senator  Gorman.  Now,  in  the  absence  of  Congress  making  such  a 
jirovision  as  you  desire,  you  would  prohibit,  as  I  understand  you  to  say, 
the  transportation  of  Cnited  States  products  across  and  out  of  tlio 
Stale  of  Maim'  for  exportation  at  Halifax  or  any  other  Canadian  port! 

Mr.  l)i:vi',i;i:r\.   Ves,  sir;   that  is  my  idea. 

Senator  (ioiniAN,  1 1  eastern  Maine  sea-ports  can  not  get  the  terminal 
business  for  Ciiited  States  freights,  what  woidd  you  do? 

Mr.  Di'.VKRf.rx.  Shut  out  the  Canadian  Pacilic  entirely  on  this  class 
of  Ireight,  and  let  United  States  roads  haul  it  to  some  other  United 
States  sea-port. 

All  we  ask  is  for  Congress  to  i)rotcct  all  our  sea  ports  aj^iinst  Cana- 
dian and  iJritish  subsiilies,  and  then  let  Castine  take  her  chances  with 
the  rest.     1  believe  in  jtutting  this  matter  on  broad  national  ground. 

With  all  this,  wi>  appreciate  and  desire,  especially  in  east<'rn  Maine, 
the  advantages  of  the  Canadian  Pacilic  as  a  short  connection  between 
New  Kngland  and  our  own  Northwest. 

JJy  tiie  use  of  Camnlian  roads,  P()rt]an<l  by  the  Grand  Trunk,  and 
Castine  by  the  Cana<lian  Pacilic,  are  brought  as  lu-ar  Minneapolis  and 
Diilulh  as  Poston  and  New  Yiuk  are  by  United  States  roatis. 

\\  ithout  the  Grand  Trunk  Portland  would  have  to  i)ay  an  arbitrary 
over  a  Boston  rate  from  the  West  and  Northwest,  by  United  States 
roads. 

Pangor  and  Castine  have  to  i>ay  an  arbitrary  now  on  freight  that 
comes  from  the  West  and  Northwest,  either  by  fl'ie  United  States  roads 
or  by  the  Grand  Trunk  via  P«>riland 

The  Canadian  I'acilic  by  its  shorter  mileage  will  give  P.angor  and  Cas 
tine  a  Portland  and  lioston  rate,  which  will  make  Hangoi  tliedistribut 
ingceiitcr  of  eastern   ^Maine,  and  Castine  the  shipping  port,     These  ad 


THE    UNITED    STATES   AND    CANADA.  435 

vantages  will  be  brought  about  by  protecting  United  States  sea-ports, 
because  it  is  more  to  the  advantage  of  the  Canadian  Pacific  to  use  Cas- 
tine  as  a  shipping  port  than  any  other  jjortiu  New  England,  on  account 
of  the  shortness  of  the  through  route  to  Europe,  and  the  fact  that  tln-y 
can  use  more  of  their  own  road  by  this  route  than  any  otbcr. 

With  our  desire  for  protection  to  our  sea-portsby  denying  the  bonding 
privilege  across  the  State  of  Maine  on  United  States  freight,  we  wisii 
to  couple  a  most  earnest  protest  against  any  legislation  that  will  pre- 
vent the  freest  interchange  of  traffic  between  eastern  Maine  and  the 
West  and  Northwest  by  the  Canadian  Pacific  Kailway,  for  without  their 
competition  we  never  shall  have  Portland  or  Postoli  rates  for  eastern 
Maine,  and  until  we  do  get  them  our  develojimeut  will  be  retarded,  and 
we  shall  have  to  continue  to  pay  tribute  to  Portlan<l  and  Boston,  whose 
merchants  now  have  an  advantage  over  ours  in  supplying  this  sectK)n. 

The  following  letter  was  subsequently  addressed  by  Mr.  Devereux  to 
Senator  Gorman : 

COMPAUATI\TS   DISTANCES  FROM   THE   NORTHWEST   TO   EUROI'E   BY    AMEIMCAX    LINES 
AND   BY   THE   CANADIAN   PACIFIC. 

Bangor,  Me.,  .JhIij  10,  l.<89. 

Dear  Sir:  At  your  request  I  have  prepared  the  tabh)  of  comparative  distaiiceH  in- 
closed. 

By  exaniiniug  tlie  table  you  will  readily  see  that  if  the  Cauadiau  Pacific  Kailway 
were  simply  seeking  for  a  sea- port  for  the  shipment  of  European  freight  they  would 
select  Castine  for  the  following  reasons: 

(1)  They  would  save  a  466-mile  haul  from  Brownville,  Me.,  to  Halifax,  only  A'i. 
miles  of  which  is  over  their  own  road  ;  of  I  he  balance  they  have  .'j(i  miles  from  the 
Maine  Central,  90  miles  from  the  New  Brunswick  Railway,  and  277  miles  from  the 
Intercolonial  Kailway,  a  government  railway  of  Canada. 

And,  in  the  place  of  this  466  miles,  they  would  substitute  an  83-mile  haul  to  Cas- 
tine, and  when  their  steam-ship  has  proceeded  215  miles  on  its  course  from  Castine  to 
Liverpool  it  is  passing  Halifax,  thus  saving  383  miles  of  rail  and  substituting  in  its 
place  21.5  miles  of  water. 

New  Brunswick  and  Nova  Scotia  claimed  they  did  not  have  their. share  of  the  pub- 
lic expenditure.  Nova  Scotia  agitated  secession,  New  Brunswick  annexatitm;  Ixuli 
claimed  that  their  harbors  should  be  Atlantic  termini  for  tlii>  Dominion. 

The  MacDonald  government,  fearful  of  losing  the  support  of  the  Lowit  rn.vin<-i'n. 
sought  a  remedv.  Knowing  that  the  snows  of  Quebec  and  the  Intt  reolonial  Kailw.iy 
were  a  practical  barrier  in' the  way  of  reaching  Halifax  or  St.  Jolni  in  the  winter, 
and  that  even  the  shortest  line  that  could  be  constructed  to  these  ports  would  li.« 
much  longer  than  to  the  New  England  sea-ports,  and  could  not  be  built  or  operated 
successfully  without  Dominion  aid, they  offered  a  subsidy  to  tlie  Canadian  Taeitie  ICail- 
way  to  enable  them  to  build  this  lino  and  divert  trade  from  the  llnited  States  jxtIm. 

This  has  always  been  evident,  because  one  of  the  terms  of  that  subsidy  is  that  tin 
Canadian  Pacific  shad  not  construct,  lease,  or  operate  any  road  to  any  of  tlieAtlanti. 
sea-ports  outside  of  the  Dominion  of  Canada. 

This  IS  the  reason  that  the  Canadian  Pacilic  can  not  built  to  Castine,  and  are  ask- 
ing bonding  privileges  through  the  State  of  Maine. 


Me. 

Portland 

sistent  wi.u  I.UV.  o"v^^.^-^- ."'■•>, -. .  ,       n     r.i 

This  is  the  only  route  available  for  them  by  whsh  they  can  use  nearly  all  ol  their 
short  line  across  the  State  of  Maine,  and  yet  reach  the  seaboard  Irom  the  Ncri  iwest. 
by  as  short  a  route  as  the  United  States  roads  to  New  York,  Boston,  or  1  ortlaml,  and 
the  Grand  Trunk  to  Portland.  ,.    ^        en     v,.-™ 

(3)  Castine  in  addition  to  being  on  the  airline  from  Montreal  to  Cajie  Sa  di.  >oxa 
Scotia,  on  the  route  to  Europe,  is  in  the  center  of  the  sea-coast  of  ;^\"•"'"^;"/''*'  ""'"Jl' 


coast  of  eastern  Maine. 


436  TRANSPORTATION    INTERESTS    OF 

All  this  adds  to  flu'  value  of  Castiue  as  the  lenniims. 

(4)  Tlie  barbor  is  the  best  for  oceau  vessels,  and  safe  of  approach  from  sea  at  all 
limes.  Terminal  property  is  cheaper  at  Castiue  than  at  any  other  termii'iis;  port 
charj;es  nominal ;  itilotaj;*'  unnecessary. 

J  bej;  to  call  your  attention  to  this  fact.  Eastern  Maine  lias  waited  for  lier  share 
of  llie"c(«untry's  bni-iucs^tili  all  the  princijial  sea-jiortsof  the  Atlantic  coast  havebeen 
supplied  with  direct  communication  across  the  continent.  The  prosperity  of  the 
West  has  returned  by  theno  loujj  railroads  to  IMiiladelphia,  New  York,  Hoston,  and 
I'ortland  an  terminal  ports.  Tlio  West  has  exjiandt'd  into  the  Northwest,  and  the 
])riisi)irity  of  tlie  Northwest  has  overllowed  and  is  now  cominji  back  to  eastern  Maine 
over  the  Canadian  I'aciric  Railway,  north  of  the  jjreat  lakes. 

'liiese  sea-jiorls  are,  including  Castinc,  about  ecjuidistaut  along  the  coast.  By  the 
ditVerent  routes  the  distances  to  the  dilVerfut  ports  are  i>ractically  the  same.  Let  the 
Canadian  I'acitic  make  Castiue  its  terminus,  and  stand  its  hand  with  all  the  rest. 
D<'ny  it  the  Ixuiding  privilege  across  I'liite*!  Stan-s  territory,  ami  you  sliear  it  of  its 
subsidy  advantagew,  and  i)rote<t  the  interests  of  eastern  Slniue  ;  1  refer  to  freight 
originating  in  the  I'niled  States. 

We  should  be  willing  to  be  neighborly  and  allow  them  to  communicate  between 
jxiints  in  Canada  aiross  onr  State,  and  I  can  not  see  what  .jnrisdictiou  we  have  over 
tliiir  Asiatic  and  Kiiro])ran  Iradi-,  exci-pt  that  we  might  oblige  them  toshijiit  from 
a  United  States  port.  Hut  while  in  my  o])inion  it  would  be  more  iirolitable  for  them 
to  do  so,  rather  than  ship  from  Halifax,  y»'t  I  do  not  think  it  would  be  jimt,  because 
they  have  |irociir«'d  that  business  by  legitimate  enterprise,  ami  it  istheirs  if  they  can 
hold  it.  The  only  legitimate  remedy  we  have  for  that  is  for  our  Congress  to  sub- 
sidi/.(>    American  steamers  Irom  our  jiortson  both  oceans. 

Hut  it  is  legitimate,  and  the  interest  of  eastern  Maine  demand  that  our  Congress 
should  incorporate  into  onr  laws  that  all  freight  originating  on  United  States  soil,  or 
coming  from  I'nited  States  connecting  mads,  if  it  is  transiiorted  through  Canada 
into  tin-  I'nited  Stat»s  again,  shall  be  shipped  from  a  I'nited  States  sea-port  if  bound 
across  the  ocean,  and  shall  not  re-enter  Canada  for  shipment  from  provincial  jiorts. 
1  am,  sir,  verv  respectfully,  your  obeilient  servant, 

A.    M.    DKVKKKrX, 
(ieneral  Mantujer  Cimtine  JUiiluaii  and  yarigalion  Company. 

Hon.    AUTIIl  K   P.    GOKMAN, 

I'nited  iSfatta  Senator,  llostoii,  Ma$s. 


Comparalirr  diKtanics  hctven  United  State*  and  Canadian  I'acijic  routes  from  the  Norlh- 
uei>t  to  Europe  and  //"    tilnniK  xiti-rntisi. 

Dnliith,  Wis.,  to—  Milc^s.     Miles. 

Minneapolis l^'-^ 

('hicago Jj^-i 

Ibitlalo : 1,11^ 

Albaiiv 1.401) 

New  York  l,r)51 

Boston 1,G(J9 

Portland 1,717 

Bangor l.i^:< 

Castiue l.W'l  1,891 

Soo  Bridge 4:{r> 

Montreal l,<'<jl 

IJrownville,  Me l.IJOTi 

Castiue 1,4:<«  1,4:>H 

DiflFerence  in  favor  of  Canadian  Pacific  roiit« l"'-! 

Minneapolis  to — 

CMiicago 4*20 

Buffalo %0 

Albauv l.'-^^'" 

New  York 1.3iK» 

lloBton , , 1 .  4r>7 

Portlnnrt  ..,-..,,,,,..„, ,.,.r ,.•».•- ». ' l.i'''>i» 

BangoP...,,. ,,„.,,,,,  ,„,,,,.,„,,.,-..,,,.,,,,, ,,..,,,,,..  1,701 

CimtiRp.T, • ,.,,„,,,,. ..,,,,„.,,,,..„,,,.„,..  i./.^u  i,r39 


THE  UNITED  STATES  AND  CANADA.  437 

Minneapolis  to — Continued.  Mil.s     Mih-H 

Soo  Bridge ^.^ 

Montreal "   ^  i.',,, 

Brownvillo,  Me 1 '  .n  4 

Caatine,  Me 1  4't7  l  .i<r 

Difference  in  favor  of  Canadian  Pacific  Railway 242 

Montreal  to — 

Browuville,  Mo 09.J 

Halifax '  ^Cq 

Liverpool "...'.'.."".""..'"*.'."."."."!."."  3,24U  :{,yjO 

Browuville,  Me 2<(4 

Castiue,  Me 377 

Liverpool .'."..".".'.'.'.'.'.".'.".'.'.".'."  3,072  3.072 

Difference  in  favor  of  Castine  route  to  Europe KW 

Browuville  to  Halifax  by  rail 41,6 

Browuville  to  Castine  by  rail 83 

Castiue  to  Halifax  by  water 215      298 

Difference  in  favor  of  Castiue  route  from  Browuville  to  Halifax IHS 

■  Should  the  Canadian  Pacific  adopt  Castine  as  a  shipping  port,  there  would  be  ',18'S 
miles  less  rail  than  by  way  of  Halifax  and  215  miles  more  water.  Freight  is  moved 
cheaper  by  water  than  by  rail. 

RECAPITULATION. 

Duluth,  Wis.,  to  Castine,  Me. —  MileM. 

United  States  roads l,f<l(l 

Canadian  Pacific 1,438 

Difference  in  favor  of  Canadian  Pacific 453 

Minneapolis  to  Castine — 

United  States  roads 1,739 

Canadian  Pacific 1, 497 

Difference  i u  favor  of  Canadian  Pacific 242 

Duluth  to  Liverpool  via  Canadian  Pacific  to — 

Halifax  (L821  rail -f  2,480  water) 4,301 

Castine  (1,438  rail -f- 2,695  water) 4,  133 

Difference  in  favor  of  Castine 1*>8 

Minneapolis  to  Liverpool  via  Canadian  Pacific  to — 

Halifax  (1,880  rail  +  2,480  water) 4,3<',0 

Castine  (1,497  rail +  2,695  water) 4.  Il>2 

Difference  in  favor  of  Castine 1*^ 

Montreal  to  Liverpool  via  Canadian  Pacific  to — 

St.  John  (483  rail +  2,700  water) '\l<^ 

Castine  (377  rail  +  2,695  water) :'.072 

Difference  in  favor  of  Castine '^^ 

If  the  Canadian  Pacific  Railway  are  refused  permission  to  fransport  freight 
across  the  State  of  Maine  in  bond  for  shipment  to  Europe  from  Ilakfax.  tliey  can 
avail  themselves  of  Castine  as  the  most  easterly  terminus  in  the  United  Sf.ate,s  con- 
sistent with  the  shortest  through  route  from  the  Northwest  to  Euroiu-. 

At  rhe  same  time  thev  can  avail  themselves  of  the  longest  haul  on  tlieir  own  road, 
consistent  witb  tbe  shortest  through  route,  viz.  to  Browuville,  Me.,  which  is  within 
43  miles  of  their  extreme  eastern  terminus  at  Mattawamkeag.  at  which  point  they 
begin  to  run  over  the  roads  of  other  companies  to  St.  John  and  Ilalitax,  hiring 
running  rights. 


438  TRANSPORTATION    INTERESTS    OF 

The  harbor  of  Castine  is  adiniiaMy  adapted  for  a  tonniiial  business,  and  is  (ho  bcHt 
deep-water,  safe,  o])en  tiarl)or  on  the  Atlantic  iiea-coast.  (See  eliart.)  Sandy  Point, 
Fort  Point,  Belfast,  Camden,  Kockpoit,  and  Rockland  harbors  in  Penobscot  Hay,  and 
Bar  Harbor  and  Hancock  Point  m  Frenchman's  Bay,  are  not  snitablt-  deep-water  or 
winter  harbors  for  ocean  goinji  vessels.  Rockland,  liar  }Iarl)or,  and  Hancock  Point 
are  not  harbors  for  any  class  of  vessels  with  the  wind  blowin-x  in  from  sea  ;  they  have 
DO  protection  at  their  months  and  are  not  deep  enough  for  ocean  steamers. 

I  am  ])erfectly  familiar  wilh  all  the  jtrincipal  harbors  from  Halifax  to  New  York 
as  regards  their  suitability  for  ocean  termini,  and  will,  if  desired,  fiive  adescriptiou 
of  each  one,  its  advantages  and  object  ions. 
Yours,  very  respectfully, 

A.  M.  I>kvki:kux, 
(iinvral  MaiuKjer  Caxtint  lUiHwaij  and  Xariyaiioii  Coinpauy,  lUimjor,  Me. 
The  Intel-state  Commerce  ('ommillt''  itf  the  Vnileil  States  Senate. 


STATEMENT  OF  J.  GREGORY  SMITH. 

Ml'.  J.  (lKK(;(>iiY  Smpiii,  iMcsitltMit  ol  the  Cciitial  N'ermoiit  Kiiilioad 
CoiDpany,  appean'd. 

The  Chairman.  WhiMv  do  yon  rcsidr,  (lovoinor  f 

Mr.  Smith.  At  St.  Albans,  "Vt. 

The  Chairman.  Yon  know  tlie  object  of  this  inxestifjatioii  and  wliat 
yon  desire  to  say  on  the  snbj«*ct  before  its,  and  we  would  therdbie  like 
t(>  have  yon  state  it  in  yoni  own  way  witliont  exainiiiatioii  or  (|iiestionin<^ 
on  onr  part. 

Mr.  Smith.   I  ]»n  ler  to  be  eross-examintd. 

The  Chairman.  We  prefer  that  yon  talk  in  yonr  own  way  for  a 
while  at  least. 

THE   CENTRAL  VERMONT   SYSTEM. 

Mr.  Smith.  There  are  so  many  i>oint8  connected  with  this  matter  that 
at  is  veiy  dillicnlt  for  me  to  see  precis<'ly  where  to  bejjin  in  the  lifjht  of 
reachino:  those  i)artienlar  ])oinls  that  come  within  the  provim^e  of  this 
CMHimiittee. 

I  rei)res(,'nt  here  wiiat  is  known  as  the  Central  Vermont  system  of 
roads,  coverin;;  in  its  own  operation  between  7"»0  and  800  miles  of 
road.  At  the  northern  end  of  onr  line — the  northern  portion  of  it — we 
connect  directly  with  the  Graml  Trmdv  road.  We  own  ami  control  a 
line  rnnniiii,'  eastward  in  the  eastern  section  of  Canada,  and  connect- 
ing; at  its  teiiniiMis  with  the  Canadian  Pacific  road. 

The  Chairman.  ^Vill  yon  ^ive  the  names  of  the  lines  as  yon  refer  to 
tliem  ? 

Mr.  Smith.  The  line  from  St.  John  to  the  connection  with  the  Cana- 
dian J*acitic,  in  Canada,  for  eastern  Canada,  is  called  the  St.  John  and 
Sherbrooke  Kailroa<l. 

The  Chairman.  How  long  is  that  line  ? 

Mr.  Smith.  It  is  4.'{  miles  to  the  point  of  connection  with  the  Canadian 
Pacific.  We  connect,  til-so,  at  Kichford,  in  my  comity,  in  Vermont, 
directly  with  the  Canadian  Pacific,  for  the  eastern  i)ortion  of  Canada, 
and  for  what  is  knowii  as  the  North  Shore  line,  a  line  on  the  nortliein 
side  of  the  river  St.  Lawrence,  rnniiing  from  Ottawa  to  Qnebec,  which 
has  a  lar^c  commerce  and  finds  its  princi]»al  market  in  New  En.iiland. 
It  runs  tliroiii;h  probably  the  most  extensive  hay  country  in    Canada. 

Senator  IJlaik.  And  that  is  situated  on  the  north  side  of  tin'  St. 
Tvawrence  ? 

Mr.  Smith.  Yes,  sir;  and  the  road  that  runs  from  Ottawa  to  Quebec, 
we  connect  with  there.     We  cDiinect  with  the  Grand  Trunk  for  the 


THE    UNITED    STATES    AND    CANADA.  439 

Province  of  Quebec,  and  with  its  comieetions  cast  and  n<.itl.oa.st  at 
Quebec.  We  also  connect  tlicre  with  the  Grand  Trunk  for  all  points 
lying  west  of  Montreal,  reachinj^r  out  in  the  Western  States  t<.  Chiea.'o 
and  the  State  of  Michigan,  and  with  all  their  systems  of  roads  then-, 
and  for  all  the  roads  that  center  upon  their  main  line  running  to  and 
into  the  Province  of  Ontario. 

We  connect  at  a  point  called  St.  Polycarpe, on  the  north  sidt-  of  the 
St.  Lawrence,  directly  with  the  Canadian  Pacific  J^dlroad  at  Ottawa. 
We  have  two  connections  witli  the  Canadian  Pacific,  there.  We  con- 
nect at  Ogdensburgh,  oi)posite  Prescott,on  the  other  side  of  the  St. 
Lawrence  Kiver,  with  the  Canadian  Pacific  again,  and  receive  a  large 
amount  of  the  products  of  Canada  from  them  there.  \Veconn<'(t  wiHi 
the  Ogdensburgh  Pailroad,  which  we  control,  with  a  line  of  steamers, 
which  we  also  control,  running  to  all  i)oints  on  the  lakes  as  fai  as 
Chicago  and  Duluth.  We  connect  at  Norwood,  a  station  on  our  <  )«:dens- 
burgh  division,  with  the  Rome,  Watertown  and  Ogdensburgh  liaMroad, 
which  runs  to  Suspension  Bridge,  and  there  connects  with  the  Canadian 
roads  that  center  at  the  Suspension  Bridge.  We  are  in  connection, 
through  the  Grand  Trunk  Railway,  with  their  water  line  via  Fi>rt 
Gratiot  and  Port  Huron.  We  also  connect,  through  the  Canadian  Pa- 
cific Eailroad,  with  aline  of  steamers  lunning  from  Chicago  to  (ieor^^ian 
Bay,  and  we  also  connect  at  that  point  with  their  line  of  steamers  run 
ning  to  Duluth  and  Lake  Superior. 

Those  constitute,  with  their  branches  radiating  from  them,  all  onr 
northern  and  western  connections.  Our  princi])al  line  of  contn»l.  so  far 
as  lake  and  rail  are  concerned,  is  by  our  own  line  viaOjidenshnrgh  and 
the  line  of  steamers  which  connects  and  runs  from  us  to  ('liicago  and  all 
the  lake  ports. 

On  the  east,  rather  tending  towards  Boston,  we  have  a  connection  at 
Swanton,  about  16  miles  east  of  Rouse's  Point,  with  the  IJoston  and 
Maine  system,  leading  throngh  the  northern  portion  of  Vermont, 
traversing  the  entire  width  of  the  State  at  that  jmint,  ami  connecting 
with  them  for  northern  New^  Hampshire,  and  so  on  to  Bo.ston,  over 
which  we  have  quite  a  large  traffic.  We  connect  with  the  Boston  and 
Maine  at  Essex  Junction,  or  rather,  by  reason  of  the  contr()l  we  have 
of  a  line  running  from  that  point  to  Cambridge  Junction,  we  connect 
with  the  same  road  again,  and  get  from  the  lake  traffic  and  from  the 
lines  on  the  opposite  side  of  the  lake  more  or  less  tratlic  going  (»ver 
their  road  at  that  point. 

At  Montpelier  we  connect  with  what  is  called  the  Montpelier  and 
Wells  River  Railroad,  and  we  connect  with  the  New  Hampshin-  line, 
until  recently  under  the  control  of  the  Boston  and  Maine  Railroad  Com 
pany,  but  now  under  the  control  of  the  Concord  roa«l,  for  the  distiilui 
tion  in  that  part  of  New  Hampshire,  over  which  we  have  quite  a  tratlic. 
We  connect  at  White  River  Junction,  on  what  we  denominate  (tnr  mam 
line,  with  the  Boston  ami  Maine  road,  and  so  over  what  was  the  T.os- 
ton  and  Lowell  road,  now  controlled  by  the  Boston  and  Maine,  over 
which  the  largest  portion  of  our  tratlic  destined  lor  ititeiior  New 
England  and  Boston  passes. 

Further  south,  at  Bellows  Falls,  we  connect  with  the  Clicslm.  road, 
which  opens  to  us  the  line  into  Boston  over  the  h'itchburgh  load  and 
down  on  to  the  Worcester  and  Providence  road  and  the  Old  Colony 
Railroad,  which  leads  us  down  into  lower  Massachusetts  and  Kliode 
Island.  They  also  have  several  branches  to  their  roa«l  which  are  lei'«l- 
ers  to  our  line  and  outlets  for  the  traffic  which  we  carry.  ^^  e  conn«'Ct 
further  south  and  control  the  line  through  to  the  Sound  over  what  is 


440  TRANSPORTATION  INTERESTS  OF 

known  as  the  New  London  Northern  Railroad,  wliicli  is  under  our  nian- 
aj^'eiuent,  with  a  line  of  steamers  runnin<j  lioni  the  road  to  New  York. 

The  C'UAIRMAN.  Between  what  points  is  that  railroad? 

Mr.  Smith.  That  road  runs  from  J>rattleboron|:ch  to  New  London. 
There  we  own  a  line  of  steamers  which  runs  into  New  York,  and  we  have 
various  eonnections  Mith  the  roads  that  run  into  the  New  London  sys- 
tem throu^di  .Massachusetts  and  Connecticut  and  also  into  Ivhode  Island 
by  tliat  line. 

We  also  connect  at  a  point  called  South  Vernon,  about  10  miles  south 
of  Brattlcboroufrh,  with  the  Connecticut  and  Ashuelot  road.  We  have 
what  is  calleil  the  Connecticut  Jiivcr  line,  which  carries  us  <lown  the 
Conne(;ticut  Kiver  and  on  to  Si>rin<.rfi<'ld,  thence  to  Hartford,  New  Ha- 
ven, and  New  York,  connect inj;  there  with  their  line  of  steamers,  as 
well  as  their  rail  line  into  New  York,  which  j;ives  usa  very  hujic  trartic 
and  o])cn8  <|uite  a  lar^e  territory  tbi- distribution  of  traflic.  \\'e  have 
branch  lines  leading  uj)  i.ito  Verujont  Irom  these  lines,  which  become 
feeders  and  alVord  opi»ortunitics  t(U'  distril)Uti()n  for  lottal  consumption 
of  the  traflic  that  comes  from  the  West. 

At  r.urlinj^'ton  we  control  the  Kuthind  system  of  roads,  which  forms 
our  line  to  New  York  via  the  New  \{)Tk  Central  and  Ihnlson  iJiver 
Kailroad.  as  well  as  with  the  Ihnlson  Kivcr  route,  over  which  we  have  a 
larfje  trallic.  We  connect  also  with  the  Delaware  and  Hudson  system 
of  roads  at  Kutland,  who  interchan<j:<^  with  us  a  very  larjje  trattic,  both 
east-bound  ami  south  bound  as  well  as  west  bound. 

Those  constitute  our  line  of  connection — our  feeders,  if  you  i)lease  to 
call  them  such— and  our  outlets  for  the  traflic  which  we  carry,  making? 
within  our  own  manaf^ement  and  operation,  ijidepen<lent  of  our  boat 
lines,  nearly  800  miles  of  road  that  we  control,  all  of  which  are  inter- 
ested in  this  question  which  is  now  before  you,  and  why  f  Uecause 
they  all  subserve  the  pur|i<ise  of  fee<linj,'  New  Kn<:land.  distributin<;  the 
products  ot  the  West  into  all  parts  of  New  l]nj,dand,  and  so  be(;ome 
very  intimately  interwoven  with  tln^  subject  which  you  have  undercon- 
siileration. 

It  is  not  necessary  for  me  to  state  that  all  the  territory  covered  by 
our  system,  and  reaching  down  into  New  Hampshire,  ^Lissachusetts, 
Connecticut,  and  Khode  Island,  is  all  tlependent  for  its  main  supply 
of  breadstutfs  an<l  food  upon  the  West.  No  State  in  New  Knpland 
raises  enouj^h  to  sup|»ly  its  population.  Our  line  is  the  most  direct  and 
the  cheapest  lor  th«'  supply  of  the  ;;reat  manufacturiii};  districts  in  New 
Enjjland  north  of  Bostt)n,  like  Lowell,  Lawrence,  Concord,  and  all  those 
l)laces.  We  are  in  more  direct  communication  by  tin*  cheapest  and 
shortest  line  through  our  connections  to  the  West  for  the  supply  of 
those  j)ointa.  They  constitute,  perhaps,  a  larjjer  distributive  district 
than  even  Boston  itself. 

Now,  then,  the  ipu'stion  arises,  Mr.  Chairman,  what  is  ro  be  the  effect 
of  any  disturbance  of  the  relations  existing;  at  present  for  tlu'din'ct  and 
8pee(ly  transportation  of  all  the  matei  ial  we  brinj;  in  to  su]>ply  this  wide 
territory  and  this  larju'c  i)o])ulation  ?  Thetonna;;e  |>assinff  over  our  road 
amounts  to  very  nearly  .'iOOO.oOOof  rons  annually,  over  one-half  of  whi<'h 
is  what  we  denominate  throuiih  tonnajre — •.tunnajic'cominj;  from  the  West 
to  the  Last  to  supply  tlu'  tlemand  and  to  teed  the  jiopulation  hero. 

While  1  have  listene<l  to  an<l  read  the  testimiuiy  which  has  been  piveti 
before  you,  and  while  1  have  heanl  a  preat  deal  of  <liscussion  on  this 
(piestion  ef  restrictiiii;  the  commer<e  which  jiasses  over  the  Canadian 
lines,  it  has  seemed  tome  that  the  ])()ints  whi«h  are  raised  are  not  sound. 
They  are  more  or  less  specious.     They  do  not  comport  with  factp.    They 


THE  UNlTEb  STATES  AND  CANADA.  441 

are  not  predicated  upon  a  sound  business  princii)le.  That  is  thr  vi.-w 
it  seems  to  ine,  one  must  talve  when  lie  comes  to  uiKlcrstaiKl  fiillv  tin' 
geographical  situation  and  the  i)hysical  condition  of  the  roa<ls  lin.l.-r 
consideration,  and  particularly  that  of  the  Canadian  Paeilic,  which  is 
charged  with  being  the  most  obnoxious,  because  of  interleienee  with 
Auiericau  roads. 

THE  GRAND  TRUNK  AND  THE  INTERSTATE  LAW. 

I  bear  very  little  complaint  so  far  as  the  Grand  Trunk  and  its  system 
are  concerned,  for  the  reason  that  it  has  been  clearly  established  to  th(i 
minds  of  all  that  the  Grand  Trunk  has  conducted  its  business  ui.(»n  a 
sound  basis. 

I  doubt  if  there  is  a  president  of  any  of  the  competing  lines  known  as 
the  trunk-lines  who  would  be  unwilling  to  admit  that  in  all  the  deal- 
ings of  the  Grand  Trunk  system,  so  far  as  its  relation  to  the  iMtcrstato 
commerce  law  is  concerned,  they  have  endeavored  to  conduct  their 
business  upon  sound  business  principles,  and  to  recognize  the  fa(;t  that 
they  are  to  a  large  extent  dependent  for  the  i)rosperity  of  their  road 
upon  their  relations  to  the  American  traffic,  to  the  tratlic  of  the  United 
States.  They  are  the  simi)le  medium  of  transportation  from  one  im- 
portant point  of  the  United  States  to  another — from  the  point  where 
the  products  of  the  country  are  raised  to  the  consumer.  It  is  the  me- 
dium by  which  what  the  East  has  to  eat  is  brought  to  them,  and  so  the 
Grand  Trunk  feels  itself  compelled,  as  a  pure  matter  of  self-protection 
and  as  a  matter  of  sound  policy,  to  conform  to  su(;h  rules  and  regula- 
tions and  fair  dealing  as  the  roads  in  the  United  States  are  compelled 
to  conform  to  under  the  interstate  commerce  law,  whether  all  its  pro- 
visions be  sound  and  wise  or  not. 

In  all  my  intercourse  and  association  and  experience  with  the  (irand 
Trunk  road — and  we  are  in  daily  communication  with  them  on  all  the 
points  involved  in  this  inquiry — I  have  found  that  in  i)ractiee  they  have 
not  only  shown  a  readiness  to  conform  to  the  requiieuients  of  the  law, 
but  also  a  ready  disposition  to  throw  no  obstacle  in  the  way  of  its  fair 
execution. 

THE   CANADIAN  PACIFIC   AND   ITS  LOCAL  TRAFFIC. 

I  have  never  yet  found  in  my  experience  with  the  Canadian  Pacific 
road  any  willingness  or  readiness  or  desire  to  force  business  that  way, 
except  on  business  principles.  1  do  not  believe  that  the  ('anadian  Pa- 
cific w-ould  attempt  to  recoup  from  the  inhabitants  of  Canada  wliat  it  is 
alleged  they  lose  by  low  rates  on  through  trafiic,  for  the  sinii)le  reason 
that,  traversing  as  they  do  almost  an  entire  wilderness  from  the  time 
they  leave  Ottawa  until  they  reach  Port  Moody,  then'  are  no  opportu- 
nities to  recoup.  There  is  no  such  local  business  on  the  line  of  that 
road  as  would  enable  them  to  recouj)  if  they  had  tiie  disposition  so  to 
do.  It  is  a  very  sparsely  settled  country,  and  miles  and  miles  of  railway 
have  to  be  maintained  and  operated  and  the  transportation  of  the 
through  freight  done  with  scarcely  a  watering  place,  with  no  popula- 
tion to  help  support  it. 

Hence  to  my  mind,  with  what  little  knowledge  I  have  of  railroading, 
I  think  the  fact  that  they  are  couipelled  to  carry  that  freight  and  sup- 
l)ort  their  railroad  forms  of  itself,  without  the  intervention  of  Congress 
or  anybody  else,  a  sufficient  protection  to  the  American  lines  dotted  all 
along  as  they  are  through  this  country  with  thickly  populated  sections 


442  TRANSPORTATION    INTERESTS    OP 

and  places,  aff'ordinfr  an  immenso  traflic  known  as  local  traffic,  and 
tln-irlorc  tlic  idi.vsical  condition  of  tlie  two  systcins  is  ofitsrlCa  protec- 
tion, or  else  tiie  Canadian  roads  must  involve  tliemsclves  in  losses  on 
every  ton  of  freifjlit  they  carry. 

THE  CANADIAN  PACIFIC   SUBSIDY. 

Tlie  riiAiRMAN.  Without  intendinjx  to  intvrrnpt  your  line  of  state- 
ment, w»'  would  like  to  know  wliat  yon  have  to  sav  with  reference  to 
government  aid  to  tiie  Canadian  road.  It  is  a  (|uestion  if  it  makes  any 
(lillerenee  to  tlie  Canadian  I'aeitic  wln'ther  it  makes  money  or  loses 
money  on  the  trallic  passinj;  ov«'r  its  lini'. 

.Mr.  SMirit.  I  tiiink  the  jiovernment  aid  was  neci'ssary  in  order  t<» 
lHiiI«l  that  mad.  It  never  woidd  have  been  huilt  on  private  capital,  and 
tiie  fact  that  the  <\inadian  (lovernment  assiste«l  tlie  line  does  not  in  my 
)ud;:nient  enti'r  into  this  (|iu'.stinn.  Kven  if  the  j^overnnuMit  assume<l 
the  uiana^M-nu-nt  «»f  the  line  it  coidd  not  alVoid  to  haul  the  lrci;:lit  from 
Port  Mo»)dy  thron;;h  a  barren  wilderness  hundreds  and  hundreds  of 
miles  in  extent  without  compensation.  They  could  iu»t  haul  this  trallic 
and  jr«'t  out  of  it  m»tliin}j:  to  support  them  in  the  way  of  hx-al  tratlic.  In 
tin'  absence  of  tlu'  local  trallic  they  can  not  make  any  serious  competi- 
tion witli  the  American  roads.  Our  roads  a»e  «loJt(M|  with  an  immense 
(topulation  that  alVords  a  lar^'e  amount  of  trallic  'J'liat  fact  alone  in  my 
jiid^rment  would  piccliule  the  idea  of  the  Canadian  l'a<-ilic  otfcrin^  seri- 
ous competit  ion  with  our  n»ads, 

1  am  no  friend  of  the  Canailian  i'acilic.  I  have  no  interest  in  that 
company.  \\'e;:et  business  fioui  them  and  do  it  on  business  principles, 
but  I  will  say  this,  that  in  all  n>y  commnnii-ation  and  experience  with 
those  ijentlemen  (Ihey  are  sharj*  nuMi  I  adndt)  I  have  not  found  the 
least  in(rlination  on  their  part  to  share  in  reduced  rates  and  no  iiiore  in- 
clination to  cut  rates  than  1  have  met  \\\lh  amon;;  competitors  here  at 
our  door.  1  have  fouiul  vastly  le.ss  of  tiiat  sort  of  tliin<r  on  their  part 
than  on  the  part  of  our  «>wn  roa<ls,  and  when  by  awident  or  «lesi<;n  the 
rates  have  been  cut  either  to  the  West  or  to  the  East  over  the  lines  I 
rei>reseiit,  I  have  exi>erienced  more  dilliculty  in  jxettitiy:  the  Canailian 
lines  to  consent  to  share  with  us  in  the  reduction  than  1  have  found 
from  the  verv  competitors  we  are  contt-iidin^'^  with  here  in  New  Eng- 
land. 

So,  Mr.  Chairman,  to  my  mind,  there  is  a  great  deal  that  is  sj)ecious 
in  this  matti'r  and  there  is  a  great  deal  that  is  fallacious.  1  am  not 
saying  that  because  I  want  to  controvert  the  point  claimed  here  that  in 
order  to  satisfy  an  unreasonable  demand  it  would  be  wise  or  best  for 
Congiess  in  some  way  to  step  in,  or  have  our  (iovernment  interfere,  be- 
cause 1  do  not  believe  it  can  be  cared  for  by  legislation. 

A   SUBJECT   FOR   TREATY,   NOT   LEGISLATION. 

It  is  not  a  subject  for  legislation.  I  do  not  believe  such  a  proposition 
could  be  carried,  and  if  a  fair  relation  is  Vxpectinl  to  exist  or  to  subsist 
between  the  Canadian  system  of  railroads  and  our  system  it  must  be 
done  on  a  basis  ditl'eient  from  inde[)endent  legislation  on  the  part  of 
one  or  both  (xovernments. 

This  is  a  subject  for  treaty.  It  is  a  subject  of  fair  dealing  l>etweeu 
two  governments,  and  if  Congress  were  to  enact  a  law  which  sliouhl  in 
any  way  be  restrictive,  which  should  aim  at  noninlerc«»urse  unless  <'er- 
taiu  coilditious  are  complied  with  by  theCsinadiau  lines,  I  think  it  would 


I'HE    UNITED    STATES    AND    CANADA.  443 

be  most  disastrous  to  our  Goverumeut,  to  all  the  inatciiiil  interests  of  the 
couiitry,to  the  very  roads  thatare  i»o\vcoiiii)laiiiiii-;(.t  tht- competition  of 
the  (^luadiau  system.  It  means  retaliation.  It  means  furtiierdismrhancc 
of  the  relations  between  the  two  Governments,  which  should  be  Iriendly 
and  which  are  already  sutticiently  strained.  It  means  disaster  to  com- 
merce; it  means  just  what  two  ^overnme'its  should  avoid,  and  that  is, 
conflict;  and  the  only  way  by  which,  in  my  judgment,  tiiis  problem  can 
be  solved,  it  it  is  a  problem  which  ueeds  solution,  is  by  such  friendly 
intercourse  between  the  two  Governments  as  places  their  lesfrictive 
policies  ou  a  like  basis,  and  it  is  the  only  way  it  can  be  reached. 

Let  me  call  your  attention  to  this:  Commerce  is  bi-.st  promoted  and 
rendered  prosperous  by  a  community  of  i.nterest  between  tiie  proilueei 
and  transporter  ou  the  one  side,  and  between  policies  which  i^ovei  u  the 
systems  of  two  conflicting  interests  like  theOauadian  and  the  American 
systems  of  railroads.  Antagonism  is  what  is  destructive  U)  both  and 
would  injure  both. 

AMERICAN   INTERESTS  IN    THE   CANADIAN    KOAUS. 

Now,  I  was  a  little  surprised  at  the  statement  made  before  your  com- 
mittee the  other  day  by  the  presideut  of  one  of  the  lines  which  reaches 
the  West  that  they  bad  uo  interest  in  the  Cauadiau  system  of  railroads. 
I  think  the  presideut  who  made  that  statement  did  not  fairly  consider 
the  extent  of  the  assertion  he  made.  1  do  not  think  he  intended  to  mis- 
represent the  facts;  I  know  he  would  not;  but  J  thinl:  he  iiad  not  be- 
fore him  all  the  facts  and  all  the  relations  which  his  road  bears  to  the 
Cauadiau  roads. 

Take  the  peninsula  in  Ontario.  Look  at  the  roads  that  run  across 
the  i^eninsula.  The  Canada  Southern,  owued  and  controlled  by  the 
New  York  Central;  the  Great  Western,  ruuuing  direct  from  Suspension 
Bridge  to  Detroit,  iu  -which  all  the  roads  that  centc^r  at  Suspension 
Bridge  are  interested;  above  them  the  Grand  Trunk  system  of  roads. 
Cut  them  off,  if  you  please,  and  what  is  the  result  to  the  commerce  ot 
all  the  territory  uorth  of  reuusylvaniaand  east  of  BuUalo  and  Suspen- 
sion Bridge?  Is  it  not  to  relegate  commerce  to  one  line  practically  .' 
The  New  York  Central  has  a  line  independent  of  everybody  elsi'  through 
to  Chicago  oi^  the  south  shores  of  Lakes  Erie  and  Michigan  ;  the  Erie 
has  no  line  of  its  own,  but  runs  iu  connection,  and  to  that  extent  as  a 
business  transaction  maybe  said  perhaps  to  control  a  line  from  Chicago. 
by  way  of  the  Chicago  and  Atlantic  road  East;  the  Nickle-Tlate  is  un- 
der the  control  of  the  New  York  Central ;  it  is  guided  in  its  policy  by  it ; 
the  Pennsylvania  has  its  line  of  railroad  to  Ciiicago  ;  the  lialtimore  and 
Ohio  has  its  road — three  roads,  and  that  is  all. 

Now,  then,  I  submit  the  question,  would  it  be  a  healthy  state  o( 
things,  a  fair,  a  rational,  a  reasonable  state  of  Ihings,  to  compel  all  this 
traflQc  which  comes  to  New  England  and  all  northern  New  Vork,  and 
to  a  great  extent  central  New  York,  to  be  forced  into  a  line  as  far  south 
as  the  Michigan  Southern  road,  and  be  litted  back  again,  at  an  expense, 
because  it  can  not  but  cost  somebody.something  to  take  thi-*  whole  vol- 
ume of  breadstufts  and  of  food  ami  lift  it  back  again  into  uortherii  New 
York  and  into  New  England  f  At  the  same  time  does  it  not  serve  thus 
purpose,  for  evervbodv  who  knows  anything  about  the  tonnage  and  the 
amount  of  transportation  knows  this:  That  iu  a  good  season,  with  busi- 
ness and  commerce  active  and  the  supply  full,  then^  is  enough  tor  all 
the  roads.  We  all  have  all  we  can  do.  We  are  more  disturbed  tor 
means  and  ways  to  haul  the  trartic  than  we  are  for  business. 


444  TRANSPORTATION    INTERESTS    OF 

Now  would  il  lie  wise  to  turn  all  this  trallic — take  what  wi'  liandli 
ourselves,  .'>,(»()(>, 000  tons — to  those  roads  and  thus  overload  theiu! 
Thev  have  been  overloaded  this  very  season.  The  I'enrisylvania  and 
the  New  York  Central  were  under  a  perteet  lilockade,  ilthe  papers  are 
to  be  believed,  and  I  have  no(h)ul)t  what  thev  stated  was  triu',  and  that 
the  roads  mentioned  were  overioadt'd. 

Now  i  sui)init  would  it  be  a  wise  thin;;  to  do  to  take  all  that  trallie  in 
which  northern  New  York,  in  which  central  New  York,if  vou  ph'ase,  i> 
iutereste«l,  because,  bear  in  mind,  independent  of  the  New  York  Cen 
tral,  independent  of  the  Pennsylvania  roa^l,  or  of  the  Eric  road,  here 
stand  several  roads  in  New  York  which  pass  throu{j;h  th(»  interioi  of 
that  Htate  and  cany  a  vast  amount  of  tratlic  which  is  distributed  to 
the  i)eople  tlu-re.  There  is  the  Delaware,  Lackawanna  and  Western, 
the  liome,  Watertown  and  Ojjib'nsbuiijh,  and  <livers  other  roads  with 
which  New  York  IStat**  is  ;,Mid  ironed,  all  (h'pendent  upon  the  tralhc  that 
must  come  fiom  beyond  the  boundary  of  ('ana<la.  Would  it  be  a  wise 
thin;;  to  (h>  to  cut  otf  the  Canadian  roads  and  thus  throw  all  that  IralVu- 
ujion  one  or  two  lines  f 

A  rj'stiictive  poli<-y  <ui  the  part  of  the  (loverniiu'nt  of  the  I'niti  d 
States  here  as  a;;ainst  the  Canadian  roads  means  one  of  two  thing's, 
uuless  it  is  dcuie  i)y  treaty.  It  nu-ans  tiie  en;;eiulerin^  of  a  system  ol 
aniapouKsm,  be<'ause  the  party  restricted  believes  that  a  wron;;  is  (lone. 
and  that  means  retaliatiiui.  8hut  ofl'  the^e  Canadian  lailroads  and 
where  would  you  liave  the  facilities  for  fe«'din^  this  preat  jtopulation 
east  of  Uutfalo  ? 

So  I  say,  and  I  say  it  without  fear  (if  contradiction  by  an\body  who 
will  examine  the  subject  carefully,  that  it  would  be  the  most  unwisr 
and  unsound  policy  »>n  the  part  of  our  (iovernment  to  attempt  in  any 
otfensivt'  fiuiii,  throu^jh  the  medium  of  le;;islation,  to  contr.d  this  (pies- 
tion.  It  is  a  sober  (piesti(Ui,  and  it  neetls  sober  mana^'cmcnt,  and  it 
needs  le;;itimate  methods  to  brin;,'  it  around. 

I  ;;rant  that  1  would  be  very  ;;lad  myself,  s»  far  as  the  interests  which 
1  represent  are  ctnu'ertn'd,  to  have  such  restrictituis  ])ut  upon  the  Cana 
dian  roads  as  to  brin;;  them  into  harmony  with  our  roatls,  and  yet  I  ha\  «• 
seen  no  reason  of  complaint.  IJut  1  see  a  danjjer;  1  see  a  possibility  of 
danger  in  the  present  (condition  of  atVairs,  but  1  ilo  not  believe  that  men 
in  the  sound  management  of  a  railroad  on  business  jtrinciples  would 
ever  resort  to  it,  except  in  retaliaticui;    not  as  a  business  juinciple. 

Therelore,  Mr.  Chairman   and   p'Utlemen  <»f  tin'  comiiiittee,  on  tip 
great  jKiint  which  you  ar«'  considerin-x,  1  respectfully  submit  asatpu 
tion  of  policy,  even  lor  the  complainiiiLr  paities  here,  much   more  lor 
those  who  are  not  c(Muplaiuing.  whether  it  would  be  sound  |udi»'y,  even 
if  Congress  wer<'  disposed  to  put  any  such  restriction  upon  these  Cana- 
dian roads  as  to  lead  to  retaliatory  action  on  the  pait  of  thi'  Cainuliaiis — 
and  anything  short  of  a  settlement  of  the  ipiestion  by  negotiation  be 
tween  the  two  (lovjuninents,  so  that  the    Parliainiuit  of  Canada  may 
enact  hiws  which  will  govern  and  bind  theirconstituencies,  these  roads 
that  they  t'ontrol,  bind  them  as  Congress  has  bound  our  roa<ls,  would 
fall  short  of  securing  the  <h'sired#nd — would  it  be  good  logic,  and  sound 
l)olicy  to  do  any  such  thing? 

orii  roMMKUcH  troN  thh  i.akks. 

Were  a  policy  to  be  nth>pted  which  the  Canadians  would   n'gard  as 
odensive,  I  beg  leave  to  suggest  another  disaster   that   wouhl   immii' 
Our  line  of  steamers,  ami  all  lines  of  boats  whi<'li  pass  e.ust  of  Lake  Eri<  . 
are  dependent  upon  the  courtesy  of  Can.ida  today. 


THE  UNITED  STATES  AND  CANADA.  445 

The  Chairman.  What  are  they  depeiulent  upon  ? 

Mr.  Smith.  Tbey  are  dependent  upon  the  courtesy  of  Canada  to-dav 
We  can  not  get  into  Lake  Ontario  except  throuj-h  hw  Wclland  ('iiiuil 
aud  that  is  all  iu  their  territory  and  under  the  control  of  Canada  ' 

Now,  what  would  you  do  with  all  tbe  commerce  of  Lake  Ontario  with 
the  Welhmd  Canal  sliut  up  against  American  boats  ?  WIumc  would 
we  be  ?  And  that  is  just  one  of  the  possibilities,  and,  in  my  judgnn-nt 
the  probability— almost  a  certainty— if  any  legislalicju  is' enacted  by 
Congress  which  becomes  antagonistic  to  the  Canadian  railroads,  and  it 
does  not  take  very  much  uow,  iu  the  disturbed  condition  of  atlairs,  with 
all  the  questions  that  are  peuding  between  the  two  (xovern men ts— be- 
tween Great  Britain  and  the  United  States— iu  regard  to  Canada,  to  stir 
up  further  animosities  which  will  lead,  perhaps,  to  very  injmlicious  re- 
sults on  their  part ;  but  men  do  uot  always  stop  to  tliink  what  is  good 
judgment  aud  what  is  not  when  they  are  mad. 

A   QUESTION  TO   BE   SETTLED  BY  NEGOTIATION. 

So  it  seems  to  me  that  this  Government  can  uot  afford  to  throw  any 
more  disturbiugelements  into  this  great  question  until  they  have  settled 
the  (inestions  uow  at  issue.  1  have  uo  doubt  that  if  proposals  were 
made  with  a  fair  spirit  and  on  a  reasoiuible  basis,  that  the  Govern- 
ment of  Canada  would  co-operate  with  our  Government  in  equaliziug 
what  are  uow  considered  difticiilties  and  burdens  upon  the  American 
system  of  railroads. 

Jf  I  remember  Mr.  Hickson's  test imouy  given  in  New  York  before 
your  committee,  he  signified  his  willingness  to  enter  into  any  assurance 
that  would  be  asked  of  him  that  the  whole  traffic  of  his  road  should  be 
submitted  and  subordinated  to  the  interstate  commerce  law.  I  think 
that  was  his  statement.  So  far,  Mr.  Chaiiinan,  on  that  point.  1  do  not 
know  that  there  is  any  other  point  that  you  wish  me  to  <liscuss. 

The  Chairman.  As  I  understand  you,  theu,  you  are  willing  to  say 
that  if  the  American  people  are  at  a  disadvantage  under  the  present 
condition  of  atiairs  it  ought  to  be  corrected  ? 

Mr.  SMITH.  Yes,  sir ;  clearly  so. 

The  Chairman.  You  seem  to  intimate  that  any  attempt  at  righting 
by  legislation  whatever  wrong  there  is,  if  there  is  any,  would  be  re- 
garded by  the  Canadian  Government  and  the  people  of  Canada  as 
offensive. 

Mr.  Smith.  I  think  it  would  be  so  construed  by  them ;  they  are  very 
sensitive.  I  have  been  closely  associated  with  tlieu),  and  1  know  their 
feelings.  I  think  any  attempt  at  what  the  Canadians  might  construe 
as  non-intercourse,  like  restricting  commerce,  taxing  their  cars,  laying 
imposts  upon  them  iu  any  form,  while  our  commerce  can  i)ass  as  freely 
through  their  territory  as  it  passes  through  our  own— we  have  jnst  as 
good  connection  to  the  North  west  aud  West  and  to  Chicago  by  our  lino 
as  any  line  on  American  soil  today,  all  through  the  courtesy  of  tlie 
Canadian  Government— would  have  that  effect.  In  my  judgment  the 
benefit  which  accrues  to  the  Canadian  Government  by  means  of  this 
outletthrough  the  United  States  is  small,  is  nothing,  in  fact,  as  coini)ared 
witlf  the  benefits  which  our  people  derive.  In  other  words,  to  declare 
non-intercourse  would  not  hurt  Canada  as  much  as  us. 

The  Chairman.  This  Canadian  road  has  been  built  from  Pngct 
Sound  to  the  Amer-ican  border. 

Mr,  Smith.  Yes,  sir.  . 

The  Chairman.  This  road  can  not  exist  if  they  have  nothing  to  carry 
o»  it,  ana  it  couia  not  exist  wHUout  tUe  Awerieiiu  bwsiuess, 


44G  TRANSPORTATION  INTKKESTS  OF 

Mr.  Smith.  No,  sir;  proWably  not.  I5iit  the  coiiiitry  is  ilcvolopin;;, 
and  they  ^vi  a  littU-  hK;al  hiisiiii'ss. 

The  Chairman.  Ls  it  not  a  matter  of  fact  that  theCanadian  I'acitic  is 
keeping  itselt" alive  to  s»»me  extent — and  iftliere  is  very  little  Canadian 
trallic  proper  it  must  be  pretty  larjjely — l)y  the  business  whi(;h  it  iH'\s 
that  in  sonu^  way  touches  the  Cnite<l  St:ite«  !  If  that  is  not  so,  the  road 
must  1k'  ke|»t  alive  by  the  Canadian  (lovernment.     Is  that  n<»t  so? 

]\lr.  Smith.  In  one  aspect  it  is,  but  it  is  not  fully,  in  niy  jud^Muent.  * 

EFFECT  OP  THE  SHOUT  HAUL  CLAUSE. 

What  1  mean  is  this:  Prior  to  the  adoption  of  tln^  interstate  l:i\v, 
])articulariy  the  Ion;,' and  short  haul  clause,  our  radr«)ads  had  no  reason 
to  complain,  nor  am  I  a\var<'  that  they  ever  comphiine  I,  o|  any  compe- 
tition by  the  Canadian  railroails.  It  is  the  lestriction  wliich  the  Ion;; 
and  short  haul  places  uptm  the  lonjj  lines  winch  makes  thedilliculty  ; 
and  if  you  will  allow  me,  Mr.  Chairman,  1  will  fjive  you  an  instance  or 
two  which  will  illustrate  my  idea  exactly. 

The  operation  of  the  lon^  and  short  liaid  clause,  so  far  as  our  State 
and  our  roa«l  are  t'oncerned,  and  so  far  as  Ni*w  lCn;:laud  is  concerncij, 
is  very  prt'jndicial,  l)ecause  all  our  trallic  is  interstate.  We  have  not 
mar;;in  enon;,'h,  we  have  not  ari'a  enou;;h  in  our  State  t(>  form  manu- 
facturing' ceuteis  and  commeri'ial  centers  <»u  which  to  sustain  ourselves, 
and  we  simply  bcc(tme  a  carrym;;  ;;round  to  Iced  somebody  else.  Now, 
ajToss  the  lake,  just  opposite  us,  in  New  V«)rk,  we  find  that  the  roads 
are  all  within  tlie  State.  Kverythinj:  is  within  tiuir  control,  and  tin  y 
have  the  advanta;re  of  us  all  the  wh  le. 

Take  the  rines  competiii;;  with  us  in  the  niutlicin  jiart  of  tln^  State. 
They  uill  make  rates  wliich  will  ^'ive  facilities  that  the  interstate  law 
says  are  «liscriminati<His.     They  ;;ive  them  freely,  be«'ause  they  tlo  not 
c<mu>  within  the  limitations  of  the  law.     They  an*  a  law  unto  Iheujselvi- 
llemu^  we  are  shut  ilowu  in  commerce. 

Tak«',  for  instance,  the  ijreat  hay  district  vhi«di  lies  about  there  m 
Canada  and  on  the  other  side  in  New  Voik.  We  <an  nt»l  compete  l<>r 
that  business;  the  New  Yoik  mads  take  it  every  tim(^.  Why!  lie<',ai; 
tin'  nnunciit  we  cut  the  late,  and  we  have  ;,'ot  t«>  cut  in  (udtT  to  jr*  t  ' 
busiiu'ss,  we  have  to  h)wer  our  local  tarill  all  the  way  thiwn  to  15onIu,i 
to  conform  to  it.  We  jjo  tlirou;rh  New  Hampshire  and  .Massacrhusrt  I  -, 
and  we  have  to  call  upon  Mr.  Kurber  to  lower  his  rale.  W»^  have  to 
call  on  the  Concoid  road  to  reduce  its  taiill  in  (udcr  to  nn-et  the  rate 
that  the  Delaware  and  Hudson  make  lor  this  trallic. 

Therefore  the  law  operates  untairly  and  uiu'cpially  in  that  respect.     I 
believe  in  Co!i;;ress  controllinij  the  (MMumcn-eol  the  cotintry.     1  bcln 
that  under  the  Constitution  C«>n<iress  h;is  not  <»nly  the  rij;ht  to  do 
but  1  think  it  is  a  wise  thin;j  to  «lo.     IJut  my  objection  to  the  law,  il    I 
may  be  permitted  to  have  any  objection,  is  that  Ctuijiress  ccunes  in 
the  province  ol  the  State,  ami  says  we  there  must  ilo  certain  thin 
which  I  am  not  (piite  pre[>ared  to  admit  Cuu^.;! ess  hiis  the  ii;;ht  to  (i«». 
We  can  not  j,'o  alonj;,  however,  and  coidorm  to  the  ;ii'neral  law  without 
subjectin;;  our>elves  to  ^Mcat  penalty  if  we  ilisobey  it.  • 

III  the  case  between  the  Boston  and  .Vlbany  and  the  Veimont  Central, 
where  the  iSoston  and  Albany  tlinn;:lit  we  were  p-liing  a  little  more 
frei.uht  out  of  Boston  than  we On.uht  to  ^et,  tlu-y  loi)ke»l  up  the  rates  on 
the  line  of  our  road,  and  tbiind  that  our  tliroM;;h  laiilV  Irom  Boston  to 
Chicaj;*)  was  in  some  respects  lower  than  the  local  tantl  fr»»m  Boston  fo 
0^densbnry;h.    Therefore  tUey  brou{;hlaeomidaintbcluielUe  Iuter»t 


THE    U.NITED    STATES    AND    CANADA.  447 

Commerce  Commission,  aud  sc  we  liad  to  eilber  cut  the  O-.h-nsl.ui-U 
rate  down,  or  else  raise  the  Chicago  rate. 

The  Chairman.  Do  you  mean  to  say  that  you  were  char-in^  more 
from  Boston  to  Ogdeusburgh  than  you  were  froiu  Boston  to  Ciiicago* 

Mr.  Smith.  Yes,  sir;  we  were  charging  more  from  here  to  Ogdeus- 
burgh than  to  Chicago;  our  tariff  from  JJoston  to  Ogdeusburgh  was  :v 
shade  higher  than  the  through  rate  in  a  severe  tompetition  between  the 
lines  here. 

The  Chairman.  Do  you  mean  to  say  that  you  were  charging  more  in 
the  aggregate  ? 

Mr.  Smith.  Yes,  sir ;  charging  more  to  Ogdeusburgh  than  to  Chicago. 

The  CHAIR3IAN.  Do  you  think  that  was  right  ? 

Mr.  Smith.  Yes,  sir. 

Senator  Harris.  What  is  the  difference  in  distance  between  Uoston 
and  Chicago  and  Boston  and  Ogdensburgh  1 

Mr.  Smith.  Chicago  by  our  line  is  probably  a  thousand  inih-s  larther 
than  to  Ogdensburgh.  We  have  to  go  to  Ogdensburgli  to  connect  with 
our  boat  line.     It  is  a  water  line  from  Ogdensburgh  to  Chicago. 

Serious  competition  was  going  on  here  between  the  truiiic  lines.  We 
all  got  to  quarreling.  All  were  cutting  rates,  and  rates  had  gone  down 
marvelously  losv.  When  such  a  condition  of  things  t^xists  the  question 
is.  Shall  a  road  go  out  of  business,  house  its  engines,  store  its  cars  on 
side  tracks,  discharge  its  men,  etc.,  or,  as  manufacturers  otten  do,  work 
at  a  loss  until  the  thing  is  cured  ?  The  moment  we  refuse  to  carry 
freight  for  our  customers  they  leave  us  and  go  elsewhere. 

Therefore  we  are  obliged,  particularly  when  the  cro])s  are  short  and 
the  freight  is  short — the  roads  have  their  equipment  on  their  hands,  they 
do  not  want  to  put  their  engines  in  the  house,  put  their  cars  on  a  side 
track,  and  dismiss  their  men — we  are  compelled  to  go  to  worlc  <md  keep 
the  staff  together,  and  such  severe  competition  is  the  result  that  the 
through  rates  oftentimes  go  below  the  local  rates,  as  they  did  in  the 
case  1  have  mentioned.  In  that  case  the  business  men  of  OgikMisburgh, 
unsolicited,  signed  a  memorial  to  the  Commission  begging  them  not  to 
enforce  the  law,  because  they  were  perfectly  satisHed  wiih  wiiat  we 
were  doing. 

Senator  Keagan.  What  is  the  distance  by  your  land  road  irom  llos- 
ton  to  Chicago. 

Mr.  Smith.  By  the  allrad  route  it  is  a  little  over  1,100  miles. 

Senator  Reagan.  Eleven  hundred  miles  going  through  the  Canadiiiii 
territory  ? 

Mr.  Smith.  Yes,  sir;  by  way  of  the  Grand  Trunk  road. 

Senator  Reagan.  What  would  be  the  distance  by  the  shortest  road 
south  of  the  lakes  ? 

Mr.  Smith.  If  I  remember  aright,  there  is  about  70  or  80  miles  diller- 
euce  between  our  line  and  the  New  York  Central. 

Senator  Reagan.  Which  is  the  shorter  line,  your  line  or  the  New 
York  Central  ? 

Mr.  Smith.  The  New  York  Central. 

Senator  Reagan.  Do  you  understand  that  there  has  been  any  serious 
change  in  the  rates  on  freight  over  the  Grand  Trunk  road  within  the 
last  twelve  or  eighteen  months,  whether  the  rates  on  the  Grand  Trunk 
have  been  raised  or  lowered  in  the  last  eighteen  months  ? 

Mr.  Smith.  Do  you  refer  to  through  rates  ? 

Senator  IxEAGAN.  Yes,  sir.  ,  ,•  i    i     f 

Mr.  Smith.  I  think  the  Grand  Trunk  conforms  to  the  published  rates 

agreed  upon  by  all  the  roads. 


448  TRANSPORTATION  INTERESTS  OF 

Senator  Reagan.  I  do  not  know  what  the  pnhlislu-d  ratos  are. 

Mr.  Smith.  At  this  luomeutl  think  the  rates  are  a  littU'  hnver  on  all 
the  trunk  lines. 

Senator  Keagan.  If  the  tariffs  are  the  same  on  all  the  roads,  and  the 
roads  south  ot  the  hikes  are  the  shortest,  why  do  you  not  j^et  lower 
rates  on  the  roads  south  of  the  lakes? 

Mr.  Smith.  For  the  reason  that  we  are  the  lonji^er  line  out  of  Uoston, 
and  in  the  interest  of  harmony  between  the  railroads  the  iliffcrent  lines 
{jive  to  us  a  differential,  which  they  allow  us  to  use  without  bein;; 
charjjeable  with  breaking;  the  rates. 

Senator  Keagan.  Do  all  the  trunk  roa<ls  agree  to  that  T 

IMr.  Smith.  Yes,  sir. 

Senator  IvEA(;an.  So  that  there  is  no  difference  between  the  (Irand 
Trunk  and  the  American  trunk  roads. 

Senator  IllSCOCK.  That  differential  is  only  allowed  on  west  bound 
freigiit. 

Mr.  Smith.  It  is  mainly  used  West.  It  is  granted  (ui  eastward  freight, 
but  it  is  seldom  used. 

The  (.'ii AIRMAN.  Why  is  the  differential  not  used  lM>tii  ways! 

Mr.  Smuh.  For  the  reason  that  it  would  nuike  great  <listurbance,  and 
although  it  is  eoiu'eded  to  our  line  on  account  of  being  the  longer  line, 
in  order  that  we  might  be  on  a  more  e(|ual  tooting  with  the  other  lines, 
yet  we  (iiul  it  better  not  to  wpply  it. 

The  Chairman.  There  is  a  redundan«-y  of  freight  at  the  West,  and 
theie  is  no  occasion  f(u*  your  r«)ad  to  um*  it, 

Mr.  Smith.  We  gi-t  our  share  of  east  bound  business,  but  going  west 
thcie  is  not  enough  traffic  to  load  all  the  cars  of  every  line. 

Senator  Kkacjan.  If  the  roads  sotifh  of  the  Iak«'sare  shorter  than  the 
Grand  Trunk,  and  the  rates  are  the  same  on  both,  why  is  it  that  you  do 
not  get  your  freight  coming  Hast  eheajK?r  on  the  trunk  roads  south  of  tin 
lakes  than  on  the  Grand  Trunk  T 

Mr.  Smith.  When  I  .sai<l  the  rates  were  the  same  I  meant  to  the 
initial  i)oint  here  at  Hoston.  Here  is  the  difTiculty.  Take  the  Boston 
and  Albany,  for  instance,  as  the  outlet  of  the  New  York  Central  at 
some  point  between  Albany  and  Ilctston.  On  freight  going  into  northern 
Verujont  and  northern  N«'w  Hampshire  for  shijunent  over  oui-  line  they 
must  let  that  freight  «)lf  and  put  it  on  some  side  Iin<'  to  bring  it  u|t  to  iis. 
That  nnikes  it  cost  a  great  deal  moie.  1  <lo  not  know  that  it  would  make 
any  diff'eren<-e  to  Boston,  but  to  the  territory  north  ami  east  of  Boston 
it  makes  a  great  difference. 

Sj'uator  IvEAGAN.  Are  you  aware  of  there  being  a  viMy  lar;:e  increase 
in  the  amount  of  business  doiu'  on  the  Grand  Trunk  road  since  the 
jiassage  of  the  interstate  commerce  law  by  Ctuigresst 

Mr.  Smith.  I  do  not  recollect,  sir.  1  have  seen  the  statement  of  the 
Grand  Trunk  of  the  amount  of  tonnage  carried  by  it,  luit  I  can  not  sa\ 
as  to  the  aggrega'e  on  their  entire  road.  I  can  only  speak  so  far  as 
their  connection  with  us  is  cojicerned. 

Senator  Reagan.  Give  us  that. 

Mr.  Smith.  So  far  as  their  connection  with  ns  goes,  it  has  diminished 
rather  than  incieased.     On  tin'  aggregate  I  understand  it  has  increase*!. 

Senator  Beagan.  You  are  not  advisol  as  to  tin'  increase  on  the  roads 
south  of  the  lakes  as  com])ared  with  the  iiwrease  on  tin*  Grand  Trunk  ! 

Mr.  SMiiii.  I  do  not  think  that  the  r<»ads  south  of  the  lakes  have  in 
creased  in  tonnage  correspomlingly. 

Senator  Keagan.  I  did  not  know  but  what  you  might  have  detbiile 
information.  It  has  been  given  to  us  that  the  inoreaM*  of  tonnage  on 
the  Gruucl  Trunk  hivs  been  very  large  as  compared  with  the  other  roaUs. 


THE    UNITED    STATES    AND    CANADA.  449 

Mr.  Smith.  I  can  not  si)eak  definitely,  not  liavini?  the  data  before  me 

Senator  Reaqan.  I  intended  to  ask  you  to  what  thelari,'e  increase  on 
the  Grand  Trunk  road  at  the  expense  of  the  roads  south  of  the  lakes 
was  attributable  ? 

Mr.  Smith.  1  have  not  enough  data  to  answer  that. 

The  Chairman.  That  is  all,  governor.  We  are  much  obliged  to  v(.u 
for  coming  down  here. 

I  desire  to  have  put  in  the  record  in  this  connection  the  correspond- 
ence which  has  taken  place  between  Governor  Smith  and  myself  in  reter- 
ence  to  the  questions  the  committee  is  directed  to  investigate. 

The  letters  are  as  follows  : 

Springfield,  III.,  June  27,  18d9. 

Dear  Sir:  The  Committee  on  Interstate  Commerce  of  the  United  StateH  SenatH 
will  meet  in  Boston  on  July  5  to  continue  its  investigation  into  the  relations  iK-tsveeii 
the  United  States  and  Canada  as  they  affect  the  transportation  intercMts  of  this 
country. 

You  will  very  greatly  oblige  me  if  you  will  have  forwarded  to  me  at  the  Hotel  \'eii- 
dome,  in  Boston,  by  that  date,  a  statement  covering  the  following  inquiries  : 

1.  Will  you  kindly  have  prepared  a  statement  describing  the  various  roiues  l)e- 
tween  Boston  and  points  west  of  Buffalo,  Pittsburgh,  Wheeling,  and  Parkersburgli. 
In  so  doing,  please  have  stated  in  their  order  the  several  lines  out  of  Boston,  with 
their  water  and  rail  connections,  as  follows: 

(1)  Central  Vermont,  all  its  rail  and  water,  and  water  and  rail  connections. 

(2)  Boston  and  Maine,  all  its  all  rail  connections,  including  Canadian  Pacific,  and 
its  water  and  rail  connections,  if  it  has  any. 

I  would  be  glad  to  have  this  statement  show  not  only  all  rail,  rail  and  lake,  and 
rail,  canal,  and  lake,  but  also  rail,  sound,  steam-boat,  and  rail  and  ocean,  coastwise 
steamer  and  rail. 

2.  I  would  be  glad  to  have  a  statement  showing  the  class  rates  i)revailiug  at  the 
present  time  over  each  particular  route  described  in  the  foregoing  schedule  of  routes. 

3.  Does  the  object  of  securing  traffic  cause  the  Fitclibnrg  Railroad,  the  Boston  and 
Albany  Railroad,  and  the  New  York  and  New  England  Railroad  Company  to  be  eiiiially 
interested  in  maintaining  between  Boston  and  the  West  rates  which  are  relatively  low 
in  comparison  with  New  York  and  other  sea-board  rates? 

4.  In  your  opinion,  is  it  probable  that  as  low  relative  rates  would  prevail  in  the 
absence  of  Canadian  railroad  competition  as  now  prevail! 

5.  Will  you  please  state  the  facts  in  regard  to  the  application  made  to  the  Inler- 
state  Commerce  Commission  for  an  order  compelling  the  Eastern  trunk  lin<s  and  the 
New  England  railroads  to  make  the  same  rates  between  Boston  and  the  West  as  are 
made  between  New  York  and  the  West,  stating  (a)  the  points  at  the  West  to  which 
the  application  referred  ;  (fe)  the  particular  commodities  to  which  it  referred  ;  (<•)  tli«^ 
decision  of  the  Commission,  and  the  considerations  upon  which  it  was  based;  (d)  any 
additional  statements  in  regard  to  the  matter  which  you  may  de-ire  to  make. 

6.  What  do  you  think  will  be  the  effect  upon  the  commerce  of  Uoston  of  the 
Canadian  Pacific  Railway  line  through  the  State  of  Maine  ? 

Very  respectfully,  S.  M.  Cl'LLO.M. 

Hon.  J.  Gregory  Smith, 

President  Central  Vermont  Railroad  Company,  St.  Albans,  Vt. 


Central  Vermont  Railroad,  President's  Office. 

St.  Albans,  Ft.,  July  f).  1S-1>. 

My  Dear  Sir  :  Yours  of  June  27  did  not  reach  me  until  Monday  of  this  week,  and 
would  have  been  earlier  replied  to  but  for  my  necessary  absence  for  a  portion  of  the 

time  since.  .       .,  ji  .i 

I  send  you  herewith  a  reply  to  the  inquiries  made  in  your  letter,  together  witii  tn. 
other  information  you  desired. 


I  hope  it  is  in  intelligible  form,  though  not  quite  as  I  would  have  had  it.  had  I  been 
fc  home  to  give  it  personal  attention.     Ireplied  to  your  telegram  to-d.^v  that  1  wonl.l 
be  in  Boston  Mondav,  if  you  could  not  favor  me  by  postponing  until  liie8<lay. 
I  am,  very  truly,  yours,  ^    Gregory  Smith, 

Hon.  S.  M.  CULLOM,  President. 

Fendomc  Hotel,  Boston,  Mass. 
6543 39 


450 


TRANSPORTATION"    INTERESTS    OP 


UOUTKS   TO    WKSTEKX    TUINTS    KUOM    HOSTON. 

Boston  and  Albany  R:iili<»!i<l  to  Albany,  thence  over  New  York  Central  to  Bnftalo, 
thence  by  rail  to  Cievelaiul  and  points  west  thereof;  also  by  steamer,  etc.;  also 
canal  from  Albany. 

New  York  and  .\cw  England  Railroad  to  Newbnrgh,  thenco  over  New  York,  Lake 
Erie  and  Western  Railroad  and  West  Shore  Railroad  to  Bnd'alo,  thenco  by  rail  or 
Bttiamer  to  Clevtlaiid  and  jiuints  west  thereof. 

New  Yolk  and  N(!W  England  Railroad  to  Williniautic,  thence  over  the  New  York, 
New  Ilavi-n  and  Hartford  Railroad  ti>  New  York,  thence  <iver  the  Pennsylvania  Rail- 
roiMl  to  Pittshnrgh  and  points  west  tht-reof  and  to  Erie,  thence  by  Hteanier  to  Cleve- 
land and  points  west  thereof. 

New  York  and  N<nv'England  Railroad  to  New  Lnndmi,  tluncc  by  Bteanier  to  New 
York,  etc. 

Fitilibnrj;  Railroail  to  Rotterdam  .lunction,  thence  over  the  Wost  SIior«<  Railroad 
to  BiitValo  and  Sunpi-nsion  Bridge  and  points  wtvst  thereof,  also  to  lintf.ilo,  thence  by 
steamer  to  Cleveland  and  points  west  thereof. 

Fitehbnrg  Railroad  t<»  Mechanicsville,  thence  over  the  Delaware  and  Hndson 
Canal  Coni)»any  ami  New  Y«Mk,  Lake  Eric  and  Western  Railroad,  or  Delaware, 
Lackawanna  and  Western  Railroad,  to. Salamanca  and  Hutlaloand  points  wewt  thereof, 
alsoto  BnlValit,  tlieine  by  steamer  ti>  Cle\cland  and  points  wt-st  thereof. 

FitchlHujj  b'ailroad  to  Rott<<rdam  .Innetion,  thence  by  canal  to  Ibilfalo,  etc. 

Fitclibur^  Railro.id.  etc..  to  Schenectady,  thence  by  canal  to  HntValo,  etc. 

Central  Vermont  Railroad  to  St.  John's,  in  cunuectiou  with  Grand  Trnnk  Railroad 
to  Montreal  ami  points  west  thereof. 

Central  Vermont  R.tilroad  to  Norwood,  in  connection  with  Rome,  Watert«»wn  and 
Ojjflensbnr;;  Railroad  to  Watertown  and  jtoints  wt«sl  thereof. 

Central  Vermont  Railroad  to  R.mse's  Point,  in  connection  with  Cana«1a,  Atlantic 
»n<l  Caiiatlian  Pacific  Railways,  to  Ottawa  and  ]ioints  west  and  ea-si  ilmreol. 

Central  Vermont  Railroad  to  Richford,  in  connection  with  Canadian  Pacilic  Rail- 
road to  Montn-al  ami  points  west  and  east  then-of. 

Central  Vermont  Ivailroad  to  Ogdensbnr^h,  thence  by  steamer  to  Cleveland  and 
points  west  theri-of. 

Boston  and  .Maine  Railroail  to  Newport,  in  connection  with  the  Canadian  Pocifio 
Railroad   via  .North  I'onway  to  .Montreal  and  points  west  thereof. 

Boston  and  .Maine  Railroa<l  via  i'ortland,  in  connection  with  the  Grand  Trunk  Rail- 
road to  Montreal  and  jioints  west  tliereot". 

Boston  and  Lowell  Railroad  via  Concord  toNew]mrt,  in  counection  with  the  Cana- 
dhui  Paeilie  Ivailroad  to  Montreal  and  points  west  thereof. 

Boston  and  Lowell  Railroad  via  White  River  .Innetion  to  Newport,  in  connection 
with  the  Canndian  Paeilie  Railway  to  Montreal  and  (loints  west  thereof. 

Boston  ami  Maine  liaiiroad  via  I'ortlautI  to  Cana4lian  Lower  Province.^  over  the 
Maim*  Central  and  CainMlian  Paeilie  Railway. 

By  Portland  steamers,  tlienee  by  all  rail  lines  to  the  West. 

By  steamers  to  Philadelphia  and  Baltimore,  thence  by  Baltimore  and  Ohio  Rail- 
road to  Parkersbiirgh  and  points  we^t  thereof. 

Freight  rate*  to  and  from  Chicago. 
In  ccDtA  per  100  ponnds. 


To  Chiraeo,  all  mil : 

ItoHioii  loiil   \  irj:  Railrowl,  »n«l  Npw 

York  mill  N  

Ccntnil  Virii  •  i  and  Maine  Iiikilroa<l 

(lfS«  lllc  (lull  11  i>l..tl<<> 

From  (Jliirrttfo,  ull  mil : 

Bo«lon   mill    All.iiiv    K.iilraacl.  Fitcliburu    Railroad,  Xew 
York  iiiiil  N  '  lUtilro.vl,  Central  Vcnuoni  Rail- 

load,  uiiil  I'  :.k.uo  Kaiboad  

To  Cliiia-o.  laki  .i 

lio^ton  and  .\ll>iin>  i;.tilroa<l 

KitrlilinrK  liuilioiid    and     New   York  and  New  England 
Riiilnnil 

r<iitml  ViT'  1 

From  ('liiiji;;o.  ! 

lloAton  and  .\ ..  o;td,  Fitchbnrg  Railroad, *nd  Kcw 

York  anil  >i<<w  Kn^l.inil  Railroad 

Central  Vennonf  Kailmitd 


4 

6 

85 

M 

86 

80 

40 

8S 

27 

23 

25 
33 

Sli 
20 

36 

30 

80 
27 

THE    UNITED    STATES    AND    CANADA.  451 

LINES   FROM   BOSTON  TO   THE   WEST. 

Answer  to  question  No.  1.— New  England  having  tbe  following  outlets : 

1.  Tbe  steamer  lines  to  New  York. 

2.  Boston  and  Albany,  New  York  Central,  and  West  Shore  Railroads;  Western 
Transit  Company,  Lake  Superior  Transit  Company,  on  lakes. 

3.  Fitchburg  ;  New  York  and  New  England ;  New  York,  Lake  Erie  and  Western  ; 
Pennsylvania;  Delaware,  Lackawanna  and  Western,  and  West  Shore  Railroads; 
Union  Steamboat  Company;  Anchor  Steamer  Line;  Lake  Superior  Transit  Companj-, 
on  lakes. 

4.  Central  Vermont  Railroad,  (a)  Grand  Trunk  Railway  to  Chicago,  Milwaukee, 
and  St.  Lonis,  and  its  Michigan  and  Western,  North westorii  and  Southwestern  rail- 
way connections,  (h)  Grand  Trunk  Railway,  lake  lines  via  Fort  Gratiot,  Point  Ed- 
ward, Sarnia,  Midland  and  Collingwood,  to  and  from  Dulutb  and  Chicago,  (c)  Rome, 
Watertowu  and  Ogdensburgh  Railroad  to  Cleveland,  Cincinnati,  Colunibus,  Indian- 
apolis, St.  Louis,  Louisville  aud  Cairo,  and  principal  ])oints  in  the  West,  Northwest 
and  Southwest  upon  the  Wabash;  Cincinnati,  Hamilton  and  Dayton;  New  York, 
Pennsylvania  and  Ohio;  Toledo,  Ann  Arbor  and  North  Michigan;  Chicago,  Milwau- 
kee and  St.  Paul;  Chicago  and  Northwestern;  Chicago,  Hiirliiigtou  and  Qnincy; 
Chicago,  Rock  Island  and  Pacilic,  etc.,  Railroads,  (d)  Canadian  Pacific  Railway  main 
line  via  Rouse's  Point  and  Canada  Atlantic  Railway  ;  Canadian  Pacitic  Kuilway  Soo 
Line  via  Rouse's  Point  and  Canada  Atlantic  Railway  ;  Canadian  Pacitic  Railway'main 
line  via  Richford  ;  Canadian  Pacific  Railway  lake  line  via  Owen  Sound,  (e)  Ogdens- 
burgh Transit  Company,  Central  Vermont  Railroad  lake  line,  running  between  Chi- 
cago, Milwaukee,  Detroit,  Cleveland,  and  Ogdensburgh. 

There  is  no  doubt  that  the  closing  of  any  of  these  routes  would  lessen  the  competi- 
tion, aud  tend  to  increase  the  rates  for  the  carriage  of  freight  to  and  from  Western 
points,  and  be  contrary  to  the  wishes  of  Boston  and  New  England  nicirchants. 

So  far  as  the  Boston  and  Albany  Railroad  is  concerned,  it  has  dclViided  a  suit  be- 
fore the  Interstate-Coninierce  Commission,  and  has  been  sustained  by  said  Commis- 
sion in  opposition  to  the  claim  of  the  Boston  Chamber  of  Commerce,  demanding  same 
rates  to  and  from  Boston  as  are  in  force  to  aud  from  New  York. 

Ansucr  to  question  No.  2. — I  do  not  think  that  as  low  rates  would  prevail  but  for 
the  competition  of  Canadian  railways. 

Answer  to  question  No.  3. — Petition  of  Boston  Chamber  of  Commerce  rs.  Boston  and 
Albany  Railroad,  etc.  (a)  Between  Boston  and  Buffalo,  Suspension  Bridge  or  ])oiut8 
west  thereof,  (b)  AH  dead  freight  except  dressed  meats,  (c)  Interstate-Commerce 
Commission  decided  that  the  rates  to  Boston  were  not  unreasoual)le,  taking  into  ac- 
count the  increased  distance,  and  the  extra  cost  in  connection  therewith,  etc.,  com- 
pared to  New  Y'ork. 

The  merchants  of  Boston  and  New  England  will  never  be  satisfied  until  tl>e  freight 
rates  between  Boston,  etc.,  and  western  points  are  not  higher  than  between  New 
York  and  similar  westerif  points. 

The  Central  Vermont  Railroad  Company  are  in  favor  of  New  York  rates  between 
Boston  and  principal  commercial  centres,  in  the  Western  States. 

THE   CANADIAN   PACIFIC   LINE   THUOUGH   MAIXi:. 

The  Canadian  Pacific  Short  Line  through  theState  of  Maine  will  be  of  much  bonefit 
to  Boston,  because  it  will  tend  to  open  up  direct  trade  with  inland  points  in  New 
Brunswick  and  Nova  Scotia,  and  it  will  stimulate  the  trade  of  P.oston  to  St.  John, 
St.  Andrews,  St.  Stephens,  New  Brunswick  and  Halifax,  Ndva  Scotia. 

The  opening  of  this  line  will  be  another  competitor  to  Boston  lines  for  traffic  to 
and  from  upper  Canadian  Provinces  and  Western  States,  but  we  have  no  doubt  that 
Bostonwill  retain  all  the  traffic  that  naturally  belongs  to  it,  and  will  receive  a  benefit 
which  would  largely  overbalance  any  loss. 

Anv  interruption  of  the  relations  existing  between  the  Central  Vermont  Railroad 
and  the  Canadian  railwavs  would  cause  great  injury  to  New  England  at  large. 
Northern  and  central  Vermont  are  dependent  almost  entirely  for  tli.-ir  8upi)lie8  of 
grain,  flour,  and  meats  upon  the  Central  Vermont  Railroad.  The  same  is  true  also 
of  New  Hampshire  an<:  her  great  manufacturing  centers.  The  Central  \  crmoi.t  Rail- 
road, through  the  lines  &he  controls  and  operates,  reaches  also  tli«^„fP";ra  portion  of 
Massachusetts,  the  central  portion  of  Connecticut,  and  all  of  Rhode  Island.  To 
Maine  the  Central  Vermont  Railroad  sup])lies  a  large  tralhc.  1  he  injury  whuh  wouh 
r<.sult  to  the  territory  thus  reached  by  the  Central  Vermnnt  Railroa.l  and  its  leased 
lines  would  be  severely  felt,  whMe  no  corresponding  beneht  could  in  any  way  r.-sult 
Nor  is  the  Central  Vermont  Railroad  and  the  country  tributary  to  it  the  only  parties 
to  be  affected  bv  such  an  interruption.  The  Canadian  railways  which  •-;"R=^/-;\»'^«*;  f 
ip  the  commerce  of  the  United  States,  and  are  earners  to  a  great  extent  ol  tUt  proa- 


452  TRANsiPOIiTATION    INTEKESTS    OF 

nets  of  thft  West,  Northwest,  ami  Southwest  for  the  supply  of  the  Eastern  States,  are 
tlie  Ciinada  Sinitlnrii,  tlie  (Jicat  Westerii  of  Caiiuihi,  as  well  as  the  Cauailiaii  I'aeiljc 
Kailmad  and  the  tiiand  Tniuk  systeiiis.  Crossing;  the  peninsula  of  the  province  of 
Ontario,  these  roads  furnish  tin*  outh't  for  lar;;e  systems  of  roa<ls  west  of  that  terri- 
tory, and  become  feeders  to  many  of  the  roads  in  the  Unitt-d  Stales,  and  supply  an 
immense  volume  of  traflic.  The  iriterru]>tion,  tlierefore,  of  tin-  rehitious  of  these  roads 
with  tiio  various  roa<ls  on  this  side  of  flie  liui'  would  comjiel  the  ^reat  commerce  of 
the  territory  of  tlie  Went,  Nortliwcst,  iin<l  Sontliwcst  to  seek  its  outlet  over  the  lines 
controlled  hy  the  New  York  Central,  Erie,  and  Pennsylvania  roads,  tliusoverbnrdening 
those  roads  already  doiiif^  an  immense  traflic  nearly  to  their  full  capacity,  and  also 
compelling;  a  liir;;e  secti<ui  of  country  in  northern  New  York  an<l  New  En;;land  to  ob- 
tain their  supplies  by  circuitous  and  indirect  routes  at  jjreatly  increased  cost  and  sub- 
ject to  j^reat  delays,  and  tend  to  destroy  the  fair  and  just  competition  which  forms 
HO  lar^e  a  factor  in  the  success  and  prosperity  of  tln-ir  local  development.  The  buiue 
may  also  be  stated  as  applicable  to  the  commerce  of  the  East  going  West. 

STATEMENT  OF  JAMES  T.  FURBER. 

Mr.JAMES  T.  FuRnteR,  f,'('iieral  luanagor  of  the  liostoii  and  Maino 
Railroad,  appeared. 

Tlie  Cil.MKMAN.  Wlicre  do  voti  live,  Mr.  l'iirl>ort 

Mr.  Fri:in:K.  At  (licat  l-'alls.  New  Ilaiiipshire. 

riic  ('IIMK'MAN.   Wluiin  ilo  yiiii  rt'pnsriit  f 

Mr.  l'rj;iti;i:.  !  repn-stiit  the  llosion  and  .Maine  Railroad,  covering 
a  section  (d'eonntry  of  about  one  thon  anil  miles  in  extent. 

The  CilAiKMAN.   In  what  capacity  T 

Mr.  FluiJKK.  As  ^reiR'ial  n)ana;,'cr  thereof. 

Tiie  CilAiioiAN.  Now,  prucee<l  to  make  your  statement  in  yotir  own 
way. 

Mr.  FUKUER.  I  woiihl  much  jirefcr  to  answer  <inestions  that  the  eoin- 
niittec  sec  lit  t(»  proptniiid.  1  can  only  sa>  in  rc;:ard  to  the  li4)ston  and 
Maine  Railroad  that  (lovirnor  Smith,  in  his  remaiks<*onc«'rniiij,'  the  re- 
lations of  the  Canadian  lines,  jtarticiilarly  throiij^h  New  Kn;,'land,  has 
expressed  my  full  views  on  the  matter.  \\'t'  ar»'  a  distrilmtinj;  railroad 
for  the  proiiucts  of  the  West  m«)re  partieidarly,  and  we  cover  a  large 
mannfactiiriiijr  district,  in  which  is  maiiutactiiied  a  lar};e  amount  of 
poods  to  he  consigned  to  the  \Vest  and  Northwest.  We  are  run:iing 
a  i(»ad  Irom  Swantou,  Vt.,  which  connects  with  the  Central  Vermont 
in  that  j)Iaee,  thence  via  that  line  to  the  Canadian  racilic  and  to  the 
Grand  Trunk;  also  through  to  the  Konu',  Wutertowu  and  Ogdensbnrg 
Kailroad.  We  carry  it  across  the  8rat»'  of  ^'«•rmont  and  connect  at 
Scott's  Mills  with  the  Maine  Central  Hailroiul  and  with  the  Concord 
Kailroad.  The  Maine  Central  is  now  building  a  line  there  which  niakes 
it  a  jH'rtect  line  from  that  section  of  the  country  to  other  parts  of  the 
State  of  Maine.  We  also  by  another  route  connect  with  the  Grand 
Trunk  and  the  Cana<lian  I'acitic.  We  have  a  line  that  connects  with 
the  (irand  Trunk  at  Portland,  whi(rh  (;omes  through  to  Hoston,  where 
connection  is  made  with  the  Fitchburg  and  the  Boston  and  Albany 
Railroads,  with  New  England  and  New  York,  and  we  connect  with  the 
Old  Colony. 

We  are  also  running  a  line  across  Massachusetts  extending  from 
ISoston  through  to  the  Connecticut  Kiver,  there  connecting  with  the 
Connecticut  River  Railroad  and  through  that  with  the  New  York,  New 
Haven  and  Hartford,  and  shortly  shall  be  connected  with  the  Connecti- 
cut Western,  thereby  making  us  a  line  over  the  Poughkeepsie  Bridge 
and  over  the  Pennsylvania  through  to  the  West,  Lake  Ontario,  etc. 
We  have  a  large  pojmlation  to  serve  ami  we  are  ijuite  anxious  that 
those  people  should  be  served   as  promptly  as  possible  aud  as  cheaply 


TflE   UNITED    STATES   AND   CANADA.  453 

as  possible.     We  thiuk  that  any  disturbance  of  the  Canadian  lines 
would  seriously  interfere  with  the  people  whom  we  serve. 
The  Chairman.  What  do  you  mean  by  "  disturbance?" 
Mr.  FuRBER.  Such  as  taxing  cars  coming  through  into  this  country 
and  such  as  undertaking  to  bring  the  Canadian  lines  under  restrictions 
and  stopping  their  trade  at  a  certain  line  and  not  i)ermitting  it  to  bo 
transported  in   here.     I  believe  with  respect  to  disturbance  tliat  the 
interstate  commerce  law  has  disturbed  us  more  than  anything  that  has 
ever  been  done.    I  believe  it  is  an  injury  to  our  people. 

THE  PAYMENT  OF  REBATES. 

The  Chairman.  Did  it  put  a  stop  to  your  paying  secret  rebates  ? 

Mr.  FuRBER.  We  have  never  been  in  the  habit  of  paying  any  secret 
rebates. 

The  Chairman.  Do  you  think  that  could  be  said  of  all  the  railroads 
of  the  country. 

Mr.  FuRBER.  I  think  not.  I  do  not  think  there  has  been  much 
trouble  about  one  road  knowing  what  the  other  road  was  doing. 

The  Chairman.  You  think  no  secret  rebates  have  been  paid  by  any 
of  the  roads? 

Mr.  FuRBER.  Oh,  yes ;  there  have  been  drawbacks  and  rebates  i)aid 
for  one  reason  and  another  by  certain  lines,  but  I  think  the  other  lines 
found  out  what  it  was. 

The  Chairman.  And  then  they  went  at  it  themselves? 

Mr.  FuRBER.  1  think  so,  and  I  think  it  was  perfectly  right.  I  think 
it  right  that  the  people  should  have  the  advantage  of  getting  a  rate  as 
low  as  possible.  I  do  not  think  we  have  anywhere  near  reached  the 
bottom  in  the  matter  of  transportation  charges. 

The  Chairman.  I  do  not  either;  but  do  you  think  it  right  to  pay  a 
secret  rebate  to  one  man  and  not  to  his  neighbor  ? 

Mr.  FuRBER.  I  do  not  think  that  could  last  long. 

The  Chairman.  Why  not  ? 

Mr.  FtJRBER.  Because  the  neighbor  would  find  it  out. 

The  Chairman.  That  has  not  been  the  history  of  it.  I\ren  have  beu« 
broken  up  or  very  nearly  bankrupted  before  they  found  it  out. 

Mr.  FuRBER.  Well,  I  do  not  believe  that  the  manufacturing  tiis- 
tricts  which  we  are  serving  would  be  able  during  certain  seas(.iis  of 
the  year,  particularly  in  the  fall,  to  get  the  products  that  they  svant 
and  which  they  should  receive  if  they  were  to  be  conlineil  to  the  Amer- 
ican lines. 

The  Chairman.  Why? 
.  Mr.  FuRBER.  Because  I  believe  the  American  lines  woul*^  not  be 
able  to  transport  the  products  within  the  time  they  were  wanted.  I 
know  we  are  finding  a  very  large  amount  of  business  coming  to  us  from 
the  East  and  the  West  over  American  and  Canadian  lines,  and  at  cer- 
tain seasons  we  find  that  we  get  all  the  traffic  we  can  accohiniotlatc  and 
all  we  can  take  care  of.  In  fact  it  is  difficult  to  find  safticient  power 
and  sufficient  cars  with  which  to  move  the  traffic. 

The  Chairman.  How  did  you  get  along  before  these.  Canadian  roads 
were  built  ?  _ 

IMr.  Furber.  Well,  sir,  the  Canadian  roads  have  been  built  tor  a 
long  time,  and  the  traffic  of  the  country  since  the  building  of  these 
Canadian  roads  has  ra{)idly  increased.  It  has  been  more  than  doubled, 
certainly. 

The  Chairman.  More  than  doubled  since  when  ? 


454  TRANSPORTATION   INTERESTS    OP 

Mr.  FuRBER.  Since  the  Canadian  roads  were  built.  The  Grand 
Trunk  Kailroad,  a.s  you  are  aware,  is  an  old  road,  and  has  been  here 
a  ^ncat  many  years,  and  been  here  about  as  lonj:  as  any  of  our  roads. 

We  receive  trallic;  also  at  Whitr  Itiver  Junction  fioin  tlie  Central  Ver- 
nn»nt,  and  receive  it  Iroin  Portland  by  direct  connection  with  the  Grand 
Trunk  at  that  point. 

TOE   REGULATION  OF   COMMERCE. 

The  CnviUMAN.  Well,  the  substanceof  your  statement  is  that  yon 
do  not  think  you  oujrht  to  l)e  rej:ulated  by  American  le^jislation,  and 
that  the  Cana»lian  roads  oujjht  to  be  left  alone  also,  is  it  not  t 

Mr.  FUKBKR.  Xo,  sir.  To  a  certain  extent  it  is  proper  and  rijfht  for 
the  American  (iovernm«*nt  to  rej^ulate  (Mnnmeree  anu)n{;  the  States.  We 
are  aware  that  that  is  a  very  proper  thin<;  to  do.  At  the  same  time 
wiien  yon  undertake  to  regulate  the  commerce  amonpf  the  Slates  and 
re;,Mihite  tlu'  tarilVat  whieh  it  shall  be  dom*,  you  are.  to  a  lar^'e  extent, 
<T(atin^  a  ;;ri'at  deal  of  trouble,  and  1  do  not  know  of  any  wayin  which 
it  can  be  <lone  unless  the  Government  is  pr»'pared  to  take  control  of  »11 
the  railroads  and  form  one  system,  an<l  then  make  rates  tiiat  shall  cover 
the  whole  ;:ionnd.  The  people  can  thenae<'ept  their  rates  or  not.  We 
have  ascertained  by  exiierieiice  that  it  Imm-oiucs  necessary  to  aid  in  the 
biiildiii;,'  up  of  towns'alon;;  our  line,  and  to  <lo  so  we  have  to  favor  them 
as  far  as  i)racticable. 

The  Chairman.  Do  you  think  that  that  is  the  duty  of  every  common 
carrier  f 

Mr.  FiRBER.  Yes,  sir.  1  believe  a  connnon  carrier  is  a  developer  of 
the  country. 

LOW  RATES  DEVELOP  TUE  COUNTRY. 

The  Chairman.  Do  you  think  it  is  the  duty  of  a  common  carrier,  if 
it  has  one  town  on  i:s  line  and  would  like  to  have  another,  to  discrimi- 
nate aj;:iinst  the  town  yon  have  in  order  to  build  up  another? 

Mr.  Fi'RHEU.  1  think  it  is  the  duty  of  the  common  carrier  to  ^'et  as 
many  more  tow  us  as  possible,  because  when  it  has  once  established  its 
towns  and  has  its  line  dotted  with  local  traflic  it  has  then  and  there  a 
local  trallic  which  will  support  its  railroad  an<l  ]>ay  its  stockholders  a 
fair  rate  of  interest  for  their  money  invested,  an(l  at  the  same  time  will 
be  enabled  to  brin;;  to  them  from  foreij,'n  points  ;xoo<ls  at  very  low  rates. 
Low  rates  always  build  up  a  territory.  We  have  always  found  it  so  in 
our  exix'rieiu'e.  We  have  always  found  that  itsuccee<led  in  j^iviu;,'  our 
peojile  such  advantages  as  enabledthem  tocompete  with  peoi>le  inother 
parts  of  the  country. 

For  instance,  it  is  our  interest  ami  study  to  furnish  to  all  our  manu- 
facturers their  supplies  for  manntMctuiin^' l>uri)oses  as  cheaply  as  manu- 
facturers are  furnished  who  are  located  at  Fall  River  and  other  points. 
When  we  can  furnish  them  an  outlet  for  their  goods  at  as  clu-ap  rates 
as  our  friends  at  other  manufacturinpr  ])oints,  and  furnish  theuj  their 
supplies  at  as  low  rates  as  other  manufacturers  are  able  to  obtain  them, 
we  think  we  are  serving  them 'properly  and  that  they  are  enal>led  to 
com])ete  with  other  jiarties,  and  the  points  we  serve  do  not  sulVer  in 
competilion  with  others. 

THE  CANADIAN  ROADS  OF  ADVANTAGE  TO  NEW  ENGLAND. 

The  Chairman.  I  shall  not  exanune  you  on  the  Jaw  as  it  stan«l8,  bnt 
what  we  are  specially  charged  to  inquire  into  is   whether  auythiug 


THE    UNITED    STATES    AND    CANADA.  455 

ouglit  to  be  done  by  the  American  Congress  in  relation  to  the  Canadian 
roads. 

Mr.  FuRBER.  I  think  that  the  Canadian  roads  ought  not  to  be  dis- 
turbed in  any  way  whatever. 

The  Chairman.  You  think  nothing  ought  to  be  done. 

Mr.  FuRBER.  I  think  so,  so  far  as  \ye  in  this  section  stand  in  relation 
to  it.  These  Canadian  roads  are  certainly  a  great  advantage  to  ns. 
The  products  of  our  section  here  are  carried  to  the  West  at  much  higher 
rates  than  the  productsof  the  West  are  brought  here.  Tliat  is  a  matter 
I  dislike  very  much,  and  accordingly  I  have  endeavored  several  times 
to  have  it  changed.  I  think  we  should  have  our  shoes  and  manufact- 
ured goods  carried  as  cheaply  to  the  West  as  Western  corn  is  brought 
to  this  section  of  the  country. 

The  Chairman.  Why  is  it  different  ? 

Mr.  FuRBER.  That  is  a  matter  that  the  trunk  lines  manage. 

The  Chairman.  Is  it  brought  about  by  the  competition  of  the  Ca- 
nadian Pacific  ? 

Mr.  Furber.  I  do  not  think  by  the  Canadian  Pacific.  I  think  the 
reduction  of  rates  and  the  cutting  of  rates  were  not  inaugurated  by  the 
Grand  Trunk  or  the  Canadiau  Pacific.  I  think  they  were  inaugurated 
by  the  American  lines  entirely.     We  have  so  found  it  in  our  exi)erience. 

The  Chairman.  So  that  whatever  reductions  the  people  have  received 
have  been  brought  about  by  the  American  lines,  aiid  not  by  the  reduc- 
tions made  on  the  part  of  the  Canadian  lines  ? 

Mr.  Furber.  Brought  about  by  a  reduction  by  the  American  lines  in 
endeavoring  to  get  the  business  from  the  Canadian  lines. 

The  Chairman.  Does  that  hurt  the  people  any? 

Mr.  Furber.  Ko,  sir;  we  are  verj^  glad  to  have  it.  We  peojde  in 
this  section  want  all  the  advantages  which  God,  nature,  or  man  can 
give  us,  and  if  the  English  Government  are  ready  to  give  subsidies  to 
railroads  which  will  enable  them  to  bring  to  us  our  goods  at  cheaper 
rates,  we  are  glad  of  it. 

The  Chairman.  You  have  a  little  American  pride,  have  you  not? 

Mr.  Furber.  Yes,  sir;  but  when  an  American  stands  up  here  and 
says  that  he  can  not  compete  with  the  rest  of  the  woihl,  and  he  cries 
like  a  baby,  1  am  not  in  favor  of  it. 

The  Chairman.  Are  you  ready  to  meet  these  foreign  corporations 
in  a  free  tight? 

Mr.  Furber.  I  am  ready  to  meet  the  Canadian  roads  in  anything. 

The  Chairman.  The  Canadians  raise  potatoes  and  many  other  things, 
and  do  you  want  those  articles  to  come  in  free? 

Mr.  Furber.  Those  are  matters  about  which  I  am  not  prepared  to 
talk  at  the  present  time. 

The  Chairman.  Y"ou  say  you  want  to  stand  up  with  them  in  a  free 
fight. 

Mr.  Furber.  I  will  compete  with  anybody  in  my  business.  We 
have  a  road  which  runs  in  four  different  States,  aiul  we  have  found  cer- 
tain troubles  in  connection  with  the  interstate  commerce  law,  ami  that 
is  one  reason  why  I  said  it  should  be  repealed,  or  ought  to  be. 

THE    interstate-commerce    LAW. 

As  we  understand  the  law,  after  having  once  advertised  our  rates,  we 
are  compelled  to  abide  by  those  rates  until  we  have  advertise*!  others. 
Now,  we  are  frequently  finding  among  our  people  a  number  ot  parties 
who  desire  to  travel  from  one  State  to  another,  and  we  find  that  wo 


456  TRANSPORTATION  INTERESTS  OP 

have  no  authority  to  carry  them.  For  instance,  a  party  of  fifty  will 
jxTliaps  want  to  visit  a  club  here  in  Boston,  and  i)erhai)S  a  club  in 
JJoston  jvill  want  to  pay  a  visit  to  a  duo  in  Portland,  and  they  will 
wairt  to  ;;o  to  ni^^lit.     We  can  not  ix'wc  them  excursion  rates. 

Tlie  CiiAiKMAN.  You  have  a  ri^dit  to  give  them  excursion  rates, 
have  you  not? 

Mr.  Fi'iMiKR.  We  do  not  understand  that  we  have  a  ripjlit  to  jrive 
them  any  excursion  rate,  or  at  least  not  such  as  we  advertise  for  an 
excursion  rate.  For  example,  we  will  advertise  an  excursion  rate  to 
Old  Orchard,  which  is  this  side  of  Portland,  for  the  public.  Now  then, 
one  of  the  clubs  here  in  IJoston  may  desire  to  fjo  to  Portland  to  pay  a 
visit  to  a  Portland  club.  They  come  to  us  for  a  rate  and  thev  do  not 
expect  to  ])ay  us  over  half  the  refjular  fare.  As  we  un«lerstand  the  law 
we  have  no  rijjht  to  make  that  rate  unless  we  advertise  it  and  send  our 
ad\  ertiscment  to  the  Interstate  Commerce  (\immission. 

I'lirtliennore  we  tall  into  the  same  trouble  with  freifrhts  of  all  kinds 
and  arc  compelled  to  issue  commodity  tarills.  These  C(nnun)«lity  tariffs 
are  simply  reductions  of  rates.  These  reductions  are  made  in  lijrlit 
j,'oods  as  well  as  heavy  j^oods.  People  are  fre<pu'ntly  callinj;  for  rates, 
and  they  want  them  tlie  same  day  they  are  called  for.  It  is  impossible 
for  us  to  advertise  that  rate,  if  we  want  to  ;,Mve  it  to  them,  and  j,'et  the 
rates  into  the  hamls  of  the  Commission  at  \Vashiu;,'tou  in  time.  We 
have  to  tell  them  that  we  can  not  carry  exc<'pt  at  the  rates  advertised, 
when  we  could  jjive  them  a  rate  that  would  be  snlliciently  remunerat- 
ive, siniply  because  wo  are  not  able  to  reduce  our  rates  to  a  certain 
figure  witliin  a  certain  specitied  time.  We  find  that  quite  annoying  in 
our  business. 

The  long  and  short  haul  clause  of  the  law  atT«'cted  us  considerably 
ast  year  with  respect  to  the  business  of  the  West.  We  have  had  no 
trouble  with  it  this  year.  We  did  last  year  iti  the  inatiiu'r  alluded  to 
by  (lovernor  Smith.  It  reduced  our  rates  from  here  to  Montreal;  also 
iVoin  here  to  St.  Albajis  and  tln-nce  to  Montjielier. 

The  CiiAiKMAN.  That  reduction  was  lor  the  benefit  of  the  people,  was 
it  not  T 

Mr.  FiRin-U.  Yes,  sir. 

The  Chairman.  And  the  New  England  people  are  the  people  you 
are  trying  to  take  care  of,  you  say  f 

,Mr.  FuuBEU.  Yes,  sir;  but  it  did  Eot  reduce  the  rates  on  the  traffic 
East,  I  am  sorry  to  sjiy. 

The  Chairman.  You  ought  to  put  the  rates  down  tui  the  East^Mu 
trallic,  then. 

Mr.  FuRBER.  It  is  impossible  to  put  the  rate  down  for  any  one  per- 
son;  you  must  do  it  for  all.  That  is  fixed  by  the  trunk  line  agre«'ment.s. 
If  the  Government  sees  lit  to  take  charge  of  tin-  railroads  and  ap|)oi!\t 
a  commissioner  to  take  care  of  them,  1  supi)ose  that  then  it  would  be 
satist'act(uy  to  the  Govern nient  whether  it  would  be  to  the  people  or 
not. 

The  Chairman.  Do  you  objec't  to  the  trunk  Hue  association  and  the 
agreements  of  the  association  1 

Mr.  FuRiiER.  No,  sir. 

The  Chairman.  The  law  has  nothing  to  do  with  that. 

Mr.  FuRUKR.  We  maintain  that  association  and  nuike  agreements  for 
the  sak<'  of  harmony  among  the  railroa<ls. 

The  Chairman.  Then  you  ought  not  to  complain  of  anybody. 
Mr.  FURRER.  I  am  not  complaining. 

The  Chairman.  You  seem  to  be  complaining  of  the  Government. 


THE    UNITED    STATES    AND    CANADA.  457 

Mr.  FuEBER.  I  do  not  complain  of  anything  except  the  interstate 
commerce  law. 

The  Chairman.  That  was  enacted  by  the  Government  in  its  legisla- 
tive capacity. 

Mr.  FuRBER.  Yes,  and  I  think  in  certain  parts  of  the  law  the  Gov- 
ernment made  a  mistake  by  not  having  snfificient  information  in  regard 
to  the  law  before  they  enacted  it. 

The  Chairman.  We  ought  to  have  sent  for  you,  perhaps.  [Laugh- 
ter.] 

Mr.  FuRBER.  No,  I  think  you  had  plenty  of  people  there. 

Senator  Blair.  I  do  not  understand  that  because  the  Government 
has  made  a  law  an  American  citizen  is  stopped  from  criticising  it.  I 
think  the  witness  has  a  right  to  criticise  the  law. 

The  Chairman.  I  am  not  complaining  of  the  witness  criticising  the 
law.  I  simply  want  the  witness  to  confine  his  remarks  to  the  facts. 
He  speaks  of  the  trunk  lines  making  agreements.  The  law  has  nothing 
to  do  with  that.  If  the  law  has  anything  to  do  with  it  perhaps  it  pro- 
hibits it. 

Mr.  FuRBER.  The  law  has  been  in  force  now  a  year  or  more.  I  will 
inquire  if  in  your  knowledge  it  has  ever  prevented  any  of  those  agree- 
ments ? 

The  Chairman.  The  law  itself  prohibits  what  is  termed  pooling, 
and  thes^:e  agreements  which  are  made  now  are  supposed  to  be  evasiv«», 
*iu  a  sense,  of  those  provisions  of  law  in  relation  to  pooling.  At  the 
same  time  I  believe  the  Interstate  Commerce  Commission  regard  the 
contracts  as  allowable  under  the  statute.  I  made  the  inquiry  whether 
you  thought  tlie  contracts  that  you  made  which  prevent  you  from  get- 
ting certain  advantages  were  a  matter  of  law  or  a  matter  of  voluntary 
action  on  the  part  of  the  railroads. 

Mr.  FuRBER.  I  am  not  aware  that  the  trunk  lines  have  made  any 
agreements  whatever,  except  such  as  have  been  considered  proper  by 
the  Interstate  Commerce  Commission.  I  think  the  Commission  have 
been  consulted  in  all  cases. 

The  Chairman.  I  think  that  is  true,  and  that  is  the  reason  I  stated 
that  while  the  law  does  not  require  it,  yet  the  railroads  seem  to  regard 
these  agreements  as  important  in  the  interest  of  stability  of  rates,  and 
I  think  they  are  allowed  by  the  Commission  to  be  formed  in  the  shape 
they  are  now  formed. 

Mr.  FuRBER.  Yes,  sir.  I  think  differential  rates  also  have  been 
allowed  by  the  Commission. 

The  Chairman.  The  roads  have  a  right  to  allow  differentials,  T  sup- 
pose. At  any  rate  it  is  so  regarded.  Do  you  believe  in  dilVerential 
rates  as  between  the  American  trunk  lines  and  the  Canadian  lines  ? 

Mr.  FuRBER.  It  seems  to  be  a  principle  that  has  been  recogni/cd  by 
all  the  roads.  It  is  a  principle  which  has  not  only  been  recognized,  but 
agreed  upon  by  all  the  roads. 

The  Chairman.  And  in  that  view  the  Canadian  road  could  be  given 
a  differential.    Why  was  it  given  the  differential  ? 

Mr.  FuRBER.  To  cover  the  difference  in  time  and  distance.     In  the 
transportf 
ter  of  time 

Qijo  iiiiA  oiiickGr    «-.«.--  .^.^  " 

then  the  lonser  linels  at  a  disadvantage,  and  that  line  in  order  to  get 


tation  of  freight  from  Boston  to  Chicago,  i)articularly,  the  nuu- 
le  enters  into  it,  and  if  merchandise  can  be  transported  by  any 
quicker  than  it  can  by  another  line  which  is  the  longer  line, 

„^  longer  line  is  at  a  disadvantage,  and  that  line  in  order  to  get 

a  reasonable  proportion  of  the  business  has  a  differential  allowed  it  tor 
the  purpose  of  enabling  it  to  take  freight  at  a  little  cheaper  rate  witu- 


458 


TRANSPORTATION   INTERESTS   OF 


out  being  subject  to  criticism  on  the  part  of  other  lines  for  having  cut 
rates. 
The  Chairman.  1  understand  that  that  is  the  purpose  of  it. 

RATES  REDUCED  BY  CANADIAN   COMPETITION. 

Senator  Blaiu.  Spoakiiip  of  tlie  competition  of  wliicli  the  trunk  linos 
of  this  country  conipluiti  as  between  tlieuiselves  and  the  Canadian  l*a- 
citic  line,  and  of  the  otlier  Canadian  line,  do  you  understand  that  the 
Canadian  lines  in  tlie  transaction  of  their  i)nsiness  have  adopted  a 
policy  which  tends  to  a  reduction  of  the  exi)enses  of  transjiortation  f 
Have  they  lessened  the  cost  of  transportation  to  the  people  of  2sew 
En^fland  ? 

Mr.  Fl'UBKR.  Every  railroa<l  that  is  constructed  extending;  from  the 
East  to  the  West  will  tend  to  a  reduction  of  the  cost  to  the  people  of 
Js'ew  Iviiiiland  of  the  tratlic  that  is  to  be  transported,  for  the  reason  that 
each  railroad  will  be  set-kinj;  to  jjet  its  proportion  of  business,  whicii 
they  will  construe  to  be  the  whole  amount,  if  they  can  j;et  it,  and  that 
competition  in  railroa<lin;;,  as  in  every  other  thin;Xi  tends  to  a  reduction 
of  rates.  A  larj;e  number  of  diy-^o(uls  stores  in  this  city  will  tend  to  a 
reduirtion  in  the  price  of  dry  gooils. 

Senator  Hlaiu.  Now,  does  this  Ixiierit  which  thus  accrues  to  the 
people  of  New  En^rland — not  tlie  railroatls — injure  the  peoi)le  in  any 
other  i>art  of  the  country  I 

Mr.  FuRHEU.  Iti  my  opinion  it  does  not.  I  believe  it  is  a  ^reat  ad- 
vanta<;e  to  the  people  ot  New  Fn^dand  without  beinj;  a  disadvantage  to 
any  other  secti<ui  (»f  the  country. 

Senator  lii.AiK.  Then  the  issue  here,  if  there  be  any,  is  rciilly  be- 
tween the  |)eople  and  the  radr(»ads,  is  it  not  T 

Mr.  Fikhkic.  It  seeuis  to  be  that. 

Senator  IIi.aik.  And  it  is  a  quesiicui  whether  the  ]>eople  shall  have 
thesi'  rates  nduced,  or  whether  the  American  railroads  shall  <'liarj,'e 
the  increased  rate  of  transportation,  wliich  they  say  they  neeil,  is  it? 

Mr.  KiKiiKK.  It  ai)peais  that  way. 

Senator  liLAiU.  Now,  in  such  an  issue  as  that,  who  oufrlit  to  have  the 
preference  in  le;,'islation,  the  people  as  a  wlu)le  or  the  corporation  that 
have  been  creat«'d  for  the  purpose  of  transportation  ? 

Mr.  Fi'KiiKR.  My  ju<l^ment  is  that  the  p»*ople,  ^hould  have  the  a<l- 
vantape.  The  pe()i)le  own  the  corporations,  and  the  people  will  never 
have  those  railroads  sacrificed.  They  will  ha\'e  them  earn  a  reasonable 
amount  of  money  in  order  to  keep  them  in  jjood  re|»air  and  to  be  ;,'ood 
servants  of  the  people  and  to  pay  their  stockholders  a  fair  rate  of 
interest. 

RELATIONS  OF  THE   TRUNK-LINES  TO  NEW  ENGLAND. 

Senator  Blair.  Do  you  consider  the  natural  terniinusof  tln'New  York 
Central,  or  tlu'  trunk-lines,  as  they  are  <*alle<l,  in  New  England,  or 
at  New  York,  Philadelphia,  and  I'.altiuuue  ? 

Mr.  FriniKR.  I  consider  the  natural  terminus  of  the  trunk  lines  at 
New  Y^ork  ? 

Senator  Blair.  Are  they  not.  then,  by  this  procecdinjr,  undertaking 
to  reach  out  into  territory  not  naturally  heloiiKing  to  them,  and  to};row 
rich  on  what  beloiif^s  to  other  people? 

Mr.  FtiRUKR.  They  are  reaching;  out  into  New  Enirland  and  into  the 
nianufacturiii};  districts,  a  country  whi<'h  we  cover,  and  they  get  a  i>or- 
tion  of  that  business.  They  want  a  proportion  of  it — all  they  can  getof 
it.    They  coustruct  theii'  railroads  with  that  view,  as,  for  example,  the 


THE   UNtTfiD   STATES   AND   CANADA.  459 

Kew  York  Central,  wliicli  has  four  tracks,  and  they  do  a  very  luro-e 
amount  of  business.  Frequently  they  get  blocked  in  their  yards  on  a*c- 
count  of  so  much  business. 

Senator  Blair,  Which  is  the  more  natural  route  of  supjtly  between 
New  England,  especially  central  and  northern  Xew  Eiigl;ui(*l,  and  tiie 
Northwest,  by  way  of  the  American  trunk-lines,  or  north  of  Lake  ("ham- 
plain  ? 

Mr.  FURBER.  There  is  very  little  difference  in  distance,  I  should  think. 
I  think  from  Boston  to  Duluth— taking  Boston  as  the  New  England 
point,  although  Boston  takes  comparatively  but  very  little  of  the  freight 
that  is  brought  to  New  England;  we  have  to-day  a'larger  poi)ulation  in 
Sussex  and  Middlesex  Counties  than  there  is  in  Boston. 

Senator  Blair.  Those  two  counties  are  north  of  Boston. 

Mr.  FuRBER.  Yes,  sir ;  north  and  east  of  Boston.  In  those  two  coun- 
ties there  is  a  larger  population  to-day  than  m  Boston. 

Now,  then,  between  Boston  and  Duluth  there  is  not  a  great  deal  of  dif- 
ference whether  you  travel  by  Chicago  or  go  north  of  the  lakes.  My 
imj)ression  is  there  may  be  in  the  vicinity  of  a  hundred  miles,  perhaps, 
in  favor  of  the  Canadian  lines  going  to  the  Sault  Ste.  Marie  by  the  "  Soo 
line,"  and  across  by  the  South  Shore  and  Atlantic. 

Senator  Blair.  Do  you  think  that  these  Canadian  lines  are  getting 
anything'  more  than  the  natural  increase  of  commerce  which  has  taken 
place  since  the  lines  were  constructed  ? 

Mr.  FuRBER.  I  am  unable  to  say. 

Senator  Blair.  It  is  hardly  to  be  supposed  that  these  American  or 
any  other  lines  are  constructed  with  a  tacit  understanding  that  they 
are  to  do  all  the  business  in  the  future. 

Mr.  FuRBER.  No,  sir. 

Senator  Blair.  They  take  their  risks  as  a  man  in  business  does. 

Mr.  FuRBEB.  Yes,  sir.  1  do  not  think  a  road  is  ever  built  with  the 
idea  that  they  are  to  get  any  particular  traffic,  or  to  hold  any  particular 
traflic.  Some  roads,  of  course,  are  built  from  pure  cussedness,  if  you 
will  allow  me  to  use  the  expression.  But  lines  are  generally  built  with 
the  idea  that  they  are  to  pay  from  the  traflic  they  are  going  to  get. 

Senator  Blair.  Do  you  think  it  is  quite  fair  that  these  American  lines 
should  be  obliged  to  compete  with  a  line  constructed  almost — it  is  said 
wholly — by  the  capital  of  the  British  Empire? 

Mr.  FuRBER.  I  do  not  see  why  not,  inasmuch  as  the  line  which  is  eon- 
structed  by  the  capital  of  the  British  Empire  is  of  great  advantage  to 
our  American  people.  It  brings  to  us  a  large  amount  of  the  products 
of  the  West,  it  brings  us  the  food  of  the  West,  which  we  want  here  anil 
the  products  which  we  want  to  use  in  our  manufacturing  districts. 

Senator  Blair.  Suppose  the  French  had  succeeded  in  getting  through 
the  Isthmus  of  Darien  with  a  canal,  do  you  think  the  American  i)eoi)le 
should  be  precluded  from  availing  themselves  of  it  for  the  purpose  of 
preserving  the  transcontinental  lines  of  the  country  ? 

Mr.  FuRBER.  That  is  rather  a  contingent  question. 

Senator  Blair.  Take  the  Nicaragua  Canal,  then  ;  do  you  think  the 
American  people  should  be  compelled  to  send  their  transeonl mental 
traflic  over  the  American  railroads,  in  order  to  maintain  and  supi)ort 
those  roads,  and  thus  be  deprived  of  the  advantages  of  the  canal  I 

Mr.  FuRBER.  I  do  not  like  to  go  into  that  question. 

THE  RAILROADS  BELONG  TO  THE  PEOPLE. 

Senator  Blair.  But  your  general  position  is  that  the  benefit  of  the 
people  of  the  country  is  uppermost? 


460  TRANSPORTATION  INTERESTS  OP 

Mr.  FtTRBEK.  I  think  so ;  I  think  that  is  what  tho  railroads  were  con- 
structed tor,  to  .suhstTVo  the  interests  of  the  peo|>h'  of  the  country.  I 
think  that  is  wliat  the  penjih"  built  tliein  for.  TIh'  j)eopU'  iiave  l)uilt 
the  railroads;  th«'y  do  not  in'lonj:  to  anybody  in  i)aiti(Mdar.  The  rail- 
roads belong;  to  the  jteojile ;  they  have  constructed  them  as  tlieir  s«'r 
vant.s,  and  it  is  very  proper  that  they  sliotihl  servo  them  to  the  best  ad- 
vantage. I  d<»  not  bi'jieve  that  a  railioad  has  any  business  makiiiir  a 
8ingle  (hillar  over  and  above  a  fair  return  on  its  i>roperty  and  expenses 
and  what  may  be  necessary  to  keep  itself  in  fair  condition. 

BUILDING    UP   NFAV   T.INES    OF    IHSINESS. 

Senator  1Ika(;an.  I  nndfrstand  yoti  to  su<:;rest  that  it  is  a  pood  pol- 
icy for  the  railroads  to  buihl  up  new  towns  and  new  lines  of  business. 

Mr.  Fi  KHKU.  I  so  consider  it,  sir. 

S«'nator  Hka<;an.   liy  what  methods  wonld  you  hav»'  them  do  so? 

Mr.  FuRHKH.  I  would  orter  any  encouragement  in  th«'  shape  of  low 
rates  of  freight  (»r  travel,  if  necessary,  to  the  people  who  would  locate 
and  form  a  town,  or  I  would  carry  the  ]»rincipal  builders  of  the  ])lace 
free,  if  necessary,  to  encourage  tliem  ami  bndd  tip  the  town,  and  get 
together  a  manufa<'turing  center  which  would  afterwards  give  to  the 
railroad  a  large  amount  of  biisiness,  and  tims  the  railroad  would  earn  a 
larger  amount  of  money  alter  the  place  is  established. 

Senator  IiKA<;AN.  Now,  in  «l«»ing  that,  you  woflld,  of  cours<',  trench 
upon  the  railroad  to  that  extent.  Would  you  make  up  the  loss  on  that 
business  from  the  other  business  of  the  road  f 

Mr.  Frinu'.K.  You  would  not  trench  ui>on  the  revenues  f)f  the  roa<l 
in  tloing  that.  There  is  a  business  you  liav««  not  got.  You  are  going 
to  run  your  trains  by  that  very  place  anyhow — lioth  pass«'ng<'r  and 
freight  trains — and  you  might  just  as  well  carry  a  <'ertain  amount  of 
business  lor  that  town  and  from  that  town;  so  that  you  an'  enabled  to 
build  up  that  place  without  trenching  upon  the  revenue  of  the  road, 
and  so  long  as  you  are  charging  your  other  customers  a  reasonable  rate 
for  their  transportation  tlu'y  would  have  no  «*ause  for  comi>laint. 

Senator  Kkacan.  If  you  carry  the  freight  or  the  passengers  for  the 
town  you  are  to  build  u|»  without  charge  are  yon  not  doing  so  at  the 
ex])ense  of  the  other  p«'op|e  T 

Mr.  FriiHF.R.  Sui>pose  you  carry  the  iiassengers  and  freight  at  the 
actual  cost  of  hauling.  If  would  beditVerent  onditfcrent  roads,  of  course; 
but  suppose  you  carry  the  i)assengers  and  Ireight  at  the  actual  cost. 
You  have  not  trenched  ujjon  tln'  revenue  of  tlu'  road  at  all,  yon  have 
given  the  people  of  that  place  a  chance  to  build  up  the  town,  which  will 
be  abenelit  to  your  road  and  no  injury  to  the  other  people,  and  so  long 
as  the  goods  of  the  other  i)eople  are  transported  at  a  fair  and  reasona- 
ble rate  they  have  no  right  to  complain. 

Senator  HKAiiAN.  If  yon  <'arried  jjassengers  or  freight  cheaper  for 
one  town  than  another,  «lo  you  ii<»t  do  so  at  theexi)ense  of  the  town  and 
the  ])assengers  you  charge  the  full  rates  ?  j 

Mr.  FrrniKU.   Not  necessarily.  ■ 

S<Miator  IvKAGAN.  lint  largely? 

Mr.  FinjRKR.  No,  sir.  If  the  practice  was  carrieil  to  a  certain  extent 
it  might  be  done ;  but  it  would  not  be  so,  simply  because  you  carried 
for  one  shipper  cheaper  than  another. 

Senator  Kkacjan.  Does  the  charter  of  the  road  of  which  you  are 
superintendent,  or  of  any  railroad  ct»mpany  that  \ou  are  aware  of,  have 
authority  to  engage  in  business  other  than  transportation!  J 


THE    UNITED    STATES    AND    CANADA.  4C1 

Mr.  FURBER.  We  have  the  rioht  to  engage  in  transportation,  and 
the  directors  have  the  right  to  make  rates,  so  far  as  we  know,  at  which 
the  transportation  shall  be  performed. 

Senator  Reagan.  Do  yoa  assume  that  you  can  carry  freight  and  pas- 
sengers for  the  purpose  of  starting  a  new  industry  or  starting  or  assist- 
ing a  new  place  without  doing  it  at  the  expense  of  the  other  peopk' ! 

Mr.  FuRBER.  I  do,  sir;  because  I  will  be  enabled  in  the  end,  before 
I  get  through,  to  give  transportation  to  the  other  points  on  the  line  at 
a  lower  rate  than  1  am  now  carrying  for.  If  I  can  buihl  along  my  line 
a  large  number  of  villages  and  towns  I  will  get  such  a  business  located 
upon  the  line  that  I  will  be  able  to  carry  the  business  of  other  places 
on  the  line  at  a  lower  rate  than  1  could  theretofore. 

Senator  Reagan.  You  sacrifice  something  at  the  start  to  gain  some- 
thing in  the  future  ? 

Mr.  FuEBER,  No,  sir ;  not  sacrifice ;  because  at  your  present  rate  you 
are  enabled  to  make  a  fair  dividend  for  your  stockholders,  you  are  en- 
abled to  keep  your  line  in  good  condition,  you  are  enabled  to  pay  your 
operating  expenses  and  to  keep  the  rolling  stock  in  good  condition,  and 
if  you  build  up  a  few  more  towns  upon  your  line  you  need  not  charge 
the  other  people  any  more;  but  when  you  have  got  the  towns  built  u}), 
which  will  give  you  business,  you  will  be  able  to  charge  these  people 
less  monev  for  the  same  service  thau  you  did  before  the  towns  were 
built.  In  the  length  of  time,  on  the  other  hand,  if  you  continue  to  oper- 
ate your  road  through  a  very  sparsely  settled  country,  you  will  be  com- 
pelled to  charge  these  people  a  higher  rate,  because  you  do  not  have 
much  traffic  to  carry,  and  you  must  make  up  your  expenses  on  the 
smaller  amount  of  business. 

Senator  Reagan.  Under  the  present  law  as  applied  to  interstate 
commerce,  can  you  charge  one  person  more  or  less  for  a  similar  service 
than  another? 

Mr.  Furber.  No,  sir ;  not  on  traffic  across  State  lines,  unless  we  issue 
what  the  Commission,  I  believe,  have  decided  to  be  commodity  tarifls, 
which  will  apply  alike  to  everybody. 

Senator  Reagan.  You  say  that  would  apply  to  everybody  ? 

Mr.  Furber.  Well,  not  to  everybody.  That  is  a  question  which  I 
think  has  been  brought  up  among  the  passenger  agents  here  and  through 
the  country  generally,  and  the  Commission  finds  it  a  rather  knotty  ques- 
tion to  contend  with. 

EXCURSION  RATES. 

Senator  Reagan.  It  has  been  held,  has  it  not,  by  the  Commission 
that  it  could  be  done  on  what  is  known  as  the  certificate  plan? 

Mr.  Furber.  I  think  at  first  the  Commission  decided  it  could  not  be 
done.    Afterwards  it  decided  we  could. 

Senator  Reagan.  Will  you  please  describe,  so  as  to  hare  it  appear 
in  the  record,  exactly  how  the  certificate  plan  works  ? 

Mr.  Furber.  We  advertise  that  on  a  certain  day  the  merchants  of 
the  several  towns  and  counties  through  which  we  pass  can  come  to 
Boston  at  a  certain  rate.  We  give,  perhaps,  the  full  rate  to  Boston. 
At  the  same  time  we  have  an  agreement  to  take  them  back  on  the  cer- 
tificate plan;  that  is,  the  certificate  is  given  them  for  the  round  trip. 
If  the  fare  is  S3  and  the  round  trip  is  $4  the  merchant  gets  a  round-trip 
sertificate,  and  at  Boston  they  present  that  certificate  to  the  ticket  agent 
»nd  get  return  tickets. 

Senator  Reagan.  That  is  the  excursion  plan  ? 

Mr,  Furber.  Yes,  sir, 


4G2  TRANSPORTATION    INTERESTS    OF 

Scimtor  Keagan.  Docs  the  State  law  permit  you  to  do  that  with 
ret'civiice  to  State  liauls? 

Mr.  FuuBKK.  1  Ixlu've  our  State  law  provides  that  we  shall  not 
charjje  more  for  the  lesser  distance  than  we  do  for  the  greater,  but  our 
State  law  does  not  jJiohihit  our  making;  a  rate  for  men  or  a  man  in  any 
section  of  the  State  to  lioston  or  to  anv  other  point  at  i\uy  rate  we  see 
fit. 

Senator  Keagan.  Can  you  make  that  rate  with  one  individual  and 
not  with  another! 

Mr.  FiuiH'.U.  Yes,  sir;  we  can  make  that  rate  for  a  Sunday  school 
class,  and  not  give  it  to  anybody  else,  and  still  not  violate  the  law,  as 
far  as  I  know. 

Senator  Keagan.  Do  you  think  that  is  right? 

Mr.  FriJRi  K.  What  I  am  speaking  of  is  this:  Suppo.se  we  have  a 
nunilu-r  of  gentlemen,  or  a  club,  at  a  certain  point  on  our  line  which 
wants  to  come  down  and  spend  an  evening  in  lioston  ;  we  give  to  that 
club  reduced  rates,  inasmuch  as  they  furnish  us  fifty  passengers.  I  am 
not  aware  that  there  is  any  law  in  tlu'  State  whi<'h  Ibrbids  that. 

Si-nator  Heacian.  As  1  uiulerstand  the  interstate  commerce  law,  it 
forbids  the  giving  of  excursion  rates  until  the  railroad  c«»mj)any  adNcr- 
tises  that  excursion  to  the  jiiiblic,  ami  files  with  the  Commission  at 
AVashingttm  tor  a  certain  number  of  days  the  tariff  at  which  they  pro- 
j)ose  to  carry  pass«'ngers.  Now,  then,  what  I  was  trying  to  get  at 
and  what  you  do  not  answer  is  tliis — where  do  you  live  t 

Mr.  FrnuEn.   In  New  Hampshire. 

Senator  IvEAfJAN.  At  what  point! 

Mr.  Fi  Kin:u.  Summcrsworth. 

Senator  Keagan.  If  ycmr  neiglibors  at  Siimmersworth  desire  to  ship 
to  a  point  within  ycmr  own  State,  say  60  miles  off,  can  you,  under  the 
law  of  your  State,  give  t>ne  of  them  a  rate  for  eitlier  travel  or  transpor- 
tation that  you  deny  to  another?     I  am  talking  about  individuals  now. 

Mr.  FUKUEU.  I  do  not  know  that  that  question  has  come  up.  Wo 
have  trit'<l,  however,  to  give  all  as  low  rates  a,s  possible. 

Senator  Ke.agan.  I  ask  this  question  as  a  jtredicate  for  another. 
Would  the  jieople  of  y«)ur  State  or  any  State  of  New  ICngland  tohiMte 
the  State  making  t«'rms  to  one  i»erson  that  it  docs  not  give  t<Kinntiici  ? 
Would  the  i)eople  of  the  I'niteil  States  tolerate  a  law  wlii(!h  would  give 
privileges  to  the  citizens  of  one  State  which  it  does  not  give  to  the  citi- 
zens of  another  State? 

Mr.  Fi'KUEK.  1  have  not  been  able  to  judge  what  Congress  or  the 
State  governnu'iit  is  likely  to  do, 

Senator  Kea(;an.  \Nhat  are  the  i)rincipal  points  in  the  West  froin 
which  y(»u  draw  your  commerce  coming  from  west  of  liufl'alo? 

Mr.  FuivjJEK.  We  are  getting  our  grain  frouj  Chicago,  and  our  Hour 
and  wheat  from  up  arouiul  Duluthand  that  section  of  the  c<Mintry.  It 
comes  to  us  through  the  Central  Vermont  I\'ailroa<l,  the  Grand  Trunk 
Railroad,  and  the  Canadian  Pacific  Kailroad.  Corn  also  comes  to  us 
through  the  I'.oston  and  Albany  and  the  New  York  C«'ntral,  and  some 
comes  to  us  thi(»ngh  the  b'ome,  Watertown  and  (  gdcnsburgh  from  I'>uf- 
falo,  and  we  are  also  getting  a  large  annuint  (tt  grain  wiiich  comes  over 
the  Canadian  Pacific  and  the  (irand  Trunk,  thiougli  Ogdensburgli. 

Senator  Ke.AGAN.  Fiom  what  points  in  the  West  d«K's  the  larger  |)art 
of  your  commerce  come — from  «liat  particular  States,  if  you  C4in  give 
it  that  way  ? 

Mr.  FiKiiEiJ.  I«loiiotknow  tin- States;  the  business  is  done  by  com- 
mission merchants.     It  is  shipped  from  Chicago. 


THE  UNITED  STATES  AND  CANADA.  463 

Senator  REAaAN.  Detroit,  Chicago,  St.  Paul,  Duluth,  are  not  those 
your  principal  points?  ' 

Mr.  FuRBER.  Yes,  sir. 
Senator  Reagan.  Does  not  Duluth  supply  you  principally  ! 

Mr.  FuRBER.  1  think  wheat  comes  principally  from  Duluth.  Our  flour 
comes  Irom  Minueapolis. 

Senator  Reagan.  What  did  you  say  was  the  distance  to  Chicago  bv 
the  roads  south  of  the  lakes  ?  *^      j 

Mr.  Furber.  Chicago  is  1,038  miles  from  Boston. 

Senator  Reagan.  What  is  the  distance  by  the  Grand  Trunk  and  the 
Michigan  Central  f 

Mr.  Furber.  I  think  it  is  about  1,100  miles. 

Senator  Reagan.  I  want  to  ask  you  with  respect  to  the  grain,  meats 
and  other  products  which  you  ship  from  Buffalo,  Cleveland,  Toledo,  De- 
troit, Chicago,  and  Minneapolis,  whether  the  lines  south  of  tlie  llikes 
between  Boston  and  all  those  points  are  not  shorter  than  the  lines  north 
of  the  lakes  ? 

Mr.  Furber.  I  think  they  are,  sir. 

Senator  Reagan.  Now,  do  you  understand  that  there  is  a  difference 
in  the  rates  of  freight  on  the  Grand  Trunk  and  the  roads  south  of  the 
lakes? 

Mr.  Furber.  I  think  there  is  a  difference  in  the  rates  east.  I  think 
there  is  a  differential  allowed  the  Canadian  road  on  west-bound  busi- 
ness.    I  do  not  think  there  is  any  differential  coming  east,  however. 

Senator  Reagan.  You  get  the  larger  amount  of  your  supplies  for  New 
England  from  those  places,  do  you  not? 

Mr.  Furber.  Yes,  sir. 

Senator  Reagan.  Do  you  know  whether,  since  the  passage  of  the 
interstate  commerce  law,  there  has  been  a  very  great  increase  in  the  ton- 
nage over  the  Grand  Trunk  road  as  compared  with  the  roads  south  of 
the  lakes  ? 

Mr.  Furber.  There  has  not  been,  so  far  as  we  are  concerned.  In  the 
matter  of  distributing  we  have  not  found  any  particular  increase. 

Senator  Gorman.  Between  Boston  and  Duluth,  for  instance,  for  the 
past  three  years,  has  the  tendency  of  rates  been  upward  or  down  ward! 

Mr.  Furber.  At  times  it  has  been  downward,  and  at  other  times  it 
has  been  upward.  The  tendency  of  the  through  rates  when  hike  trans- 
portation is  open  has  been  downward.  The  rail  traffic,  however,  iias  in- 
terfered very  little  with  it.  The  rail  traffic  has  not  been  as  much  in 
summer  when  the  lakes  are  open  as  in  winter.  The  people  can  ship 
cheaper  in  summer  by  the  lakes  than  they  otherwise  could,  and  they 
ship  that  way. 

STATEMENT  OF  CHARLES  CARLETON  COFFIN. 

Mr.  0.  C.  Coffin,  representing  the  Concord  Railroad,  appeared. 

The  Chairman.  Where  do  you  reside,  Mr.  Coffin? 

Mr.  Coffin.  In  Boston. 

The  Chairman.  What  is  your  business  or  profession  ? 

Mr.  Coffin.  I  am  a  writer. 

The  Chairman.  You  may  proceed  with  your  statement  in  your  own 
"Way. 

Mr.  Coffin.  1  would  say  that  I  am  not  a  railroad  man,  although  I 
appear  here  for  the  Concord  Railroad  in  IS^ew  Hampshire  at  their 
request.    A  good  many  years  ago  I  was  engaged  in  civil  engineering 


4G4  TRANSPOKTATION    INTEKESTS    OF 

upon  the  line  of  ro;ul  in  the  Mcrritnac  Valley  and  in  the  construction 
of  several  railioads  in  the  State  of  New  Hampshire,  and  I  shall  s]>eak 
to  you  to-day  fioin  a  little  dilferent  stand  jxdnt  iroin  that  of  any  one  who 
has  appeareil  bi  lore  you,  from  my  ooservation  as  an  engineer  in  years 
past  and  also  Ironi  my  obtervations  as  a  traveler.  I  will  say  further 
that  1  am  somewhat  familiar  with  this  entire  section  of  country  in  the 
Northwest.  1  traveled  over  a  jmrtion  of  it  before  a  shovelful  of  earth 
was  thrown  uj)  on  the  Northern  Pacilic  Jiailroad,  and  I  had  somethinj; 
to  do  with  the  development  of  that  line.  1  also  took  out  the  charter  lor 
the  present  roa«l  from  .Minneapolis  to  Sault  Ste.  Marie  and  explored 
that  r«'j  ion  personally,  an*!  I  shall  endeavor  to  answer  a  question  which 
has  been  i>ut  here  several  times  as  to  why  tlie  Canadian  Pacifi<;  IJail- 
roa<l  (!an  transport  freight  from  the  Atlantic  to  the  I'acilic  more  cheajtly 
than  any  other  line. 

NATTUAL  ADVANTAGES  OP    THE   CANADIAN    PAriFIC  LINE. 

Humboldt,  in  his  Cosmos,  lays  down  as  a  fundamental  principle  that 
the  great  highwa.NS  of  a  nation  will  be  along  ita  great  water  ccuirses. 
Turning  now  to  the  map  of  North  America  we  see  that  the  one  great 
east  and-west  water-way  across  the  contin«'nt  is  the  fc>t.  Lawreiu-e  and 
the  chain  of  lakes  reaching  halfway  from  the  Atlantic  to  the  l'a<;ili(;. 
Within  the  boundaries  of  tiie  l'nit«'tl  States  the  Upper  Missouri  and  the 
Yellowstone  are  in  the  same  tlirection  leading  to  the  llocky  Mountains 
and  to  the  headwaters  »»f  the  Columbia. 

Within  the  boundaries  of  the  Dominion  of  Canada  we  see  a  remark- 
able water  way  between  Lake  .Superior  aj)d  th*'  Kocky  Mountains.  It 
would  not  be  dillicult  U)  construi't  a  eanal  uniting  the  waters  <tf  Lake 
Superior  ami  Lake  Winnipeg.  l>olh  bodies  ot  water  are  only  a  little 
more  than  (iO(»  leet  above  tlie  sea-level.  From  Winnijteg  westward  the 
Canadian  Pacilic  Kailroatl  folIt)Ws  the  valley  of  the  Soutli  Saskatchewan 
to  the  Kocky  .Mountains,  crossing  the  continental  divide  at  an  elevation 
of  3,.")(iU  feet  above  the  sea  level,  then  follows  the  valley  of  the  Fraser 
liiver  to  the  sea.  The  Columbia  within  our  own  ilomain,  and  the  Fraser 
in  IJritish  America,  are  the  oidy  two  streams  running  from  the  heart 
of  the  continent  westwanl  to  the  Pacilic,  and  when  viewe<l  in  connec- 
ti«)n  with  the  St.  Lawreuce  and  the  lakes  form  the  only  water  course 
frotn  ocean  to  ocean. 

In  the  upheaval  of  the  mountain  ranges  we  tind  that  those  of  British 
Columbia  are  iu)t  so  lofty  as  the  ranges  within  «)ur  own  borders.  The 
Northern  I'acilic  Railroad  has  two  mountain  summits,  that  betwt'enthe 
Yellowstone  and  the  Missouri  and  that  between  the  Missouri  ami  the 
Columbia,  both  at  an  elevation  of  about  ">,0(K»  feet  above  the  sea. 

When  we  go  soutliward  to  the  Union  and  Central  I'acilic  roatls,  wc 
tind  live  distinct  elevations,  the  highest  more  than  s,(H)(>  feet  above  the 
sea.  Those  roads,  for  a  distance  of  more  than  1,000  miles,  have  an  el 
evation  exceetling  4.(»KMeet  above  the  sea.  The  physical  features  an 
all  in  favor  vf  the  Canadian  i'acific  line,  and  the  natural  advantagi- 
are  so  greatly  in  its  favor  that  it  can  transport  its  (reight  at  much  h-^- 
c(»st  than  either  the  Union,  Northern,  or  Southern  Tacific  roads,  1; 
makes  a  vast  ditference  in  the  working  of  a  road  whether  the  gradi  > 
are  UI>  feet,  as  on  the  Uuiou  Pacilic,  or  half  that  number  of  feet,  as  on 
the  Canatliau  racilic. 

Mi'.  Mellen,of  the  Union  Pacific,  has  stated  that  the  Canadian  Pa^itic 
was  taking  a  large  percentage  of  the  business  between  the  Atlantic  sea- 
board and  San  Francisco;  that  the  gain  in  the  southw;u-d  traflic  wsis 
from  10  per  cent,  oue  year  ago  to  ^31)  per  cent,  at  the  prcsout  time.    Xlie 


I 


THE    UNITED    STATES   AND    CANADA.  4G5 

reason  for  that  increase  is  obvious.  The  Union  Pacific  line,  from  its 
great  elevation,  its  series  of  ascents  and  descents,  its  monntain  ranges 
its  bigU  grades,  will  ever  be  at  a  disadvantao-e  as  comi)are(l  witli'tlie 
Canadian  Pacific.  More  than  this,  tlie  Canadian  Pacilic  is  under  one 
management  from  ocean  to  ocean,  while  the  Union  Pacific  is  only  a  lo- 
cal road,  a  link  connecting  with  several  other  roads.  In  its  relation 
with  other  roads  it  is  at  a  disadvantage.  (Commercially,  it  begins  no- 
where and  ends  nowhere.  Were  the  Union  Pacific  in  control  of  a  line 
extending  from  New  York  to  San  Francisco,  it  could  carry  its  through 
freight  much  more  cheaply  than  at  present.  The  same  might  be  said 
of  the  Northern  and  Southern  Pacific. 

Senator  Reagan.  What  is  the  highest  altitude  of  the  Southern  Pacific! 

Mr.  Coffin.  About  6,000  feet,  more  than  2,000  feet  lower  than  the 
highest  point  on  the  JSTorthern  Pacific. 

THE  FOOD  SUPPLY  OF  NEW  ENGLAND. 

Something  has  been  said  about  the  food  question  here.  Mr.  Speare' 
when  he  brought  before  you  the  facts  in  regard  to  food,  stated  it  briefly 
and  tersely.  But  allow  me  to  say  that  the  State  of  Rhode  Island  raises 
six  ounces  of  flour  for  each  individual  in  that  State,  or  enough  to  give 
them  one  griddle-cake  for  each  man's  breakfast,  and  that  is  all.  Massa- 
chusetts raises  enough  flour  to  give  each  inhabitant  one  cake  for  break- 
fast and  another  for  dinner,  but  nothing  for  supper.  New  Hampshire 
is  a  little  better  olf ;  she  raised  159,000  bushels  of  wheat,  I  think  it  was, 
year  before  last,  or  enough  to  last  her  about  four  days.  I  have  not  the 
statistics  in  regard  to  Maine,  Vermont,  or  Connecticut,  but  that  is  the 
position  we  are  in  here  in  New  England  in  regard  to  our  food. 

Now,  where  do  we  get  our  food  and  where  do  we  obtain  our  raw 
materials  for  manufacture "?  We  obtain  our  garden  truck  from  Norfolk, 
Savannah,  and  Charleston.  Our  strawberries  come  from  the  South, 
our  flour  from  Minnesota,  and  we  obtain  our  beef  from  Texas  ami  Mon- 
tana, our  corn  from  Illinois,  Minnesota,  and  Nebraska.  We  l)ring  our 
iron  and  coal  from  the  West.  We  purchase  all  of  our  food  and  raw 
materials,  and  bring  them  here  for  consumption  and  manufa(;ture,  and 
send  the  products  out  over  these  same  lines  of  railway  by  which  we  re- 
ceive our  food.  During  the  cotton  season  there  is  not  a  week  passes 
that  you  will  not  find  cars  in  the  yards  at  Lowell,  Lawrence,  Manches- 
ter, Nashua,  and  Lewiston  that  are  loaded  down  in  Texas,  Tennessee, 
Alabama,  Louisiana,  or  Mississippi,  in  the  interior,  not  on  the  sea- 
board, that  are  brought  through  from  Chicago  by  the  Canadian  Pacific 
and  Grand  Trunk.  That  is  the  course  of  the  trade  in  the  raw  mate- 
rial and  produce  that  we  bring  from  the  West  and  Southwest.  We  do 
not  take  cotton  from  the  coast  towns  and  cities  because  the  railroads 
can  not  compete  with  the  water  transportation,  but  when  the  producer 
in  Tennessee  wants  to  ship  his  cotton  the  Grand  Trunk  road  of  Can- 
ada, with  its  connecting  lines,  says,  "We  will  take  your  cotton  into 
Lowell  cheaper  than  you  can  ship  it  to  Mobile  or  Savannah,  Irom  thero 
by  water  to  Boston,  there  to  be  reshipped  to  the  manutactones. 
Therefore  you  see  that  this  question  does  not  aftect  NewEn-laud  alone, 
but  all  the  cotton-growing  and,  in  fact,  all  the  agricultural  Slates. 


may  make  in  regard  to  this  question,  if  the  decision  shaU  disturb  m  any 
6543 30 


4G6  TRANSPORTATION    INTERESTS    OP 

way  the  pacific  relatious  between  Canada  and  this  country.  So  it  is 
not  simply  the  question  of  dillerential  rates,  but  behind  it  lie  some  of 
the  profotuuU'St  ijuestions  of  future  years. 

Let  us  h«)k  at  the  far  Northwest.  I  recall  the  remark  of  William 
IJ.  Seward,  as  he  stootl  on  the  steps  of  the  capitol  of  Minnesota  in  St. 
Paul,  in  ISDO.     lie  said: 

I  stand  DM  till'  spot  which  in  tho  future,  ia  all  probability,  will  bo  the  ocuter  of 
population  on  thin  continent. 

The  statement  may  seem  incredible,  but  let  us  see  what  were  the  rea- 
sons for  the  prophecy.  We  are  hero  to  day  in  rlie  hititnde  of  42  and  a 
few  minutes.  Where  does  that  line  run  around  the  world  ?  It  is  the 
sontliern  lioundary  of  France;  the  whole  Kinpire  of  Bismarck  and  of 
linssia  is  north  of  it;  the  projjressive  peoples  of  this  world  maiidy  re- 
side north  of  it.  It  runs  across  this  continent  through  Ibitlalo  and  a 
little  south  of  Milwaukee*  antl  on  to  the  raeitit;  in  southern  ()re;;on. 

Now,  sir,  there  lies  in  the  n»>rthwestern  section,  north  of  that  line,  a 
territory  lar^re  enough  for  forty  States  of  the  size  of  Ohio,  and  a  terri- 
tory that  is  capable  ol  supportin;;  a  dense  population.  And  why!  Had 
I  a  ujap  of  the  world  I  would  show  you  the  o(^ean  currents,  and  you  would 
see  at  a  ^lain-e  how  the  heated  ri\ers  in  the  ocean  are  felt  upon  tlie 
land.  When  tlie  Alinijrht.v  set  this  world  to  turning;  (rom  east  to  west, 
there  be;L:an  tliat  ureat  ti»lal  >va\e  which  sweeps  across  the  Atlantii-  and 
which  breaks  against  the  coast  of  Hra/il.  where  it  divides,  one  section 
turnini;  northwest,  receiving  tlie  waters  of  tiie  Amazon,  Orinoco,  and  the 
Mississippi.  Heated  by  the  tropi<'al  sun,  it  pours  out  its  mij^hty  tl(K>d 
thronph  the  narrow  <:}tp  betw<en  Florida  ami  Cuba,  and  sentls  it,  at  the 
rate  of  li  miles  an  hour,  up  the  Atlantic,  and  gives  a  warm  climate  to 
northern  Fnrope. 

When  you  come  to  the  Paciflc  Ocean,  you  have  the  same  conditions. 
1  sailed  from  .lapan  to  San  Francisco  a  few  years  ajjo.  When  we  were 
out  from  Yokoliania.  a  little  more  than  one  day's  steamin;;,  i  foumi  that 
the  air  became  sud«lenly  warm.  We  had  entered  the  Kuro.Siwo.or.lapan- 
ese  current,  a  ^leat  river  in  the  sea  more  than  l.ooo  miles  wide.  The 
racilic  e(piatorial  current  strikin;r  a;;ainst  the  Phillipines,  biinjjs  its 
warm  air  and  moisture  on  the  noithwestern  coast.  That  is  what  {jives 
us  the  mild  climate  at  Pu;ret  Sound,  where  the  tlowers  are  in  bloom  tho 
year  round,  where  a  fiiend  re<;ale<l  me  with  t\<is  raised  in  his  own  jjar 
den.  That  current,  with  its  humid  atm«)sphere,  i)ro<luees  a  tremeinlous 
forest  growth  on  the  west  sides  of  the  liockies.  An«l  then  it  yfoes  over 
the  low  elevations  ami  ifives  us  the  (;Iimate  of  the  Northwest,  where  at 
Lake  Athabasca  the  blue  bird  makes  his  appearance  in  the  spring  as 
early  as  in  liost«m. 

Alrhoush  there  is  a  si)arse  ])o])ulation  in  British  America  to-day,  the 
time  is  coming'  wh'-n  there  is  to  be  a  mi;,dity  emjiire  in  the  Northwest. 

WHEN    TDK    (\VNAD\aN    PACIFIC    WAS   SUGGESTED. 

The  first  movement  towards  the  building  of  the  Canadian  Pai-ific  was 
by  Disraeli  in  1S.~).S,  before  he  was  Lord  neaconsfiehl.  I  hold  in  my 
hand  a  pamphlet  which  1  preparetl  for  the  press  in  this  (Mty  in  that  >ear. 
^ly  soul  was  stirreil  when  I  rea<l  thesi'  words  uttered  by  Mr.  Hot'om-k 
in  the  debates  in  Parliament  upon  the  presentation  of  a  bill  for  the 
builtling  t)f  a  railroad  through  Can;ida.     Sai<l  .Mr.  H^ebuck  : 

Tlio  tliiitci-n  Colonics  which  wi«  phtntftl  in  America  h»vo  incn-ascd  to  lltp  nnmbcr 
of  tiiirty-tivK  fm-  St.itcs.  \V<<  liavv  i-riMttMl  a  power  tln-ro  which,  if  Honu-tliiux  in  not 
ilotti-  !»>•  I",ii;;lanil  as  n  ronulerpoioo  tu,  tho  Uuilcd  Slatea  will  ovcibbmlow  uut  only 
EnL'land  but  the  earth. 


THE    UNITED    STATES    AND    CANADA.  407 

He  wanted  England  to  build  the  railroad  and  enter  upon  a  scheme  (.f 
colonization,  with  the  sole  end  in  view  of  increasing  the  political  and 
commercial  power  of  Great  Britain. 

And  then  he  goes  on  again : 

The  accomplishment  of  snch  a  scheme  would  nnite  England  with  Vanconvor  and 
with  China,  aud  we  shall  be  able  to  widely  extend  tlie  civilization  of  Kn-rJand  It 
was  a  magnificent  scheme,  and  the  name  of  the  minister  who  had  pim.oscd  it  would 
go  down  to  posterity  as  the  great  colonial  minister. 

The  project  on  the  part  of  England  from  that  time  to  the  completion 
of  the  road  was  kept  steadily  in  view,  and  it  was  brought  forward  at 
last  as  a  great  political  enterprise  to  bring  about  the  confederation  of 
the  Dominion  of  Canada.  It  has  been  constructed  by  liberal  gifts  from 
Government.  It  has  been  wielded  as  a  political  power,  but  its  political 
importance  is  subordinate  now  to  its  commercial  imi)ortaiice.  It  is  to 
become  the  great  thoroughfare  between  England  on  the  one  hand  and 
China,  Japan,  Australia,  aud  the  islands  of  the  Pacific  on  the  other— 
the  shortest  aud  quickest  possible  line  of  communication  between  those 
countries. 

ENGLAND'S  COMMERCIAL  POLICY. 

In  the  commercial  history  of  the  world,  no  nation  has  ever  approached 
Great  Britaiu  in  completeness,  thoroughness,  and  far-reaching  policy. 
Her  manufactures,  her  commercial  prosperity,  her  very  existence  as  a 
great  power  is  found  in  her  policy  of  reaching  either  by  rail  or  steam- 
ship, every  country  on  the  face  of  the  globe  by  the  shortest  aud  cheapest 
route.  To  that  end  she  has  given  liberally  to  the  Canadian  racilic,  and 
is  appropriating  large  sums  annually  for  ocean  mail  service  to  every 
country.  To  that  end  the  grant  has  been  nuule  for  the  establishment 
of  a  first-class  ocean  line  of  steamers  from  England  to  Halifax,  and  from 
Victoria  to  Japan,  China,  and  Australia. 

THE  FUTUEE  OF  PUGET  SOUND. 

When  we  examine  the  physical  features  of  the  western  coast  of  this 
continent,  we  see  that  there  are  but  three  ports  which  commeiee  ean 
ever  use — San  Francisco,  San  Diego,  and  Pnget  Sound.  From  tiie  mouth 
of  the  Columbia  southward  the  coast  range  of  mountains  is  broken 
through  only  at  the  Golden  Gate  and  at  San  Diego.  Everywhere  else 
the  mountains  rise  sharp  aud  steep  from  the  sea. 

Now  it  is  not  difiBcult  for  us  to  forecast  the  probable  fnture  of  tlu^ 
three  places.  The  greatuess  of  San  Francisco  is  already  assured.  It 
has  no  river  sy^tem^behiud  it,  but  it  has  the  wealth  of  a  magniticent 
State.  San  Diego  has  no  natural  fertile  region  to  draw  from ;  but  it 
will  undoubtedly  be  a  place  of  considerable  iinportance. 

Puget  Sound  has  a  great  future  before  it.  To  aud  from  that  wonder- 
ful scroll-work  of  inlets  and  harbors  will  How  the  great  tides  of  com- 
merce in  coming  years.  Its  tonnage  already  is  assuming  magnilicent 
proportions.  Its' lumber  is  found  in  every  land.  Being  in  the  port  ot 
Marseilles,  in  France,  on  the  Mediterranean,  some  years  ago,  I  saw  a 
vessel  discharging  masts  and  spars  which  had  been  brought  around 
Cape  Horn  and  through  the  Straits  of  Gibraltar  to  that  port.  \\  h»-n 
in  India,  I  was  informed  that  the  ties  of  the  railroad  m  the  valley  ot 
the  Ganges  were  cut  in  the  forests  of  British  Columbui.  Were  we  to 
go  to  Svdney  or  iMelbourne,  in  Australia,  we  should  see  tlie  biml.er 
yards  piled  with  timber  sawn  iu  the  mills  of  Port  Towuseud  aud  la- 


468  TllANSPOKTATION    IXTEKE8TS    OF 

coma;  tlio  sanio  at  Valparaiso,  Shan<Tliai,  Canton,  and  Yokoliaina. 
Two  yi*iii''<  !•;;<>  I  ^vas  upon  the  SouikI,  and  saw  vessels  loading;  wiili 
lumber  for  London,  San  Francisco,  and  almost  every  part  of  the  Pacilic. 

The  constrnctitjn  of  the  Suez  Canal  has  changed  the  tich's  of  com- 
merce. The  dii.vs  of  the  jrrayhounds  of  the  sea — the  celebrated  clipper 
tea  shijts — donblin;^'  the  Cape  of  Ciood  Hope  have  ^^one  by  never  to  re- 
turn. The  tide  lor  several  years  has  been  via  the  Mediterranean  and 
the  iJcd  Sea;  but  with  the  construction  of  the  Canadian  Paoiticand  the 
subsidized  line  of  mail  steam-ships  from  Pu^et  Sound  to  Chiuii,  Japan, 
and  Australia  a  lar;;e  portion  of  the  trallic  of  the  Orient  is  to  arrive 
and  depart  from  that  Northwestern  jjateway  of  the  continent.  Let  us  not 
for;;et  the  unparalleled  resources  of  the  country  behind  it — the  dense 
foiest  <jrowth,  the  agricultural  htinls  of  On';;on  and  east<'rn  Washiiifiton, 
the  ^Meat  jdains  of  the  Columbia,  its«'lf  Iir;ier  than  the  State  <)f  Ohio. 
I'ear  in  mind  that  San  Francisco  and  the  pints  of  the  I'acitic  are  today 
burnin;:  coal  from  the  mines  alon;:  Pn;,'et  Souml;  that  tiie  coal  supplii's 
tliere  an*  cheaper  ami  more  acci'ssible  than  anywln'ie  else.  You  may 
put  it  tlown  as  foreordained  that  a  ;;reat  conuu«Mcial  em|»orium  is  to  rise 
U|)on  till'  shores  of  Pu;:et  Sound.  (^>uite  likely  there  will  l)e  two  such 
cities — one  within  our  own  domain  and  one  within  Pritish  Columbia. 
Ko  lonjjer  does  our  tea  come  to  us  acros.H  the  Atlantic,  but  via  the  Pa- 
cilic. While  at  \'ict<uia  two  years  a;ro,  1  saw  stately  ships  sail  in, 
win;;in;;  their  way  from  Canton  and  Shan;,diai,  loadecl  with  tea  con- 
si^ifned  to  parties  in  Chica^^o,  St.  Paul,  St.  Louis,  Cincinnati,  Detroit, 
New  York,  and  P>oston,  as  I  learned  upon  impiiry,  to  be  delivered  in 
those  cities  by  the  Canadian  Pacilic  road  and  connectiufr  lim's. 

This  brinp;s  us  squarely  to  the  jtroposition  before  you.  I'lie  Union 
ami  Southern  Pacilic  Pailroads,  if  i  understand  the  matter,  ask  you  to 
step  in  and  put  a  stop  to  this  trallic  within  the  Stat»'s  on  the  part  of  the 
Canadian  Pacilic.  You  are  asked  t(»  impose  such  r«';j:ulations  as  will 
take  this  trallii-  out  of  the  hands  (tf  the  road,  and  hand  it  over,  ov  at  least 
pive  the  Cnitin  and  Southern  Pacific  roads  a  chance  to  enter  the  lists. 
This  is  asketl  for  nmler  the  assumjiiion  that  the  Canadian  road  recoups 
its  losses  on  throu;;h  rates  by  imp(>sin;;  hi;:;h  local  rates.  The  alle;:a- 
tlon  is  not  i)roven;  nor  do  I  believe  it  to  be  true.  There  is  very  little 
local  freipht  on  that  road  west  of  Ottawa.  The  country  is  new;  very 
sparsely  settled.  .\  new  country  needs  low  rates;  and  no  railroad  cor- 
jioration  can  afford  to  impose  lii;;h  rales  upon  a  peojde  striijjjrlinjr  to  j,'r't 
a  footin;,'.  The  I'nion  and  Southern  Pacilic  naturally  d«'sire  to  see  San 
Francisco  the  entrep«>t  for  the  t«'a  trade  of  this  country;  but  Pujjet 
Sound  is  nearly  .'»00  miles  m'arer  Yt)kohama  than  is  San  Francisco. 
Every  city  that  Ihave  named  to  which  tea  was«'()nsi<rned  is  nearer  China 
via  Pii^et  Sound  than  via  San  Francisco.  The  commerce  of  the  Orient 
is  no  lon-,'«'r  in  the  Fast,  but  in  the  West;  it  is  to  come  to  us  from  the 
Butting  and  not  from  the  rising  sun. 

TUE   TRADE   IN   COTTON  GOODS. 

I  come  now  to  a  matter  which  I  am  sure  will  interest  those  gentlemen 
of  the  committee  whose  homes  are  amid  the  whitening  cotton  bolls  (jf 
Tennessee  and  Texas. 

Fngland  is  the  great  cotton  manufacluring  nation,  with  more  spin- 
dles than  all  the  world  besides.  She  takes  70  per  cent,  of  her  raw  ma- 
terial from  the  ports  of  the(iulf  and  South  Atlantic  Stales,  trans|)orts 
it  across  the  sea,  brings  the  balance  from  I'.razil,  India,  and  Fgy|»t,  and 
luauufacturcs  enough  to  swathe  the  globe  six  times.     ISUe  doea  this  au- 


THE   UNITED    STATES   AND   CANADA.  4G9 

nually.  She  sends  more  than  six  hundred  million  yards  of  cotton  "-oods 
to  the  Pacific  against  a  few  hundred  thousand  yards  manufacture.!  by 
American  looms.  The  United  States  has  an  insionilic.mt  loivi-ni  trade 
in  cotton  goods.  We  haye  been  content  to  put  uj)  with  our  home  mar- 
ket, while  England  is  doing  the  manufacturing  and  carrying  for  nietty 
much  all  the  world  beside. 

But  we  haye  arrived  at  a  point  in  out-  manufacturing  when,  if  I  mis- 
take not,  the  people  of  this  country  are  soon  to  enter  the  lists  with 
England.  It  is  one  of  the  signs  of  the  times— this  dotting  of  the  cot- 
ton growing  States  with  manufactories.  The  question  arises  as  to  what 
we  are  to  do  with  the  rapidly-increasing  products  of  our  looms  1?  Wheie 
shall  we  find  a  market  1  England,  witu  the  opening  of  the  steam-ship 
line  from  Pnget  Sound  to  China,  will  be  quick  to  use  it,  saving  nearly 
a  month's  time  by  so  doing.  In  these  days  it  is  the  nimble  sixpence 
that  wins  against  the  slow  shilling.  The  Canadian  Pacific  Kailioad,  the 
English  mail  steamers,  I  take  it,  will  be  just  as  ready  to  transport  a  bale 
of  goods  to  China  manufactured  at  Lowell,  in  :\rassachusets,  at  Augusta, 
Ga.,  as  in  Kochdale  or  Manchester,  England,  and  1  look  forward  in  the 
near  future  to  the  shipment  of  goods  via  that  line.  Indeed  it  has  already 
begun.  During  the  past  few  weeks  cars  have  been  loaded  in  the  yards 
of  the  Jackson  corporation,  in  Nashua,  N.  H.,  billed  to  China  via  Puget 
Sound.     It  is  but  the  beginning  of  a  great  traftic. 

We  are  paying  England  to-day  for  carrying  our  mails,  our  raw  ma- 
terials, our  manufactures.  If  you  wish  to  send  a  letter  to  linizil,  it 
must  first  go  to  Her  Imperial  Majesty's  dominions  and  be  handled  by 
the  clerks  of  the  Koyal  Mail  before  it  ever  reaches  its  destination  in 
South  America.  If  you  would  send  a  bill  of  goods  to  any  maritime  port 
on  the  face  of  the  earth,  the  chances  are  that  England's  mail  steam- 
ships will  be  the  agency  for  caiTying  it. 

It  has  been  the  commercial  policy  of  England  to  put  herself  in  the 
closest  possible  relations  with  every  country  by  establishing  a  regular 
mail  service.  To  this  end  we  have  the  Canadian  Pacific  line  and  the 
promised  steam-ship  service  on  the  Pacific.  The  United  States  has 
pursued  the  opposite  course,  refusing  to  establish  an  ocean  mail  service, 
hence  we  have  no  foreign  market  for  our  cotton  goods. 

We  are  beginning  to  get  such  a  market  in  China.  Ir  is  a  trade  which 
I  think  will  receive  a  great  impetus  by  the  proposed  British  steam  siiip 
service,  and  yet  at  this  juncture  you  are  about  to  imi)ose  regulations 
upon  the  Canadian  traffic.  Look  at  the  tratfic  of  last  year,  during 
which  the  United  States  sent  mainly  over  the  Canadian  route  7.s,;i(;<t,(Hi() 
yards  of  cotton  goods  to  China.  'England  sent  5G2,0U0,0U0  yards  of 
cloth  to  China,  and  a  very  large  portion  of  it  went  over  the  Canadian 
Pacific  road,  having  been  brought  to  INIontreal  in  steamers.  Seventy- 
eight  per  cent,  of  the  manufacturers  in  the  United  States  are  nearer  to 
China  by  3,000  miles  than  England,  and  yet  England  is  taking  the  cot- 
ton from  here  across  the  Atlantic  and  then  shipping  it  across  this  con- 
tinent to  China. 

England  sends  to  the  western  coast  of  South  America,  to  Peru,  and 
Chili  more  than  200,000,000  yards  of  cotton  goods  annually.  Here- 
tofore the  course  of  commerce  has  been  around  Cape  Horn  or 
through  the  Straits  of  Magellan,  but  from  this  time  on  the  trallic  is  to 
be  via  the  Canadian  Pacific  road  and  down  our  own  western  coast. 
You  possibly  may  wonder  at  such  a  statement,  but  in  the  transporta- 
tion of  bales  of  sheetings  and  kindred  fabrics  climate,  the  humidity  ot 
the  atmosphere  is  au  important  point  to  be  considered,    betore  tiie 


470  TRANSPORTATION  INTERESTS  OP 

construction  of  the  Canadian  Pacific  road  the  Enjxlish  shipper  sending; 
^oods  to  China  or  tlie  western  coast  of  South  America  was  oblijjod  to 
I)ack  his  hales  in  oilcloth  canvas,  or  other  fabric,  which  would  i-lU'ct 
uall.v  exclud*'  the  moisture  of  the  trojiics.  Only  those  who  have  expe- 
rien<'«Ml  the  humiility  of  thi*  tropics,  just  before  the  bcfjinniu^'  of  the 
monsoons,  can  have  an  adetjuate  idea  (»f  the  excess  of  moisture  in  the 
air.  I  have  seen  a  pair  of  boots  completely  covered  with  ;;reen  fun<,Mis 
in  a  sin<,'Ie  niijht.  Creat  precaution  uiust  be  takeii  to  pr''^'^'"t  <^'"'t^**" 
goods  Irom  mildew;  Immicc  the  need  of  ;,Meat  care  in  i)a(;kinp;.  which  of 
course  involves  expense.  With  the  opening  of  tlu'  Canadian  I'acHie 
road  and  the  conin'cting  lines  of  steamers  all  this  is  to  be  change«l. 
No  extra  care  will  be  recpiired  to  prote<;t  the  goods,  which  will  be  put 
from  liivepool  to  \'al|>araiso  in  thirty  days. 

\V«'  have  seen  in  the  papers  recently  no  little  discussion  in  regard  to 
the  future  otCanada,  that  it  w;i«  soon  to  be  annexed  to  tlie  United 
States.  Allow  me  to  express  the  opinion  that  if  we  desire  to  bring 
al»out  such  a  consummation  the  action  called  tor  by  the  Cnjon  Pacilic 
road  is  not  calcidated  to  promote  that  end.  On  the  contrary,  I  am  of 
the  opinion  that  free,  u.i trammeled  comineice  will  l4>iid  to  bring  it  about 
much  more  i.i|iidly. 

When  in  \'i«-toria  a  few  months  ago  I  wfiit  into  the  stores  and  in- 
spected the  goods,  and  discovered  that  by  far  thi'  largest  proportion  of 
articles  were  manufu-tured  in  the  I'nited  States  and  hail  been  pur 
chased  (rom  the  wholesale  dealers  of  Chicago  ami  St.  Paul  ;  that  nearly 
all  artich'sot  hardw.ue  weiv  from  the  lJnit«Ml  States;  wooden  ware  was 
mostly  from  Tt)roiito.  Cpon  the  shelves  of  the  dry  goods  stores  wen* 
sheetings  manufactured  in  the  hxuiis  of  New  lOngland.  A  great  and 
constantly  increasing  trallic!  is  siMiiigiiig  up  between  British  America 
west  of  Lake  Supeii(uand  our  Northwestern  States.  Kven  the  social 
atmosphere  ttf  \ictoiia  is  almost  American.  Shall  we  not  lose  commer- 
cial ami  political  prestige  it  we  a<lopt  the  line  of  action  called  for  by 
tiie  Union  I'acilic  road  *. 

TUE   QUESTION   OF  CANADIAN   COMPETITION. 

The  (luestion  befiue  you  is  not  ahme  the  wt-lfare  of  New  England,  but 
of  the  whole  community.  This  disci  imination  asUed  for  is  not  (;ontiiied 
to  the  through  trallic  from  the  Atlantic  to  the  i'acilS-.  Let  us  se. 
where  tho  stroke  will  fall.  Some  months  since  1  was  at  !)ulu;h,ttn<l  saw 
long  trains  of  cars  discharging  corn  ,into  the  elevators  which  ha<l  been 
grown  upon  the  fields  of  central  Kansas.  When  you  examine  the  great 
waterway  of  the  lakes  and  the  St.  Lawrence  and  the  country  west  and 
southwest  of  Lake  Michigan  you  will  notice  that  Central  Kansas  is 
no  further  from  New  York  and  Boston,  via  Duluth  and  the  lakes,  than 
by  Chicago  and  the  lakes.  That  is,  the  Kansas  shipper  can  s«'iid  his 
corn  to  New  York  via  the  Lakes,  I'.iilfalo,  and  the  Erie  Canal  by  Duluth 
or  via  ('hicago. 

It  seems  to  me  that  it  the  projjosed  line  of  a<tion  is  adoi)ted  mc 
shall  greatly  injure  ourselves.  The  people  of  the  United  States  ha\  • 
not  asketl  for  tiiis  action.  They  make  no  comidaint.  'ihe  hue  and  ci.\ 
comes  wholly  from  a  few  railroads,  (ireat  economic  laws  never  can 
be  changetl  by  legislation.  If  you  were  to  enact  a  law  disj-riminating 
against  the  Canadian  railroads.  I  do  not  think  that  it  would  change  the 
current  of  tratlic,*  for  even  with  tlu'  discrimination  aske«l  for  the  Cana- 
dian road,  with  its  low  grades,  subsidized  by  governtnent,  with  .'I  per 
cent,  guaranteed  by  the  govcnimeiit,  would  make  its  rates  conform  to 


THE    UMTED    STATES    AND    CANADA.  471 

your  requirements  and  would  still  be  the  great  trauscontiuental  line 
taking  a  large  share  of  traffic  from  the  States.  ' 

AN  AMERICAN  OCEAN  MAIL  SERVICE. 

Far  better  for  the  Union  and  Central  and  Northern  Pacific  roads  to 
accept  the  situation  and  enter  the  lists  as  competing  roads.  Better 
though  would  be  the  adoption  by  our  own  Govenimeiit  of  a  line  of  com- 
mercial policy  like  that  of  Great  Britain— tbeestablisliment  of  an  ocean 
mail  service  to  China,  Japan,  Chili,  Brazil,  the  Argentine  IJepublic. 
Not  till  we  do  our  own  carrying;  not  till  we  establish  a  certain,  con- 
stant, sure,  and  rapid  ocean  mail-service,  shall  we  have  the  world  ibr  a 
market. 

Let  us  see  what  might  happen  were  the  United  States  to  establish  a 
rapid  mail  service  of  weekly  steamers  between  San  Francisco  and  China. 
Throughout  the  Southern  States  there  is  a  rapid  increase  of  cotton  man- 
ufactures, mainly  coarse,  stout  fabrics.  Were  such  a  line  of  steamers 
established  the  cotton  manufacturer  of  Texas,  sbipyjing  his  goods  to 
San  Francisco  by  the  Southern  Pacilic,  would  take  the  cotton  from  the 
field  and  have  his  goods  on  the  market  of  Shangbai  in  less  than  thirty 
days,  whereas  the  English  manufacturers  must  ship  it  from  central 
Texas  to  Galveston,  from  Galveston  to  Liverpool,  thence  to  the  manufac- 
tory, thence  back  to  Liverpool,  send  it  to  Montreal  in  the  summer  months, 
across  the  continent  to  Puget  Sound,  thence  to  Shangbai.  In  winter 
he  must  send  it  by  the  Peninsula  and  Oriental  Line  to  Gibraltar, 
through  the  Mediterranean,  the  Suez  Canal,  tbe  Ked  Sea,  across  the 
Indian  Ocean,  through  the  Straits  of  Sumatra,  up  the  China  coast. 
Six  months  is  the  shortest  possible  time  for  such  a  transaction.  Let  us 
not  forget  that  Great  Britain  takes  more  than  70  per  cent,  of  her  cotton 
from  this  country.  Bear  in  mind  that  she  is  sending  between  three  and 
four  hundred  million  yards  of  cotton  goods  to  China ;  that  she  sends 
nearly  one  hundred  million  yards  to  Java  and  the  Phili])pine  Islands, 
where  never  a  yard  of  American  cottons  has  been  seen,  unless  sent  there 
by  British  merchants. 

Mr.  Chairman  and  gentlemen,  a  great  commercial  future  lies  before 
us,  if  we  are  wise  enough  to  adopt  a  large,  liberal,  tar-sighted,  ener- 
getic policy. 

ADDITIONAL  STATEMENT  OF  ALDEN  SPEARE. 

Mr.  Speare.  I  have  a  set  of  resolutions  from  the  Lowell  Board  of 
Trade  which  I  would  like  to  present,  Mr.  Chairman. 

The  Chairman.  We  will  be  glad  to  have  you  do  so. 

Mr.  Speare.  I  have  been  requested  to  present  the  following  resolu- 
tions adopted  by  the  Lowell  Board  of  Trade : 

RESOLUTIONS  OF  THE  LOWELL  BOARD  OF  TRADE. 

At  a  meeting  of  the  Lowell  Board  of  Trade  held  this  day,  the  folio  wiug  resolutions 
were  unanimously  adopted :  ,  t,    ^      •    ii.         *♦/.» 

Whereas  the  interests  of  Lowell  are  co-incident  with  those  of  Boston  in  the  matter 
of  railway  traffic,  and  that  those  interests  will  he  seriously  interfered  witli  hy  the 
proposed  restrictions  or  suppression  of  traffic  by  the  Canadian  Railroads  : 

Resolved,  That  the  Lowell  Board  of  Trade  indorse  the  resolutions  on  this  matter 
passed  by  the  Boston  Oil  Trade  Association.  „„:„*„,i 

Resolved,  That  a  special  committee  to  represent  the  interests  of  LoweU  i.eapponuen, 


472  TRANSPORTATION  INTERESTS  OF 

1  o  appear  before  tbe  United  States  Seuate  Committee  ou  Interstate  Commerce  at  a 
hearing  to  be  given  in  Boston  Jnly  5. 

liesolved,  That  thiw  committee  consist  of  the  standing  committee  on  railroads  and 
transportation,  togclhtr  with  lion.  Charles  II.  Alien,  Hon.  Charles  A.  Stott,  Hon. 
Francis  Jowett,  Charles  II.  Coburn,  A.  G.  Cumnock,  and  Alvin  S.  Lyon. 

.  CUAS.  W.  Eaton, 

July  2,  W'iO.  Secretary. 

STATEMENT  OF  NATHANIEL  B.  BORDEN. 

Mr.  Nathaniel  B.  Borden,  a  member  of  the  Board  of  Trade  of  Fall 
Eiver,  api^'ared. 

The  Chairman.  State  your  name,  please. 

Mr.  liouDEN.  Xathanit'l  B.  Bordi'ii. 

The  ClIAiKMAN.  Wh«*re  is  your  hornet 

Mr.  BoKDEN.  Fall  Kiver. 

Tlie  ('HAiRMAN.  Ill  wlijit  business  are  you  enpaged  t 

Mr.  Bori)i:n.  Jn  the  iiianiilactiue  of  cotton  poods. 

Thi'  Chaikman.  K  you  have  any  statement  to  make  in  behalf  of  your 
city  we  ^vill  be  f^Iad  to  hear  you. 

Mr.  BoiJDKN.  I  do  not  know  that  I  have  a  prcat  deal  to  say  in  ref^ard 
to  this  matter. 

Fall  lliver  is  a  lar;;e  manufaeluriii}^  city,  ^^'e  maniHaeture  cotton 
j,^)ods  hirpely,  a  considerable  amount  of  which  is  shipped  to  the  West. 
Of  course  we  are  anxious  to  j;et  our  trans])ortation  as  chea|)ly  as  possi- 
ble, and  we  feel  that  the  more  competition  there  is  in  transportation 
the  better  rates  we  j^et ;  and,  so  tar  as  I  am  concerned  and  the  peoi»l»» 
J  represent,  we  are  satistied  willi  the  i>re.sent  status  of  atlairs.  That  is 
about  all  1  have  to  say. 

I  am  here  to-day  representing;  the  manufacturers  of  Fall  Kiver  on 
another  matter.  We  have  come  to  Boston  today  to  ask  the  jjenth'ineii 
of  the  committee  to  visit  Fall  IJiver.  \N"e  wonhl  like  to  have  you  <(»ine 
to  our  city  ami  become  acipiainted  with  us  as  manulacturers  and  un 
deistand  us  better  than  .Muinow<lo,  probably  ;  and  if  it  «-an  be  arian;:ed 
we  will  be  very  much  pleased  to  have  you  come  to  our  cty. 

The  ("haikman.  I  rey:ret  to  say  tiiat  our  enpragements  are  such  that, 
while  we  wouhl  be  deli<;htcd  to  po,  we  will  be  compelled  to  <lecline. 
We  can  not  deviate  from  the  i>ro;:ramme  already  a<;reed  upon  without 
interferiuf;  with  the  work  of  the  committee,  otherwise  Wi>  would  be  glad 
to  accept  your  kind  invitation,  for  which  we  an'  duly  grateful. 

ADDITIONAL  STATEMENT  OF  ALDEN  SPEARE. 

Mr.  SrEAKE.  Some  questions  were  put  to  me  yesterday  in  regard  to 
distances,  which  I  was  then  unable  to  answer  on  account  of  lack  of 
data.  1  have  since  procured  this  data,  and  with  the  i)ermission  of  the 
committee  will  tjive  it. 

The  C'HAiiJMAN.  You  are  at  liberty  to  do  so. 

Mr.  SpEAUK.  From  MinneajHdis  to  Boston  by  the  Saiilf  Sfe.  Miirie 
and  Canadian  Atlantic  Bailway  is  1.1L'."»  miles;  to  New  York  hy  the 
same  route  IS  1,4L'S  miles;  .^o  that  fiom  Minneapolis  by  the  Cana<lian 
route  we  are  3  mih's  nearer  than  is  New  Yoik.  Another  (|uesli(»n  was 
askrd  as  to  the  distance  the  Canailian  railways  would  have  to  jjo  if 
avoiding  I^Iaine.     1  he  additional  (b.-^tant'e  would  be  M>  miles. 

The  <  HAii.'MAN.  Can>ou  not  let  the  table  of  distances  from  which 
you  are  reading  go  into  the  recoid? 


THE  UNITED  STATES  AND  CANADA.  473 

Mr  Speare  It  is  rather  hastily  gotten  up,  but  cau  be  put  in  the 
record  if  you  desire  it.  i  i  « 

The  table  is  as  follows: 

From  Minneapolis,  via  Sault  Ste.  Marie  &  Can.  At.  Ry.,  to  Boston . .  1  '^^ 

Chicago  &  Cau.  Pac.  Ey.,  to  Boston 1^,^ 

Chicago  &  West  Shore  route,  to  Boston                         \' av, 

Sault  Ste.  Marie,  C.  P.,  G.  T..  N.  Y.  C,  to  Boston 1  r^:!2 

Sanlt  Ste.  Marie  &  Can.  At.  Rv.,  to  New  York                        I'jfiy 

Sault  Ste.  Marie  &  Can.  Pac.  Ry.,  to  New  York     i' 428 

Chicago  &Penn.  R.  R.,  to  New'York i'324 

Sault  Ste.  Marie,  C.  P.,  G.  T.,  «&  D.  L.  &  W.,  to  New  York 1*41)2 

Chicago  &  Can.  Pac.  Ry.,  to  Halifax 2't»29' 

Sault  Ste.  Marie  &,  C.  P.  R.,  via  Ottawa,  to  Halifax l'878 

From  Montreal,  via  C.  P.  R.,  via  Ottawa,  to  Halifax  758 

G.  T.  &  I.  C.  R.,  via  Ottawa,  to  Halifax '"/.'.] 850 

C.  P.  R.,  via  Ottawa,  to  St.  John 481 

G.  T.  &I.  C.  R.,  via  Ottawa,  to  St.  John !."*..!'"."."!!!!.'.".!!!  7.'.! 

C.  P.  R.,  via  Ottawa,  to  Moncton  ]_ ..........  r)70 

G.  T.  &  I.  C.  R.,  via  Ottawa,  to  Moncton !!!^.."."!  662 

STATEMENT  OF  JEROME  JONES. 

Mr.  Jerome  Jones,  an  importer  of  earthenware,  appeared. 

The  Chairman.  The  committee  will  be  glad  to  hear  any  statement 
you  may  desire  to  make,  Mr.  Jones. 

Mr.  Jones.  What  I  shall  have  to  say  will  be  in  the  interest  of  the 
importers,  or  rather  of  the  views  that  come  from  their  standpoint  on 
this  question.  Boston  being  second  only  to  New  York  and  the  port  for 
Kew  England  foreign  commerce,  we,  as  importers,  feel  that  the  sncfes.s 
of  this  commerce  is  dependent  upon  having  a  reliable  continuance  of  com- 
parativelj"  low  rail  rates  to  and  from  Boston. 

This  reliance  has  been  secured  to  us  by  the  competition  of  the  north- 
ern roads  which  are  a  part  of  the  Grand  Trunk  and  Canadian  roads. 

While  the  American  trunk  roads  are  an  important  factor  in  the  for- 
eign commerce  of  Boston,  we  believe  that  these  northern  roads  that 
connect  with  the  Canadian  lines  will,  if  not  hampered,  continne  in  the 
future  as  they  have  done  in  the  past  to  secure  as  low  through  rates 
from  Boston  to  the  Northwest  as  are  enjoyed  by  the  merchants  in  New 
York,  Philadelphia,  and  Baltimore.  This  equality  is  secured  by  the 
differential  rates  on  all  west-bound  traffic  over  these  Canadian  Hues. 
What  I  say  of  Boston  is  true  substantially  at  all  the  trade  centers  north 
and  east  of  here  in  Maine,  New  Hampshire,  and  Vermont,  and  by  this 
certainty  of  competition  all  the  heavy  items  of  imports  such  as  n.)w 
come  here  in  the  Cunard,  Leyland,  and  Warren  steam-ship  lines  from 
Liverpool,  the  Glasgow  line,  the  London  line,  and  the  Antwerp  line, 
consisting  of  wool,  machinery  for  mills,  ])aper  stock,  bleaching  i)ow(h'r, 
soda  ash,  tin  plates,  Mediterranean  fruits,  cannel  coal,  salt,  sugar, 
crockery,  dry  goods,  glass^  iron,  and  the  thousand  and  one  other  itt-nis 
necessary  to  the  progress  of  our  people,  are  landed  in  Boston  at  as  low 
a  sea-freight  generally  as  toother  American  ports;  but  that  equality  of 
rates  is  secured  only  in  consequence  of  our  having  here  ready  return 
cargoes  for  the  steamers,  and  the  Canadian  roads  are  our  reliance  to 
secure  equally  low  rail  rates  on  the  grain.  Hour,  provisions,  leather, 
cheese,  etc.,  to  supply  the  export  cargoes.  ■  r    •   i  f 

This  commerce  having  been  secured  to  us  by  the  ecpiality  of  freight 
rates,  and  with  our  industries  in  New  England  dependent  upon  it,  it 


474  TRANSPORTATION   INTERESTS   OP 

seems  next  to  if  not  a  vested  right.  We  believe  the  burden  of  proof 
is  with  those  who  would  make  the  chanjje. 

Congress  may  deprive  our  merchants  and  manufacturers  of  rights 
we  now  have,  but  can  not  restore  by  legislation  the  harm  indicted  upou 
the  millions  in  New  Englan<l  it  the  northern  lines  are  ruled  out. 

Senator  IJlaiu.  You  arc  an  impoitcr,  1  believe T 

Mr.  .loNES.  Yes,  sir. 

Senator  lii.AiR.  What  «lo  you  import? 

Mr,  .loNKS.  My  i)arti«ular  line  is  t-arthenware. 

Senat(»r  (Ioijman.  Where  do  you  find  a  market  for  your  goods  t 

Mr.  .Junks.  Chiefly  in  the  West  and  Northwest. 

Senator  llLAiH.   Do  you  send  gof»ds  as  far  as  the  Tacilic  coast  ? 

Mr.  ,I(>m:s.  Yes,  sir  ;  our  business  is  chietiy  west  of  the  Hudson  Kiver. 

Senattu-  IJi.Aiii.  What  prr»jK)rtit)n  of  tiie  goods  imported  arriving  at 
Bost(Ui,  which  are  distributed  throughcuit  tlie  continent,  pass  ovi-r  the 
Canadian  lines  f 

Mr.  .I()M;s.  1  can  not  answer  that  question,  because,  while  we  do  n«)t 
patroni/e  the  nortiiern  lines  so  much  as  yiai  mi;:ht  tliiidx  from  what  I 
have  said,  we  fei-l  that  they  ke<'p  I  lie  other  lines  to  a  parity  of  rates,  so 
that  iioston  is  on  a  parity  with  the  other  importing  cities. 

Senator  r>i,Aii{.  l)o  tlie  Canadian  roads  mak«'  low«'r  rates  than  the 
American  roads  If 

Mr..I()Ni:s.  We  understarnl  their  ratesarcahvuys  aslow,  and  they  have 
a  ditb'icntial  wliich  tlu'V  cati  apply.  For  instance,  if  w«»  want  to  con- 
tract for  an  importation  from  Liverpool  t<»  Peoria,  or  to  any  other  point 
in  the  Inited  States,  they  will  giv«'  us  a  through  billot  lading  from 
Liverpool  to  the  i)oint  of  destination  in  the  l'nil«'d  States. 

Senator  KKA(tAN.  Do  you  understand  that  commerce  coming  through 
AiiMMican  ]>orts  going  into  Canada  goes  through  in  bond,  or  is  it 
handled  by  American  men-hants  f 

Mr.  .loNKS.  Chielly  in  bon«l.  We  sell  goo<ls  in  bond,  and  of  course 
we  sell  many  Am«'ri<-an  juoducts  to  Canadians;  but  the  chief  jjart  of  the 
shipments  in  our  line  go  through  in  boml. 

Senator  KkA(;an.  Thecpiestion  is  suggested  as  to  whether  you  speak 
of  merchandise  that  pays  duties  in  the  Cnitcd  States  or  goods  going 
through  in  bond? 

Mr.  .loNKs.  The  much  larger  share  of  the  goods  that  go  through  are 
goo<ls  whii'h  pay  dut3'  in  the  Cnited  States. 

Senator  Keagan.  WIumc  they  are  for  conMnii]»tioii  in  the  Ciiiite*! 
States  ? 

Mr.  Jones.  Yes,  sir. 

Senator  Heagan.  I  am  speaking  of  that  which  comes  tlirough  the 
territory  of  the  United  States  en  route  to  Canada,  whether  it  is  mer- 
chandise which  is  handled  by  American  merchants  or  simply  sent 
through  in  bond  to  be  handled  by  Canadian  merchants. 

Mr.  .Tones.  Y«  s  and  no  to  that  ipiestion  ;  yes,  so  far  as  good.s 

Senator  Kka(;an.  You  do  not  g»'t  my  idea.  A  large  amount  of  the 
goods  you  import  go  through  into  Canada,  do  they  not? 

Mr.  Jones.  Y'es,  sir. 

Senator  IIeagan.  Now,  as  to  that  class  of  goo<l8,  are  they  handled 
by  American  merchants  or  do  they  go  through  in  bond  ami  are  they 
handled  by  Canadian  merchants  ? 

Mr.  Jones.  It  depends  whether  they  go  through  Canada  for  con- 
sumption ni  Chicago,  or  whether  they  go  to  Canada  and  are  consumed 
there,  in  which  case  they  pay  duty  to  the  Canadian  Government. 


THE    UNITED   STATES   AND   CANADA.  475 

STATEMENT  OF  WILLIAM  CLAFLIN. 
Mr.  William  Claflin  appeared. 

The  Chairman.  You  are  ia  business  here,  I  believe,  governor ! 

Mr.  Claflin.  Yes,  sir. 

The  Chairman.  You  kuow  wbat  you  want  to  say,  and  you  may  j)ro- 
ceed  to  make  your  statement  without  interruption  on  our  part. 

Mr.  Claflin.  I  suppose  that  my  eloquence  will  be  rather  accumula- 
tive than  otherwise,  as  you  have  by  this  time  understood  the  position 
of  almost  all  New  England  merchants  and  manufacturers,  and  that  is 
simply  that  they  do  not  wish  matters  changed  so  far  as  the  Canadian 
railroads  are  concerned. 

I  will  say  at  the  outset  that  from  the  first  I  was  opposed  to  the  inter- 
state commerce  law.  1  was  in  Congress  when  it  was  first  brought  be- 
fore that  body.  I  heard  the  arguments  for  it  during  two  scsskuis.  I 
was  satisfied  it  would  never  pass  as  originally  rejjorted,  and  it  never 
did,  as  originally  introduced.  I  was  satisfied  that  it  would  be  of  no 
benefit  but  rather  an  injury  to  the  East  and  West,  where  it  esi)ecially 
applies  to-day.  There  are  some  parts  in  the  law  that  are  beiu^ri<;ial  and 
there  are  other  parts  that  are  beneficial  to  nobody  except  the  railroads, 
and  I  believe  the  railroads  say  that. 

When  I  was  in  Congress  there  were  no  large  railroad  cor])orations 
present  to  oppose  the  law.  They  are  generally  represented  before  Con- 
gress and  in  State  legislatures  if  they  are  to  be  affected  unfavorably,  I 
believe  they  early  saw  that  the  law  would  be  to  their  advantage,  and  1 
believe  the  experience  of  merchants  here  and  in  the  West  is  that  the 
railroads  derive  advantages  arising  from  the  law. 

LINES  FOSTERED   BY  MASSACHUSETTS. 

It  has  been  the  experience  of  Massachusetts  for  more  than  thirty 
years  that  she  was  hampered  by  want  of  complete  communication,  and 
she  spent  enormous  suras  in  order  to  make  her  road  to  the  West  easy 
and  inexpensive.  Massachusetts  absolutely  lost  nearly  $12,0()(>,0()(»  in 
the  construction  of  the  Hoosac  Tunnel  line,  in  order  that  her  merchan- 
dise might  be  carried  from  the  Atlantic  coast  to  the  West  at  low  rates. 
She  has  fostered  railroads  by  large  expenditures.  She  almost  built  a 
road  out  of  Worcester  to  the  West.  I  speak  of  this  because  it  was 
brought  to  your  attention  that  roads  had  been  subsidized  by  the  Cana- 
dian or  British  Government,  or  by  both.  Massachusetts  subsidized 
roads  in  the  way  I  speak  of  in  order  that  her  peoi)Ie,  who  were  shut  up 
here,  as  it  were,  in  one  part  of  the  world,  miglit  have  egress.  We  of 
New  England  have  no  mines  of  any  value,  and  we  have  nothing  but  the 
industry  of  the  people  and  the  water-courses  to  attract  people  here. 

THE  CANADIAN  ROADS  EQUALIZE  RA^bES.  . 

One  great  means  of  equalizing  the  transportation  for  the  last  twenty 
or  twenty-five  years  has  been  these  Canadian  roads.  The  routes  through 
Canada  have  been  very  potential.  In  the  first  place,  we  went  by  north- 
ern lake  routes  and  reached  the  West  at  moderate  prices,  and  those 
prices  controlled  the  great  central  lines.  Say  what  they  would,  they 
could  not  overcome  the  fact.  I  remember  at  one  time  that  the  mer- 
chants of  St.  Louis,  I  being  in  business  there  as  well  as  m  I. oston  at- 
tempted to  get  the  rates  reduced  from  here  to  St.  Louis  on  thr  central 
roads.    The  rates  were  then  from  $1.75  to  $1.80  on  the  goods  manu- 


476  TRANSPORTATION   INTERESTS   OF 

factured  in  New  Eiif^laiid.  The  inerfli;uits  said :  "If  you  take  our  goods 
at$I.Uoor  $1  we  will  give  you  all  mir  Uusiuess."  The  roads  relused  to 
reduce  their  rates  any.  The  nieiehaiits  iuiniediately  went  to  the  North- 
ern Hue,  and  that  line  did  reduce  ahout  one-halt*.  They  knew  that  they 
could  make  a  gjeat  deal  of  money  by  doing  it.  An  agreement  was  made 
with  the  Chicago  and  Cincinnati  ])eo]>le,  and  the  price  was  reduced  one- 
half.  Then  the  central  lines  reduce«l  their  rales  to  three  hit hs,  and 
offered  to  take  the  goods  that  they  ha<l  lormerly  been  taking  at  $1.75 
and  .ifI.8U  for  SO  cents.  Notwithstanding  the  ofler  of  this  great  reduc- 
tion the  merchants  would  not  leave  the  Northern  line,  and  to  this  day 
that  Northern  line  is  patronized  by  those  merchants.  It  was  only  for 
one  year  that  the  agreenunt  was  made,  antl  yet  the  i)eo|)le  felt  so 
aggrii'ved  by  the  couise  pursued  by  the  New  York  Central  and  Penn- 
Kylvania  routes  that  they  refused  to  ship  by  them  even  when  those  lines 
offered  to  ship  lor  from  LM)  to  AO  pi-r  <'enl.  less  than  the  Northern  line. 

Now,  if  you  are  going  to  regulate  the  ('auadian  roads  1  think  you 
should  regulate  the  roads  through  New  York  an<l  the  canal  routes. 
You  should  apply  some  plan  or  other  that  they  should  be  placed  under 
the  same  restriction  as  the  Canadian  roa«ls.  It  is  well  known  to  you 
that  the  New  Y«>rk  Central  has  a  line  that  takes  advant;  ge  of  the  law  ; 
I  do  not  say  illegally,  but  they  have  that  privilege.  If  tijey  wish  to 
evade  the  law  they  siujply  have  goods  sent  through  to  iJulValo  on  one 
ticket,  and  some.bdin  Smith  or  man  Frida\  »»r  s«)met>ther  mylhical  man 
stan<ls  there  and  tlu-y  are  reshippid  through  him  and  your  interstate- 
commerce  law  is  gone.  The  |»eople  have  no  advantage  of  it.  I  woidd 
say  that  the  New  Yiuk  Central  and  thosi*  lines  a<'t  \«'ry  fairly  aboui  it. 
Tlu-y  give  (»ne  man  or  on**  coiporati(»n  as  gotxl  a  trade  as  the  olher. 

Senator  lliscocK.  Do  you  think  that  winch  you  have  sug;;ested  is 
being  «lone  now  by  the  New  York  Central  t 

Mr.  Clafi.in.  I  think  it  has  Ikhmi  d(U\e  within  a  year. 

Senator  IIiscocK.  The  reason  I  thought  it  was  not  being  <lone  now 
was  because,  as  I  suggested  the  other  <lay,  they  can  not  po.ssibly  charge 
a  man  who  buys  goo<ls  to  be  shipped  to  Albany  any  more  or  any  less  by 
any  such  artilice  as  that. 

Mr.  Clai'LIN.   I  (lid  m)t  say  they  charged  him  less. 

Senator  IIisroCK.  Is  there  anything  in  the  interstate  commerce  law 
that  interfrres  with  that  being  <l<)ne  f 

Mr,  Ci>AKLiN.  If  the  interstati'-commerce  law  is  to  keej)  the  prices 
level  and  ])rovide  that  no  one  set  of  men  shall  have  any  advantage  over 
another,  I  think  there  is. 

Senator  IIiscock.  There  is  nothing  in  the  interstate  commerce  law 
that  says  you  shall  not  charge  less  tor  the  shorter  than  the  longer  haul. 

Mr.  Claflin.  No,  there  is  nothing  in  that  line. 

Senator  Hisroriv.  And  all  the  New  Y'ork  Central  does  is  to  do  that. 

Mr.  C^LAi'LiN.  They  may  do  more. 

Senator  IIiscoc&  No.  because  th«'n  the  purchaser  would  buy  his 
goods  in  Chicago  ami  ship  through.  I  only  speak  of  that  as  bearing 
upon  the  suggestion  made  here.  1  do  not  see  how  that  couhl  be  doiif 
so  as  to  afl'ect  the  other  liiu's. 

Mr.  Claflin.  It  takes  away  the  business  from  the  other  lines.  It 
enables  tin*  peo])U'  living  in  the  State  of  New  Y'ork  to  get  an  a«lvantage 
that  |)eo[>le  living  across  the  line  can  not  get. 

Tin-:   INTEllSTATECOMMERrE    LAW. 

Then  again  the  interstate  cotnmerce  law  has  enhanced  the  i)rice  of 
goods  coming  from   New  York   into  this  city.     This  is  true  to  such  an 


THE    UNITED    STATES    AND    CANADA.  477 

extent  that  persons  who  formerly  brought  certain  kinds  of  goods  over 
the  I^ew  York  Central  and  the  Boston  and  Albany  have  be.-ii  obli-.-d 
to  give  up  the  plan  on  account  of  the  interstate-coninierce  law  Tlio 
roads  raised  the  prices  in  some  instances  25  per  cent.,  and  wIkmi  com- 
plaint was  made  they  said  it  was  due  to  the  interstate  commerce  law 
I  think  you  will  find  it  very  dilticult  to  obtain  the  evidence  of  any  man 
to  the  effect  that  the  interstate  commerce  law  has  reduced  the  price  of 
goods  coming  from  New  York.  All  the  advantages  of  the  law  liave  ac- 
crued to  the  railroads.  If  you  apply  that  law  to  the  Canadian  routes  so 
as  to  shut  up-New  England  I  do  not  know  where  we  are. 

In  the  trade  in  which  I  am  engaged  there  are  probably  more  people 
engaged  than  in  any  other  one  manufacture  in  New  England.  It  is  a 
trade  that  is  very  close  in  its  profits.  It  gives  sui)port  to  a  very  large 
number  of  people.  A  very  small  percentage  will  change  the  place  of 
the  trade.  For  instance,  we  can  not  manufacture  any  more  in  large 
cities.  I  do  not  mean  in  Boston  alone,  but  the  business  is  going  away 
from  Lynn  because  of  the  small  percentage  they  can  save  by  going  into 
Maine  or  New  Hampshire  or  the  western'part  of  Massachusetts. 

If  the  prices  of  freight  are  raised  and  the  expenses  of  living  are  raised 
through  the  intervention  of  the  interstate  commerce  law  the  result  will 
be  that  the  manufacturing  people  will  have  to  go  into  another  State, 
because  the  percentages  are  so  small  that  a  man  doing  a  busines»J  in 
Lynn  of  a  half  or  a  quarter  of  a  million  can  go  west  and  maiuifacturo 
there,  for  the  reason  that  his  people  can  be  supplied  at  a  less  price  than 
if  he  manufactured  in  Lynn. 

The  people  are  going  from  the  city  to  the  country,  which  shows  you 
that  the  manufacturers  who  consult  their  pockets  and  look  out  for  the 
money  they  are  going  to  find  in  their  business  will  change  the  whole 
method  of  doing  business  notwithstanding  it  may  be  done  at  great  in- 
convenience to  them. 

It  has  already  been  stated  that  we  have  to  pay  more  than  New  York 
owing  to  this  5  cents  per  100  additional  rate,  and  with  the  great  amount 
of  consumption  it  makes  an  enormous  difference  to  the  people  of  the 
State.  Of  course  they  are  opposed  to  that.  These  people  are  great 
consumers  of  the  products  of  the  West.  The  West  brings  us  nearly 
everything  we  eat  and  drink.  A  gentleman  who  is  familiar  with  this 
side  of  Worcester  told  me  the  other  day  that  within  fifty  years  nearly 
one-half  of  that  country  has  been  turned  into  a  forest  where  there  were 
formerly  farms.  He  pointed  out  farms  that  were  formerly  used  for 
raising  corn  and  grain  that  were  now  grown  up  in  forests. 

The  Chairman.  Why  is  that? 

Mr.  Claflin.  Because  we  get  products  from  the  West  cheaper  than 
we  can  raise  them  here.  That  is  so  with  respect  to  hay,  even.  Take 
fifty  or  a  hundred  thousand  men  who  work  in  our  business.  They  use 
a  great  deal  of  flour.  They  do  not  like  rye,  and  use  but  little  corn. 
That  comes  principally  from  the  West.  We  can  not  raise  anything  to 
advantage  here  but  potatoes  and  hay,  and  we  are  raising  less  and  less 
hay  everv  year.  Gardening  is  about  the  only  cultivation  we  have.  An 
acre  of  cabbage  in  Cambridge  is  worth  a  great  deal  more  than  two  acres 
of  cereals  in  the  West.  I  think  our  people  would  like  to  have  the  in- 
terstate commerce  law  changed  so  far  as  it  affects  the  trade  of  which  I 
have  spoken. 

Senator  Blair.  Is  there  any  change  that  these  people  desire  except 
the  repeal  of  the  long  and  short  haul  section? 

Mr.  Claflin.  I  think  that  is  the  main  thing.  Of  course  that  is  tlio 
main  difference.    If  that  is  changed  I  suppose  it  will  make  no  differ- 


4? 8  TRANSPORTATION    INTERESTS    OP 

ence  as  to  the  Canadian  or  any  otluT  railroads.  I  think  tlie  principle 
of  uniform  rati's  hctwfon  New  Eiifjland  ami  the  West  was  pretty  widl 
nettled  biit'on'  the  law  was  passed.  We  used  to  have  great  competition 
between  New  York  an«l  Huston  in  various  lines,  and  now  they  have 
settled  down  on  a  lair  basis  and  each  stands  on  its  own  ;;round.  Hut 
that  does  not  apply  to  pl;u-f8  west  of  New  York.  There  were  all  sorts 
of  prices  ami  a;,Meements,  and  y<Mi  never  knew  when  you  ^rotyour  rate 
from  here  to  the  West  what  your  neijrhoor  was  jiayinj;.  Y«m  mijjht  l>e 
payinj;  .">()  j)ercent.  more  than  your  nei^dibor,  and  never  liud  it  outfroin 
him  or  the  railroad. 

The  CiiAii{MAN.   When  was  that  ? 

Mr.  Clai'I.in.   Within  live  years,  1  think. 

The  CnAiUMAN.  Not  since  the  passa;;e  of  the  intc^rstate  commerce 
law  .' 

Mr.  (yi.Ali.iN.  No,  sir;  I  think  the  rate.s  now  are  very  uniform;  but 
that  has  nothing  to  do  with  the  long  and  short  haul  clause. 

Si'iiator  Hlaiu.  You  would  not  by  any  means  suggest  a  repeal  of  the 
hiw,  liiit  a  modification  in  re;:ar*l  to  the  long  and  short  haul  section  T 

Mr.  CLAI'I.IN.  I  say  that  it  W(»uld  be  better  to  have  the  law  repealed 
as  it  is  on  the  books  now  tlian  to  iipply  it  to  the  Canadian  roads. 

Senatoi  Hi.Aiit.  The  (piestion  of  pooling,  1  suppose,  you  have  nut  had 
occasion  to  give  much  <!onsiderati<m  t 

.Mr.  Ci.Ai'i.iN.  No,  sir;  not  now  being  a  railroad  man.  Tooling  was 
not  popular  when  1  was  a  director,  i'liat  is  a  UKKlern  devic*'.  I  think 
now  tlie  radmatls  think  that  the  denial  of  the  po(d  is  a  disadvantage  to 
tin*  pulilic.  Men  who  have  been  long  in  the  business  and  who  have  a 
fair  share  of  ))ulilic  spirit  and  integrity  think  that  the  law  was  a  mis- 
take in  respect  to  preventing  the  privilege  of  p^Milmg.  Our  people  are 
almost  uniformly  opposed  to  the  long  and  short  loiid  clause,  but  do  not 
tak»«  uMU-h  interest  in  the  pooling  (piestion,  Ixdieving  on  the  wlnde  that 
it  was  the  tinly  thing,  as  we  say,  tiiat  would  keep  the  railroa«ls  in  line 
one  with  tin*  cither. 

Senat(M'  Hi.Aiu.  Do  you  find  that  the  jieople  wlio  live  outside  the 
city  and  traders  and  deahis  along  the  lines  of  railroads  in  the  smaller 
phu-es  re<-eive  any  atlvantagi*  in  the  reduction  of  tan-sttr  freights  f  Do 
y«>ii  hear  <>f  that  as  you  come  in  contact  with  the  people  t 

Mr.  Clafi.in.  D(»  you  mean  fnun  the  interstate  commerce  law! 

Senatiu   Hi.Aiu.   Yes. 

Mr.  Claii.in.  1  hear  that  almost  uniformly. 

Senator  liLAiR.  I  mean  as  between  competing  points. 

^Ir.  ClaI'LI.n.  I  never  heard  a  man  say  he  lia«l  anything  ]exs.  The 
railroads  raised  the  price,  and  that  is  what  the  people  complain  of  and 
that  kei'ps  up  the  lot-al  rates.  Th«^  hx-.d  rates  are  far  m<  re  lu'iiefieial 
and  prolitalde  tiian  others,  although  I  do  not  agree  with  these  gentle- 
men that  tlu'y  are  not  al»le  to  make  money  on  tlieir  through  rates,  ami 
tlu'  reason  I  do  not  helieve  it  is  bci-anse  they  are  v«'ry  anxious  to  con- 
trol a  part  of  the  business  that  goes  fnun  <me  part  of  the  country  to 
another. 

Senator  Hlaik.  Do  you  think  that  it  would  be  j^racticable  for  the 
Interstate  Commerce  Commission  to  be  clotlied  with  p(»wer  to  regulate 
the  tarill's? 

Mr.  ('lafi.in.  I  thiidv  that  you  would  have  to  fiml  a  very  high  com- 
mission to  be  able  to  do  such  a  thing  effectively  and  to  the  satisfaction 
of  tlw  railroads  and  the  ]i*>ople.*  I  think  thai  principle  would  have  to 
be  adopted  after  a  gnat  deal  tti  experieiwe  and  in  a  very  stringent 
n«'ces,siiy.  It  is  haid  to  cIoiIm'  a  commission  with  the  power  to  regi^ 
late  rates. 


A 


THE    UNITED    STATES   AND    CANADA.  4  7 'J 

Senator  Blair.  It  is  now  left  to  men  who  have  no  resDousibilitv 
whatever  to  the  people?  •' 

Mr.  Claflin.  And  the  people  have  no  responsibility  to  them. 

Senator  Blair.  The  great  masses  of  people  do  not  live  at  competintr 
points,  but  at  intervening  points  along  the  lines  of  roads. 

Mr.  Claflin.  In  some  cases  the  Commission  might  prevent  an  injus- 
tice being  done  to  a  particular  locality.  I  think  our  railroads  in  "the 
East  have  come  to  an  understanding  that  it  is  verv  impolitic  to  Lave 
to  establish  any  principle  by  which  one  community"aloug  the  line  will 
have  the  advantage  over  another. 

The  Chairman.  That  is  because  the  interstate  commerce  law  pre- 
vents it. 

Mr.  Claflin.  Yes,  sir ;  and  I  believe  the  common-law  principle  ap- 
plies to  that. 

The  Chairman.  The  interstate  commerce  act  is  based  on  common- 
law  principles. 

Mr.  Claflin.  Yes,  sir  ;  but  there  are  a  great  many  things  which  are 
based  on  common-law  principles  which  you  find  do  not  carry  out  what 
they  are  established  to  carry  out. 

Senator  Eeagan.  Do  I  understand  it  is  your  view  that  the  long  and 
short  haul  clause  is  wrong  because  it  does  not  enable  you  to  get  through 
freights  cheaper  than  way  freights? 

Mr.  Claflin.  Yes,  sir;  that  is  one  result,  of  course. 

Senator  Reagan.  Is  there  any  other  objection  to  it? 

Mr.  Claflin.  The  objection  tbat  it  operates  to  raise  the  price  of 
freight.  It  enables  a  combination  to  be  made  which  would  not  obtain 
but  for  the  law. 

Senator  Eeagan.  There  is  nothing  in  the  law,  is  there,  that  would 
prevent  the  roads  from  so  regulating  the  rates  as  to  raise  tbe  same 
amount  of  money  under  the  law  as  without  it? 

Mr.  Claflin.  The  railroads  always  take  advantage  of  the  law,  if  it 
is  on  their  side. 

Senator  Eeagan.  If  the  roads  choose  to  do  wrong  is  that  a  good 
reason  for  opposition  to  the  law  ? 

Mr.  Claflin.  Of  course  that  is  not  a  reason,  but  if  the  law  gives 
them  the  privilege  of  doing  an  unfair  thing  then  I  do  not  like  tlie  law. 

Senator  Eeagan.  The  policy  of  the  law  is  to  prevent  wrong. 

Mr.  Claflin.  Under  the  policy  now  adopted  they  do  regulate  rates. 

Senator  Eeagan.  The  law  prohibits  discrimination. 

Mr.  Claflin.  That  is  right. 

Senator  Eeagan.  And  the  allowance  of  rebates. 

Mr.  Claflin.  That  is  right,  too. 

Senator  Eeagan.  It  prohibits  excessive  charges  and  requires  e(piality 
in  the  transaction  of  business.     Is  there  anything  wrong  in  thatf 

Mr.  Claflin.  Did  they  not  have  all  those  rights  before  under  tlie 
common  law  ? 

Senator  Eeagan.  The  common  law  prevents  that.  You  understand 
that  the  common  law  was  unavailable  as  a  means  in  the  hands  <»f 
citizens  to  redress  their  wrongs,  but  something  more  than  the  eonin)»»n 
-law  was  needed.  The  common  law  was  unavailable  for  the  vindication 
of  the  rights  of  the  citizen.  But  to  come  to  the  point,  take  the  route 
from  here  to  Chicago,  would  it  be  right  to  charge  more  for  the  same 
kind  and  amouut  of  freight  from  Chicago  to  Boston  than  from  Califor- 
nia to  Boston  ? 

Mr.  Claflin.  It  would  not,  but  there  may  be  circumstaucctt  in  wbiiav 

it  would  be  right. 


480  TRANSPORTATION    INTERESTS    OP 

Senator  Reagan.  "Would  it  be  right  to  charge  more  from  Buffalo  or 
from  Albany  tbnn  from  Chicago  ! 

Mr.  Claflin.   I  do  not  think  it  would. 

Senator  Kkagan.  If  a  rate  is  roasonabU'  from  Chicago  to  l'>oston,  is 
it  unrcasonaldc  or  unjust  to  say  that  the  railroad  shall  not  charge  more 
than  that  reasonable  rat*'  for  that  distance? 

]\lr.  Cr>Ai  LIN.  The  dillicnlty  is  about  the  reasonableness — the  word 
"  rcasonabh'.''  What  is  a  reasonabl««  rate?  The  railroads  say  a  cer- 
tain rate  is  reasonable  and  the  jH'opIe  say  the  same  rate  is  nnreasonalile. 

Senator  Kkacan.  1  am  talking  of  the  relative  reasonableness.  If  a 
rate  is  reasonable  tVom  Chicago  to  P.oston,  is  it  reasonahh' to  Ibrbid  the 
roads  to  charge  any  more  for  a  shorter  distance T 

Mr.  Claflin.  I  do  not  think  so,  onlinarily. 

Senator  Kea(;an.  That  is  all  the  interstate  commerce  law  does. 

Mr.  Claflin.  It  tl«»es  something  more. 

Senator  Keagan.  What  is  it  ? 

Mr.  ClaI'I.in.  It  eimbles  the  railroads  to  raise  their  prit-es. 

Senator  Keagan.  That  is  not  the  lault  of  the  law,  but  the  fault  of 
the  railroad. 

Mr.  Clai  LIN.  You  gave  the  railroad  the  oj)portunity  to  do  so. 

Senator  Keagan.  Aim!  under  this  interstate  commerce  law  have  they 
80  raised  the  rate  as  to  make  it  unreasonable T 

Mr.  Claflin.  Who  is  to  Judge  of  the  unreasonableness  7 

Semitor  Kka(;an.  The  law  and  fact. 

Mr.  Claflin.  That  is  where  you  come  back  to  where  you  were  before. 
The  ililliculty  was  to  unite  the  |)eople  and  fight  the  railroad. 

Senator  Keacjan.  1  have  reference  to  the  enforcement  of  the  remedy. 

IMr.  Claflin.  That  is  what  I  mean.  A  man  standing  alone  can  not 
fight  a  railioa«l  of  $  |(».«Mi(>,()00  or  .•««:.0,(MK),(MMI  j'apital. 

Si'uator  Ki,A(;an.  Vou  un«leistand  that  under  the  law  if  there  is  «lis- 
crimination  ami  the  case  goes  before  the  Commi>siou  the  Commission 
tjjkes  upon  itself  the  power  ot  righting  the  wrong. 

Mr.  Claflin.  Here  is  a  business  today  over  a  certain  line  and  that 
line  ]ila(-es  a  hardship  on  the  man  who  ships.  lie  has  to  go  to  the  (com- 
mission and  say  he  sutlers  from  this  hardship,  because  he  knows  before 
he  starts  hi'  will  get  the  ct)ld  shoulder  from  the  railroad.  Therefore  he 
does  not  start. 

Senator  Keagan.  Can  you  cite  us  nn  example  where  it  is  right  to 
charge  more  for  the  shorter  than  for  the  longer  distance? 

Mr.  Claflin.  I  have  no  instance  in  miml. 

Senator  IlAiniis.  I  understand  you  as  saying  that  you  ilesire  the  re- 
peal of  the  long  and  short  haul  clause  for  the  reason  that  that  clause 
authorizes  the  railroad  comi)any  to  increase  its  through  rates. 

Mr.  Claflin.  Yes,  sir;  that  is  the  residt. 

Senator  IIakkis.  Did  not  the  railroa<ls  fix  their  through  and  local 
rates  betbre  the  i)assage  of  the  intei state  commerce  act  ? 

Mr.  Clai- LIN.  Of  course  they  diil. 

Senator  IlAinns.  Do  they  not  do  the  same  now  ? 

Mr.  Claflin.  No,  sir;  they  do  not  <liarge  their  local  rates  as  a  rule. 

Senator  IIakkis.  Do  iu>t  t lie  railroatl  companies  lix  their  rates  now 
for  themselves,  just  as  they  had  to  do  ami  exercised  the  right  in  doing 
before  the  })assage  «)f  the  int«»rstate  commerce  act? 

Mr.  Claflin.  Well,  I  do  not  quite  un<lerstand  the  question;  but  I 
snjjpose  you  nu'an  that  the  roads  get  together  ami  fix  the  rate  between 
liere  an«l  Chicago,  for  instance. 

Senator  IlAKKis.  Has  the  interstate  commerce  act  taken  any  rights 


(I 


THE    UNITED    STATES    AND    CANADA.  481 

from  the  railroad  companies  in  the  matter  of  fixing  their  tarifls  of 
charges? 

Mr.  Claflin.  No,  sir;  they  do  not  comphiin  of  that. 

Senator  Harris.  Because  they  do  not,  did  I  understand  vou  to  com- 
phiin that  this  act  has  given  them  a  power  that  thev  did  not  possess 
before!?  "  ^ 

J\lr.  Olaflin.  I  think  so. 

Seiator  Harris.  I  want  to  know  whether  the  railroads  iiad  not  un- 
limited power  to  fix  their  own  rates  before  the  passage  of  the  act  and 
whether  they  do  not  have  tlie  same  power  now  under  the  act,  with  the 
single  limitation  that  they  shall  not  charge  a  greater  sum  for  the  shorter 
than  the  longer  haul  over  the  same  road  and  in  the  same  direction,  and 
that  the  rates  shall  be  reasonable. 

Mr.  Claflin.  Exactly. 

Senator  Harris.  Now,  where  has  the  interstate  commerce  act  dimin- 
ished or  increased  their  power  except  in  that  one  single  regard  ? 

Mr.  Claflin.  Because  it  enables  them  to  combine  and  arrive  at  an 
understanding  with  each  other. 

Senator  Harris.  Did  they  not  have  the  power  to  combine  before  the 
passage  of  the  act? 

Mr.  Claflin.  Yes,  but  they  could  not  agree  to  it ;  that  is  the  trou- 
ble. 

Senator  Harris.  Did  they  not  practice  the  device  of  pooling  in  order 
to  ]>ievent competition ? 

Mr.  Claflin.  That  might  be. 

Senator  Harris.  Well,  was  it  not  the  fact  ? 

Mr.  Claflin.  To  a  certain  extent,  I  think  so.  A  line  could  break 
out  then  and  do  what  it  pleased  auy  time  it  chose  to,  and  they  can  not 
do  so  now  under  the  interstate  commerce  act. 

Senator  Harris.  Why  not  ? 

Mr.  Claflin.  It  is  difficult  for  them  to  do  it,  to  say  the  least.  Take 
the  case  of  the  Baltimore  and  Ohio  Railroad,  which  is  now  going  on. 
The  Baltimore  and  Ohio  can  break  out,  but  they  have  all  the  railroad 
interests  down  upon  them.  So  they  did  before,  but  they  have  more 
sympathy  for  the  other  roads  than  they  did  then.  This  law  eiud)les 
the  roads  to  combine  better  thau  heretofore.  The  law  tries  to  prevent 
combination,  but  does  it? 

Senator  Harris.  Do  you  regard  uniformity  and  stability  of  rates  as 
very  important  to  the  business  of  the  country  ? 

Mr.  Claflin.  I  said  I  did. 

Senator  Harris.  Do  you  not  think  that  the  i)rohibition  of  recouping 
upon  the  people  at  non- competitive  points,  or,  in  other  words,  the  i)ro- 
hibition  of  charging  more  for  the  shorter  than  for  the  longer  haul,  tends 
to  make  uniform  and  steady  rates! 

Mr.  Claflin.  No,  sir. 

Senator  Harris.  Where  the  carrier  knows  that  If  he  reduces  upon 
the  long  haul  to  an  unreasonably  low  rate,  or  reduces  at  all,  that  he 
can  not  recoup,  that  he  can  not  charge  more  for  the  shorter  thau  tlie 
longer  haul,  does  not  that  tend  to  make  better  and  more  uniform 
rates  ? 

Mr.  Claflin.  The  law  enables  him  to  raise  the  through  price. 

Senator  Harris.  Did  he  not  have  the  right  always  to  increase  the 
through  rate  if  he  wanted  to? 

Mr  Claflin.  Yes,  sir ;  but  competition  was  different  then. 

Senator  Harris.  Is  not  competition  just  the  same  now  as  then— in- 
creased by  every  mile  of  railroad  that  is  built? 
6543 31 


482  TRANSPOKTATION  INTERESTS  OF 

Mr.  Claflin.  It  doos  not  seem  to  me  to  be  so.  The  Aiiierican  roads 
eome  liere  now  to  preNeiit  it  by  ext<Mi(liii<;  the  hvw  of  the  United  States 
over  the  Canadian  loatls. 

Senator  Kkac^an.  Are  you  not  aware  that  for  many  years  before  the 
interstate  ef)mn)eree  hwv  was  passed  the  State  of  Massaclmsetts  enaeted 
a  hiw  prohibitiii;,'  railroads  from  ehar;,Mn;,Mnore  for  the  shorter  than  the 
lonj;er  distaiicr  i 

Mr.  Clai'LIN.  That  law  only  applied  within  the  State. 

Senator  IJKAfrAN.  WOnhl  \t>n  draw  a  distinction  l»e(ween  the  appli- 
cation of  a  law  in  the  State  and  in  the  wlmle  country  f 

Mr.  Claflin.  Tliat  is  what  they  are  trying;  to  do  now.  Are  they  not 
drawing;  a  distinction  between  the  Cainidian  roa<ls  and  the  American 
roads  ? 

Senator  liF.AGAN.  The  interstate  c«>mmerce  law  «loes  not  apply  within 
the  State,  l>ut  it  appli«*s  tiie  principle  to  the  whole  countiy;  but  the 
State  of  .Massachusetts  applietl  it  oidy  to  this  Stat*'.  If  it  was  wrong 
in  the  (loverument,  it  was  wron;;  for  MassachusettH  to  set  the  example. 

Mr.  Claflin.  However  that  may  be,  what  I  have  stated  is  evidenced 
by  the  fa<-t  that  the  rates  have  b«'en  raised  over  and  over  ajrain. 

Senator  CioKMAN.  Von  do  n(»t  mean  to  say  that  the  thron;;h  rates 
have  been  rais«'<l  since  the  interstate  commerce  law  wjis  passed? 

Mr.  Claflin.  Ves,  sir. 

Senator  (iOUMAN.  Have  you  «b'finite  iid'ormatioii  or  facts  to  show  that 
they  have  ? 

Mr.  Claflin.  I  have  paid  the  bill  for  ;;onds  coiuin;;  from  every  part 
of  the  Stale  of  New  Voi  k  to  tiiis  city,  which  would  show  tlu'  amount 
raised.  I  complained  to  the  authorities,  and  they  said  tliat  under  the 
operation  of  the  interstate  commerce  law  they  had  to  raise  the  rates. 

Senator  (lOiOlAN.  Could  yon  furnish  a  statement  showing  what  the 
rates  are  to  day  ami  what  they  were  |>rior  to  the  passage  of  the  inter- 
state i'ommerce  law.  except  thiring  rate  wars,  taking  the  principal 
points  west  Irom  wlii<h  NourtMcive  i»roductst 

Mr.  Claflin.  1  do  not  receive  many  now. 

Senat»)r  (Iokman.  My  umhrstandin;;  is  that  the  through  rate  to-day 
is  lower  than  at  any  time  prior  i<»  the  passage  of  the  interstate  com- 
merce law,  except  when  rate  wars  pievaih'd, 

Mr.  i'LAi'LlN.   I  have  not  s«»  understood  the  fact. 

Senator  IlLAii:.  if  lo«al  rates  have  been  n-dncid  ")(►  percent,  while 
through  rat«'s  have  lieen  i educed  only  L'.">  per  (;ent.,  lelalively  the  through 
rates  have  been  raised,  hav**  tln-y  not  f 

Mr.  Claflin.  1  «lo  not  know. 

Senator  JJLAili.  So  it  «h)es  not  follow  because  through  rates  are  no 
higher  or  are  even  lower  than  i)rior  to  the  time  the  interstate  commerce 
law  was  enacted  that  the  law  operates  to  iiu'ieiuseon  the  whole  the  cost 
ot  Western  comnnulities  ? 

Mr.  ('laflin.  It  does  not  api)lyatall;  you  can  imt  say  the  interstate 
("ommerce  law  reduced  rates  because  the  rat«'s  are  lower,  so  many 
things  enter  into  lowering  rat<'S.  Atone  tinu»  1  kiu*w  of  tin  being  car- 
rie«l  Irom  Liverpool  to  St.  Louis  for  1<>  <-<'nts  a  hundred  |)t»unds  ;  I  do  not 
think  von  will  lind  any  rates  lower  ihan  that.  I'or  years  the  rat««  w;w 
n«»t  much  higher  than  that.  Tin'  tin  \\vu\  right  over  these  roads,  and 
it  was  to  their  intert'st  to  <'arry  it  or  else  they  would  not  have  done  so. 
IJefore  the  law  was  jiassed  the  roads  had  a  freedom  which  they  have  not 
audur  the  htw  :  tluv  cm  iiMi  ii.i  tii;it  Under  the  interstate  commerce 
law. 


THE  UNITED  STATES  AND  CANADA.  483 

STATEMENT  OF  FRANCIS  F.  EMERY. 

Mr.  Francis  F.  Emery,  represeutino-  the  Shoe  and  Leather  Associa- 
tiou,  appeared. 

The  Chairman.  State  your  name  and  residence. 

Mr.  Emery.  Francis  F.  Emery  ;  I  reside  in  Boston. 

The  Chairman.  What  is  your  business  ? 

Mr.  ICjiERY.  I  am  a  boot  and  shoe  manufacturer.  I  was  aske<l  by 
Governor  Chifliu  to  ai)pear  before  you  as  a  representative  of  the  Shoe 
and  Leather  Association  of  New  England.  The  Shoe  and  Leather  Asso- 
ciation is  an  association  embracing  an  industry  whose  yearly  prodnct  is 
$250,000,000.  The  boot  and  shoe  industry  is'one  of  the  inipoitant  in- 
dustries of  New  England.  I  have  given  no  particular  thought  to  tliis 
subject,  and  am  not  prepared  to  enter  into  it  in  detail.  I  have  only  a 
lew  ideas  which  commend  themselves  to  us  in  the  trade  very  generally 

regulation  of  THE   CANADIAN  ROADS, 

We  understand  the  inquiry  to  be:  Shall  Congress  so  legislate  as  to 
comjtel  the  Northern  or  Canadian  Eailroad  line  to  act  in  concert  with 
the  other  through  lines,  tlius  placing  it,  with  them,  under  the  control  of 
the  Interstate  Commerce  Commission  f  We  understand  this  action  is 
desired  by  certain  railroad  representatives,  and  for  the  reason  that  the 
rates  of  freight  by  this  Northern  line  are  lower  than  those  by  the  other 
lines,  and  with  a  view  of  ultimately  raising  the  rates  by  this  Northern 
line. 

To  the  inquiry,  shall  Congress  do  this,  we  return  a  decided  negative, 
and  for  the  following  reasons : 

It  is  not  the  policy  or  the  prerogative  of  our  Government  to  inter- 
fere with  or  to  dominate  the  domestic  relations  of  the  people,  exco]iting 
so  iar  as  is  necessary  to  protect  the  people  from  injustice  and  abuse. 
In  the  present  instance  the  people  do  not  make  any  complaint,  because 
the  charges  by  the  Northern  line  are  reasonal)ly  low.  Nor  is  there  any 
just  comijlaint  from  any  competing  line  that  this  Northern  line  is  work- 
ing injustice  to  it.  There  is  absolutely  no  just  comi)laint  from  any 
source  against  the  Northern  line.  The  railroad  line  which  is  most  closely 
aligned  with  it,  and  which  should  feel  most  sensitively  its  competition, 
is  the  line  dominated  by  the  New  York  Central,  and  this  line,  so  far 
from  being  disturbed  or  aliected  adversely,  has  been  and  is  now  abh' 
to  realize  very  large  profits,  not  only  ujwn  the  actual  capital  invested, 
but  upon  a  very  large  amount  of  fictitious  or  watered  capital. 

The  New  York  Central  line,  which  reaches  from  IJoston  to  Chicago, 
has  watered  stock  of  more  than  $100,000,000.  In  fact  the  business  done 
by  this  line,  especially  that  portion  between  Boston  and  Chicago,  is 
today  and  has  been,  viewed  from  its  actual  cost,  nuire  ])rolit:ible  than 
the  average  mercantile  or  any  other  great  business  industry.  The  other 
kindred  lines  are  enjoying  very  generally  a  like  ]>rosperity,  and  are 
earning  and  dividing  very  large  amounts,  not  only  upon  the  actual 
cost,  but  also  a  very  respectable  amount  upon  more  or  less  ol  the  watered 
capital  and  securities;  and  all  this  is  often  done  after  a  share  of  tiio 
earnings  has  been  diverted  by  certain  private  interests  which  are  rep- 
resented by  the  numerous  so-called  color  and  dispatch  lines,  the  amount 
of  which  diversion  can  not  be  ascertained. 

So,  then,  there  is  no  reasonable  claim  that  injustice  is  being  done  to 
any  other  line  or  lines,  nor  is  injustifje  doue  to  the  people  at  large,  by 


484  TRANSPOUTATION  INTKRESTS  OF 

any  <'<nn])«'tition  which  loines  from  this  Northern  line,  and  Iumu'o,  under 
<»nr  national  ri;;lits  and  common  hiw,  there  is  no  excuse  or  warrant  lor 
the  inlerrcren«;e  wliich  is  su^};ested.  The  request  wliicli  was  made  to 
Con<;ress  for  such  interl'enMice,  we  believe,  was  not  in  the  interest  of 
any  ie<:i(iniate  luisjness  enteii)riNe,  hut  may  have  ln'cn  in  the  inti'rest 
of  stock  johhcrs,  since  the  visible  inlluciice  which  atti-mlcd  tiie  re- 
quest is  ninic  identillctl  with  stock-johhin^'  than  with  well  conducted 
railroad  niiiiia::t  nient;  or,  it  may  be,  in  this  time  ot  trusts,  the  inllucnce 
which  is  lichind  the  request  <lesires  f(»  j-stablish  in  elVect  a  mammoth 
railroad  trust,  to  provide  a  way  Ibr  advancing;  rates  ol  iVci^iht  to  the 
peoph*  ;;enerally,  and  they  expect  to  accomplish  this  by  lirst  brinj;in;» 
all  lines  into  subj»'(ti«»u  to  the  Interstate  Commerce  Commission,  after- 
wards trustin;;  to  be  able  to  capture  the  otlice  of  the  Interstate  Com- 
mission and  appropriate  the  power  ho  piined.  Kither  of  these  ends 
attained  would  woik  misfortune  to  the  pe<»ple  and  to  the  country. 
Sto<k  jobbing',  unrestri<*le«l  power,  and  trusts  are  all  siKiially  consi<lered 
an<l  n'co;,Mii/.rd  as  public  evils. 

The  Interstate  Commerce  C'oinndssion  \\i\n  instituted  for  a  ditVercnt 
and  iietler  purpose,  Ibr  the  i»urpose  of  pr<»tect in;;  the  peoph«  from  exces- 
sive and  unjust  e\a<'iion  <tf  certain  railroads,  and  was  not  expectt'd  to 
be  used  to  aid  anv  railroad  in  exact  in;;  unnecessary  «'har;;es. 

Cntil  it  can  be  shown  that  this  Norihcrn  line  is  working;  iiij"0'  b»  other 
lines,  or  is  oppressinj;  the  people  «)f  our  country,  we  claim  it  ispunlent 
lo  not  interlere,  and,  lurthernioic,  it  is  be_\  oud  the  provintr**  of  the  (lov- 
eriiment  to  do  so  and  it  is  against  pultlie  policy  toattempt  to  control  it. 

The  operation  of  this  N«irthern  line  under  its  hb(>ral  numaKemetit 
has  be«Mi  of  im-stimable  Ix-uefit  to  the  people  of  ail  seclioiiH  of  thiscoun- 
tiy.  It  is  an  avenue  throu;.di  which  a  lar^'e  qimntity  of  ihemanntact- 
nres  (»f  the  l);ist  ai«'  transpoited  t4>  the  ct)nsumerN  of  the  West  and  the 
South,  and  a  lar;;e  quantity  of  raw  materials  isbrou;^ht  from  the  S«uith 
ami  West  to  be  manufaetuied  at  the  I-^ast ;  it  is  also  the  «;arrier  of  a 
larj,'e  lood  suppl>  lioni  the  NVest  to  the  consumers  of  the  Ivast.  liy  its 
nuMleialt*  and  just  rate  of  ••har;,'es  its  inllucnce  has  extcncletl  to  other 
lines,  so  that,  idlhou;;h  carrying;  but  a  small  part  of  this  entire  frei;iht, 
it  has  been  the  ;;rcat  power  in  tin*  interest  of  the  people  for  the  re;,'ula- 
tion  of  the  lates  ol  lrei.i;ht  of  all  lin«'S  betwj-eu  the  dillerent  secli«ms  of 
the  country.  Kvery  man,  woman,  and  cliddin  the  noith(*rn  half  of  the 
I'niled  States,  and  probably  also  in  the  ^'leater  part  of  the  southeiii 
lialf,  has  been  tlircctly  benelili'd  by  the  reiusonable  charj^es  which  have 
been  obtaiiu'd  through  this  line. 

The  j;eoj:raphical  ]»osition  of  the  State  of  New  York  operates  to  cut 
in  twain  the  ;;ieat  streams  of  business  which  Ihrvv  between  the  easti'rn 
ami  the  western  and  southern  sections  of  our  <'«>uutry.  W'itlMUit  tln> 
c<un])ctition  w  Inch  has  come  from  this  northern  line  the  railroads  of  that 
State  have  it  in  their  power  to  m«)nopolize  and  impose  upon  this  lar;;e 
volume  of  business  any  tril)ute  that  their  mana;,'cr  mij;ht  <lictate;  in 
fact.  It  was  tlu'  exct'ssive  tribute  whieh  was  so  extorted  which  tirst  le<l 
t«»  tlie  establishment  of  this  northein  line  from  Dtiston  to  Chit-a^H).  It 
was  to  frci'  the  pcojilc  of  the  country  from  this  oppression  that  the 
busiiu'ss  men  of  the  ;;reat  West  and  of  the  ;,'i'cat  ICasl  unit<'<l  in  a  re- 
(piest  to  the  mana;ienu'nt  of  the  norlhern  roads  to  establish  this  through 
line.  It  is  not  really  a  foi»'i;,Mi  line  in  the  oidinary  a<'<-4'ptation  of  the 
word,  since  it  was  established  for  the  benefit  of  the  busines.s  of  our  own 
country  by  our  own  business  men,  w  ho  co  operated  to  susiaiu  the  line 
until  it  was  firmly  establislietl.  A  larjje  portion  of  it  is  loeated  within 
our  boundary.     These  business  men  estal»lished  it  at  gix'at  labor  and 


THE   UNITED   STATES   AND   CANADA.  485 

cost,  and  it  has  been  to  them  one  of  their  greatest  boons.  They  now 
cherish  it,  regard  it  as  a  national  right  and  of  vital  conseqiu'iico  to  the 
people  of  all  sections  of  the  country.  They  therefore  protest  stroii-rlv 
when  any  scheme  is  projected  which  threatens  to  take  from  tlu-m  The 
reliefs  which  they  have  experienced  from  this  important  line  of  trans- 
portation. 

To  refer  more  in  detail  to  this  matter,  the  i>articular  business  interest 
which  1  represent  is  that  of  manufacturing  and  distributing  boots  and 
shoes  throughout  the  country.  The  boot  and  shoe  industry  piobably 
had  more  to  do  with  the  establishment  of  this  Northern  line  between 
Boston  and  Chicago  than  had  any  other  industry. 

At  the  time  this  line  was  established  the  New  York  Central  Railroad 
system  imposed  a  charge  of  $1.80  per  100 pounds  upon  boots  and  shoes 
from  Boston  to  Chicago  and  St.  Louis— a  charge  that  waseqmd  to  from 
5  to  0  per  cent,  of  the  value  of  the  grade  that  was  being  transjiorted. 
Remonstrance  was  unavailing.  Every  avenue  of  transportation  west- 
ward from  Boston  was  influenced  or  controlled  by  one  line.  The  geo- 
graphical situation  of  the  State  of  New  York  enabled  its  railroad  sys 
terns  to  accomplish  this  and  to  exact  this  high  charge.  It  was  then  that 
the  shoe  merchants  of  the  West  and  South,  co-operating  with  t  hose  of  t  he 
East,  worked  together  to  effect  the  establishment  of  this  Northern  line. 
As  a  result  of  their  pledge  of  support  to  this  Northern  line  it  was  es- 
tablished, and  the  freight  of  boots  and  shoes  to  the  i)oints  named  was 
reduced  to  a  satisfactory  rate,  and  ever  since  a  fair  and  reasonable  rate 
has  prevailed. 

The  benefits  which  have  come  to  the  people  from  this  action  are  almost 
beyond  computation.  For  instance :  The  number  of  pairs  of  boots  and 
shoes  which  are  produced  annually  in  New  England  and  are  distributed 
through  the  West  and  South  is  probably  not  far  from  90,00( >,()()(>  pairs. 
This  number  of  pairs  represents  probably  .'30,00(),000  individuals  outside 
of  New  England  who  are  directly  affected.  If  a  tax  of  ~>  per  cent,  is  im- 
posed upon  these  shoes,  as  it  was  formerly,  in  lieu  of  U  percent,  which 
lately  prevails,  it  means  every  man,  woman,  and  child  of  the  ;;i).(»(»(>,(MlO 
is  to  ])ay  that  much  additional  for  each  and  every  pair  of  lto<>ts  or 
shoes  consumed  by  them.  The  number  of  persons  affected  and  the  (•(►st 
to  each  is  a  very  serious  matter.  If  added  to  this  is  the  extra  tax  which 
is  put  u[)on  the  raw  material  which  comes  from  the  South  and  West, 
and  which  entered  into  the  construction  of  the  boots  and  shoes,  the 
added  cost  is  very  materially  further  increased  and  becomes  a  serious 
matter. 

The  people  of  New  England,  amounting  to  several  million  ])ersons, 
are  also  affected  through  their  food  suj)ply,  which  comes  to  them  mainly 
from  the  West  and  South.  Every  cent  of  all  such  unnecessary  tax 
upon  freight  would  be  an  unnecessary  tax  bearing  directly  and  only 
upon  all  these  millions  of  people,  and  would  aflect  directly  their  com- 
fort and  welfare. 

COMPETITION  AMONG  KAILEOADS. 

However  great  may  be  the  benefit  which  may  result  to  the  ]>eo- 
ple  from  the  working  of  the  Interstatt^  Commerce  Commission,  it  can- 
not be  as  certain,  as  reliable,  and  as  effective  as  is  that  which  comes 
to  them  from  competition.  In  all  ages  of  the  world  it  has  been  coinpe- 
tition  which  has  been  the  great  regulator,  and  which  has  preserved  to 
the  people  their  rights  and  their  comlbrts.  Whatever  they  have  may 
be  taken  from  them  with  less  harm  and  detriment  than  would  be  the 


486  TRANSPORTATION  INTERESTS  OF 

loss  of  competition.     Without  it  they  are  the  i)rey  of  spoilers  and  the 
victim  of  others. 

That  competition  amonp  the  railroadsiwill  become  ruinous  is  absurd. 
The  stockhohleis  jin«l  the  liohlers  of  securities  may  always  be  dejuMided 
upon  to  see  that  competition  does  not  no  t<>o  lar.  Tlie  idea  that  rail- 
roa<ls  must  Ik*  protected  from  coinprtition  amon^'  themsolves  is  as  ah 
surd  as  woiihl  be  that  which  shoiiM  demand  tliat  merchants  must  \u- 
]»rotecteil  Irom  the  competition  amonj;  tln-msclves.  They,  lilie  mercan- 
tile atfairs,  are  nothin;:  l»ut  business  venlures,and  they  are  both  amen- 
able to  the  hiws  of  tra«h'  and  are  abU-  t«)  protect  themselves.  It  it 
wouhl  be  j)reposterons  to  ask  for  a  commissioji  to  protect  tlie  mer- 
i'hants  Irom  com|»etin;r  with  »'a<'ii  other,  it  is  cMpially  preposterous  to 
aiU'^'c  that  the  radroads  need  fosiernijr  <"a»e  to  proH'ct  tiiemselves  iVom 
each  other. 

The  financial  complaint  relative  to  the  unprolitableness  of  tlu'  rail 
roa<l  busiui'ss  whi«di  is  heard  of  late  is  only  the  reacti«>n  which  is  nat- 
ural and  inevitable  to  all  prosperous  business.  The  business  of  cciii 
struetinj:  and  operalin;;  radroiuls  has  for  several  yea»rs  been  the  most 
ju'olitabU' ot  all  the  luisiness  interests  of  the  country.  The  profits  to 
those  who  ar»«  nicliub'd  in  the  outer  circle  havt*  been  exceedin;:ly  larj;e. 
while  the  pr(dits  to  thttse  within  the  inner  circle  l«av»'  been  enormous. 
So  ^Mcat  has  been  the  pr<»lit  of  raHroadin;;  that  capital  has  been  di 
verti'«l  to  it  Irom  our  Itueijxn,  commercial,  and  our  .*»liip|Mn;;  interests. 
and  als<»  fn)m  stmie  «if  «tur  important  domestic  interests,  nnicli  to  the 
dt'trinn'iit  of  tin'  national  nrosperity.  A  business  which  is  so  ex«e«'d- 
in^ly  prolitable  mu>t  bv  natural  law  experiein-e  a  rea<!tion.  'J'he  older 
roa«is,  which  were  built,  stocketl,  and  operated  upon  m<»re  reasonable 
l>rotits.  are  not  complaininj;.  The  complaint  comes  chi«'lly  from  tho>r 
which  have  realized  improperly  these  enormous  profits,  and  whose  stock 
ami  st'curities  re|»resent  very  l.ir;;ely  fictitious  values.  The  juesent 
troubles  will  in  time  be  cured  by  national  laws. 

It  is  not  the  function  ofM"on;,'re.ss  to  interfer*'  and  attempt  to  j;uide 
business  ventures,  more  esp«'cjally  to  assist  in  brin^iin^r  to  a  successlul 
issue  such  as  ar«'  <pu'sii<uiable  in  <'liara<-t«'r and  are  buidens  imi)roperly 
and  unjustly  placed  upon  t'le  people.  To  clothe  the  Commission  with 
j)ower  to  do  this,  and  then  to  tiu-^t  to  its  discretion  to  not  use  it,  is  un- 
wise ami  dan;;(i()us,  since  the  chan;,'es  incident  to  our  political  move- 
ments ar«'  liable  ti>  brni;;  into  the  < 'ommission's  oflices  those  who  may 
use  such  j)owers  unwisely  and  adversely  to  tin*  best  interest  of  the 
people. 

With  no  n'al  or  just  cause  of  complaint  at  the  i)resent  time,  either 
from  the  pe()ple  or  from  competiii};  lines,  a;;ainst  this  Northern  line,  in 
view  of  the  helplessness  of  the  people*  without  it,  and  the  jjreat  benefit 
which  the  people  have  experienced  throuj^h  its  <-om|>etition,  we  claim 
it  would  be  unwis«',  if  not  sui«iilal,  to  take  any  action  which  may  im- 
])air  the  usefulness  of  this  Norlhern  line  to  the  jjcoph' of  this  whole 
country. 

'file  Interstate  Commerce  Commission,  like  the  police  force  of  a  city, 
or  the  military  arm  of  tlu'  (Jovernment,  is  for  the  jmrpowe  of  <lefendin;: 
and  protectini;  the  people  from  abuse,  and  is  not  for  the  purf>ose  ot 
re^'ulatin;;  their  domestic  transactions;  especially  is  it  not  intended  for 
prt)motinj;  harm<iny  amoni;  those  who  may  be  re;;ariled  as  the  abusers. 
Senator  iW.Aiu.  Voii  sai«l  that  you  repn'sent  an  interest  which  pro- 
duces )j;l'.')(>,O(H),(H)0  oI  ^oods  yearly. 
Mr.  Kmkuy.  Yes,  sir:  I  do. 

Senator  llLATll.  What  proportion  of  the  boot  and  shoe  manufacturing 
of  the  wh<)le  <M>untrv  is  «lom'  in  New  lai^lamlT 


THE    UNITED    STATES   AND    CANADA.  487 

Mr.  EiviERY.  I  can  not  give  you  the  exact  figures,  but  I  should  sav 
seven-eighths. 
Senator  Harris.  How  much  t 
Mr.  Emery.  Seven-eighths. 

STATEMENT  OF  JONATHAN  A.  LANE. 

Mr.  Jonathan  A.  Lane,  president  of  the  Boston  Merchants'  Asso- 
ciation, appeared. 

The  Chairman.  Give  your  views,  Mr.  Lane,  as  you  see  proper. 

Mr.  Lane.  You  have  observed  probably  that  I  have  been  an  atten- 
tive listener  and  have  no  particular  desire  to  say  much.  Tbe  Bostt)n 
Merchants'  Association  is  an  organization  consisting  of  about  two  liun- 
dred  mercantile  firms,  most  of  whom  are  the  large  wholesale  houses  of 
this  city. 

The  Chairman.  Engaged  in  various  kinds  of  merchandising! 

Mr.  Lane.  Engaged  in  dry  goods,  clothing,  famishing  goods  largely, 
and  in  all  kinds  of  goods  sold,  including  hardware,  crockery  ware,  and 
so  forth.  They  are  firms  that  send  their  men  throughout  the  country, 
and  no  doubt  my  friend  from  Texas  [Senator  Reagan]  has  encountered 
the  Yankee  drummer  of  the  great  Yankee  nation. 

In  Boston  we  labor  under  a  good  deal  of  disadvantage  in  an  effort 
throughout  the  country  to  secure  for  Boston  a  share  of  the  trade.  If 
it  were  a  question  of  to-day  I  do  not  know  how  we  could  get  any  of 
the  trade  in  competition  with  New  York  and  get  along  without  New 
York.  I  sell  goods  for  the  millions,  and  I  am  compelled  to  have  a 
branch  place  in  New  York.  The  jobbers  are  compelled  to  go  directly 
to  the  merchant  in  the  country  and  persuade  him  to  buy  goods  from 
Boston  merchants,  if  he  can  possibly  do  so,  and  we  meet  with  success. 
If  there  is  any  advantage  which  the  merchant  of  Boston  i)ossesses  he 
can  not  aflbrd  to  lose  it. 

One  of  the  advantages  the  Boston  merchant  possesses  he  gets  from 
the  Central  Vermont  and  its  northern  connections,  so  that  we  are  able  to 
say  to  the  Western  buyer,  "If  you  come  to  Boston  and  do  your  buying 
the  freights  shall  cost  you  no  more  than  if  you  went  to  New  York." 
That  has  great  weight  with  the  buyer.  The  merchant  does  not  conie  to 
the  jobber,  as  he  did  years  ago.  The  merchant  goes  to  the  buyer  with 
samples  and  says  to  him,  "If  you  give  us  your  orders  you  will  pay  no 
more  freight  than  when  you  buy  your  goods  in  New  Y^ork,"  and  we  have 
been  able  to  hold  a  goodly  share  of  the  trade  of  the  country,  and,  as  I 
said  before,  this  is  largely  due  to  this  Northern  line  of  road.  We  have 
secured  these  advantages  and  hold  them,  and  it  would  be  a  tremendous 
loss  to  Boston  if  any  of  these  advantages  were  seriously  curtailed. 
.  I  do  not  understand  from  the  spirit  of  this  committee,  as  it  has  so 
far  been  manifested,  that  there  is  any  purpose  to  destroy  these  northern 
connections.  I  understand  the  spirit  of  the  committee  to  be  to  put  all 
these  railroads  on  an  equal  footing. 

The  Chairman.  The  committee  is  simply  und(ir  instructions  to  make 
inquiries,  without  regard  to  any  views  its  members  entertain  and  with- 
out regard  to  any  views  the  body  it  represents  may  have. 

Mr.  Lane.  So7ar  as  the  Grand  Trunk  is  concerned,  that  isa  i>artand 
parcel  of  New  England.  It  is  so  interwoven  with  the  interests  of  New 
England  that  it  is  a  part  of  the  New  England  system  ot  roads 

But  as  far  as  the  Canadian  Pacific  is  concerned  there  is  a  diflerence 
in  the  status  of  the  two  cases.    I  took  occasion  recently  to  inquire  ot  my 


488  TRANSPORTATION   INTERESTS   OF 

New  York  Loiiko  if  wo  were  sondiiifr  any  inercliaiidise  over  the  Cana- 
dian Pacific  road.  I  fonnd  that  we  w»'re.  This  was  not  done  In  any 
contracts  we  made  with  the  merchants,  but  we  were  delivering  from 
New  York  to  the  buyer  over  this  roa<l  because  the  buyer  makes  liis 
own  contracts,  and  we  prefer  the  merilian<lise  sent  that  way.  I  found 
that  some  of  our  merchandise  was  K<>i"K  I"  ^^"  Francisco  by  way  of 
the  Cana<lian  Pacific  and  lines  of  steamers  on  the  Pacific  coast. 

RATES   OVER   THE   CANADIAN    PACIFIC. 

It  may  be  iiiterestinj:  to  the  committee  to  ascertain  how  that  wa.s  so, 
and  when  I  tell  you  I  think  you  will  see  clearly  that  in  the  whole 
transaction  tlu*  (^UKulian  l*;i«'ilic  ;:eis  no  ;_Meat  advanta;:e,  and  ontlie 
whole,  the  Canadian  I'acific  is  iloin;;  the  people  of  the  liiited  Stat<'s  n 
substantial  servi<*e  in  carryiii;:  these  ^'o4k1s  in  this  roundabout  way  to 
the  people  of  the  Northwest. 

Take  the  chea])  ^rade  of  blankets.  We  ship  fifty  |)airs  of  these 
blankets  in  one  lot;  eat-li  blaidict  will  wei;:h  <I  pounds,  and  the  whole 
cost  ol  fitty  wouhl  be  about  ><\10.  Now.  the  buyer  of  these  bl:inUet.>. 
wants  to  ;iet  his  merchaiidise  to  the  Pacific-  coast  at  ai  rate  that  will  bear 
some  reasonable  value  to  the  },'o(mIs  themselvi-s,  and  1  fin«l  that  mer 
chandiM'  of  this  kind  cariieil  in  that  iouiidab<»ut  way  is  taken  at  a  very 
reduce*!   rate  ot   fi«M;;hl.      1  i.iU  no;  .sa\   \\  hat  those  rates  are,  because  1 

d )|  make  the  coiitiact.     iWit  I  undeistan<l  that  the  merchant  in  San 

I'rancix-o  saves  Jrom  ".'A  to  ."»  p«  r  ««Mit.  in  sending;  ^oods  that  way.     The 
Canadian  Pacific  carries  the  ;:«M»ds  l.tMM)  miles  in  transporting,'  them  to 
the  Pacific  coast   by  rail  and  steamers.     'Ihe  Camidian   Pa<-ific  carries 
this  merchandise  7iK>  miles  farther  than  our  roa<ls,  throu;,'h  a  re-^ion  oi 
storm  ami  tempest  a  laijje  part  of  the  year,  and  1  take  it  that   the  run 
niu},' of  railroad  trains  in  a  imrtheni  climate,  even  if  not   impeded   by 
snow,  in  a  low  temperatuie,  is  daiij^erous,  <inil  it  seems  to  me  that  the 
transa<-tion   is  one   that    can  not  be  very   profitable   for  the  Canadian 
Pacific.     Yet  they  are  doin;;  for  us  very  mm-h  the  same  kiml  of  biisi 
uess  a.s  when  we  sent  our  i;o«Mls  around  Cape  Horn.  an<l  thereby  «oii 
ferrinjr   ui>on   the   peoph' of  tin'  West   and    New    Mn;:land   a   ;rreat    ad 
vanta^'e. 

This  sort  of  merchandise  could  not  stand  the  hi;rh  rat*'  that  first-class 
dry  p)o«ls  stand.  The  merclnint  expects  to  pay  a  hi«rli  rat**  lor  first- 
clilss  merchandise.  Therelore  the  Cana<lian  road  is  servinjfus  in  what 
mi;;ht  be  called  the  skimmed  milk  of  the  business.  They  tike  ordinary 
and  cheap  m«<rchandise  in  this  way  and  thereby  serve  the  interests  of 
the  country,  and  1  presume  that  we  in  this  matter  are  looking;  out  for 
the  interests  of  the  pe(»ple,  and  view  the  railroiwls  with  secondary  con- 
SHleration. 

This  is  a  pra<'Jical  statement  of  the  business  that  these- northern  ro.wU 
are  tloin^',  and  1  am  informed  by  members  of  the  .Merchants'  As.socia- 
tion  who  are  enjra^red  in  the  dry  j;oods  jobbing:  business,  and  sehding 
merchandise  out  ot  season,  and  st-ndin;;  ;;oo«ls  of  low  value,  that  they 
send  them  in  that  way  and  pay  less  freifjht,  and  by  that  metluul  are 
enabled  to  ])lace  their  merchamlise  in  the  South  and  West  on  more 
favorable  terms. 

It  will  be  seen  at  once  that  this  whole  thin;:  does  not  illustrate  that 
the  Canadian  roads  need  to  be  put  under  a  remarkable  ilepree  of  siir- 
veillanct'.  If  they  shoiihl  recoup,  to  use  a  familiar  phrasr,  on  their 
friends  at  home,  I  do  n<»r  know  why  we  should  look  out  for  the  peoph- 
of  Canatla.     What  we  want  to  take  care  of  is  the  i>eople  of  the  UniteU 


i 


THE    UNITED    STATES    AND    CANADA.  489 

States,  and  if  they  get  a  jrood  job  out  of  these  roads  I  am  not  worried 
about  the  freight  paid  by  the  people  in  Toronto  or  the  i)eoi)le  in  Can- 
ada generally.  I  do  not  know  that  I  want  to  make  any  further  remarks 
on  this  subject. 

The  Chairman.  We  are  very  anxious  to  close  the  hearing  to  day  by  4 
o'clock,  and  I  will  say  that  if  any  person  here  has  a  paper  prepare*'  he 
can  present  it  to  the  committee  withont  reading  it.  We  do  not  want  to 
cutoff  anybody  who  wishes  lo  be  heard  orally,  neither  do  w««  wish  to  cut 
off  anybody  who  desires  to  communicate  his  views  in  writing. 


ADDITIONAL  STATEMENT  OF  MR.  ALDEN  SPEARE. 

The  Chairman.  I  understand  that  Mr.  Speare  would  like  to  make  a 
statement  supplemental  to  his  remarks  heretofore  made  before  the  com- 
mittee. 

Mr.  Speare.  I  would  like  to  be  heard  on  the  matter  of  the  long  and 
short  haul  clause.  The  question  has  been  asked  here,  "  Has  the  long  au<l 
short  haul  clause  of  the  interstate  commerce  act  changed  unfavmably 
the  rates  from  what  they  were  previous  to  the  passage  of  the  act?"  I 
know  of  instances  in  which  this  is  the  fact.  Where  the  rate  was  90  cents 
a  hundred  before  the  law  was  passed,  it  has  been  very  considerably  in- 
creased. When  the  interstate  commerce  law  went  into  etiect  the  roads 
had  to  reduce  their  whole  tariff  because  they  had  intervening  rates 
higher  than  to  a  point  farther  distant,  and  the  through  rate  was  made 
$1,213  and  that  rate  is  in  existence  to-day,  when  the  rate  was  00  cents 
prior  to  the  enactment  of  tbe  inteivstate  commerce  law.  In  another  case 
right  in  our  own  New  England  territory  the  rate  was  changed.  The 
rate  was  32  cents  per  huudred  pounds.  In  the  same  revision  that  be- 
came necessary  by  the  enactment  of  the  interstate  coinmerce  law  they 
had  to  reduce  it.  Either  that  rate  had  to  be  decreased  at  that  i)oint  or 
increased  at  a  point  beyond.  But  in  many  cases  the  rates  have  been 
increased  on  numerous  articles. 

THE   QUESTION   OF   POOLING. 

Now,  in  reference  to  pooling.  Pools  originally  were  made  by  rail- 
roads not  as  against  communities  but  as  against  themselves,  for  the  i)ro- 
tection  of  themselves  one  against  the  other.  There  are  four  things  the 
community  want — they  want  fair  rates,  reasonable  rates,  c(iuilal»le 
rates,  and  they  want  no  changes.  There  is  no  plan  that  will  so  thor- 
oughly protect  a  community  as  the  pool. 

Let  me  give  you  an  instance  of  a  cut.  A  few  years  since  there  was  a 
new  road  that  came  into  Denver.  The  new  road  wanted  a  proportion 
of  the  busineps  there.  The  other  roads  refused  to  give  them  what  they 
called  their  proportion.  The  rate  was  cut  down  to  G  cents.  You  may 
say  the  community  got  the  benefit  of  that  cut.  Every  merchant  iii  Den- 
ver proceeded  to  stock  up  to  the  extent  of  his  ability,  feeling  that  il  he 
did  not  his  neighbor  would.  Their  customers  did  not  feel  this  cut,  and 
the  result  was  that  more  than  four-fifths  of  tiie  merchants  faded  within 
six  months.  The  same  thing  happened  at  VA  Paso.  The  rate  trom  the 
Indian  Territorv  to  Chicago  was  $90  per  car.  A  new  road  coming  in 
and  finding  it  could  not  get  what  it  called  its  share  of  the  business 
reduced  the  rate  to  $50  a  car.  The  cattle  dealers  thought  that^  was 
their  opportunity  and  got  together  all  the  cattle  they  could.     Ihej 


490  TRANSPORTATION  INIERESTS  OF 

failed.     It  benefito*!  nolKxly.     Chicafjo  was  overstockod,  and  it  hurt 
the  raising  of  cattle  in  Texas.     Those  art'  tacts  of  which  1  know. 

Senator  IIiscocK.  Yon  think,  as  a  rnlf,  that  in  New  England  and 
•evcrywlMTe  else  the  sliippcrs  are  tiivorablc  to  pooling? 

Mr.  iSPKAUE.  Yes,  sir;  1  <lo. 

Senator  IliscocK.  Have  yon  ever  heard  of  any  s.'titiment  amongst 
shippers  against  pooling! 

Mr,  Spkakk.  No,  sir;   I  have  not. 

The  CiiAiUMAN.  So  that  yon  wonld  he  in  favor  of  an  arn»'ndn»ent  of 
the  interstate  cornrnerj-e  law  anthori/ing  or  pei  inM  ting  eontr.icts  to  ho 
nia»h^  hetween   railroads,  suhjeit   to  api)roval   of  the   Interstate  Coin-      ^ 
nieree  (,'oinmission  t 

Mr.  SpKAUK.   I  would,  most  certainly. 

S»'iiator  Hakui.^.  What  sort  of  pool  would  yon  recommend  7  II(»w  | 
wonhl  yon  adjust  the  hnsiness  or  allt)\v  the  husiness  to  he  adjusted  as  a  j 
p(tol  ln'tween  competing  railroa<ls  T  j 

Mr.  SPKAKK.  I  Wiiuhl  not  care  how  they  a<ljusted  it,  whetln-r  hy  nnmey 
or  division  of  traflic,  for  this  r»'ason — heing  und'-r  the  approval  of  tin- 
Inter8tate  Comineree  ('oinmis.>>i<»n,  presuniahly  the  rates  must  he  reason 
ah  e.  If  they  adjusted  it  anmiig  themselves  1  woulil  not  <are.  1  have 
kn<»wn  of  a  pool  where  lour  railro.ids  enten-d  at  a  <Trlain  point  and 
agreed  upon  a  division  of  L'">  per  <'ent.  eai'h,  and  if  either  diti  not  have 
2.')  per  c«'nt.  of  the  hu^ini'ss  the  pioportion  of  the  road  which  was  la  U 
ing  was  paid  h.nU  to  it  in  money,  the  railroad  carrying  the  surplus 
I»a\  ing  ov«'i-  the  iimoiiiit  in  mone\.  You  see  it  is  not  to  the  intcTcst  oi' 
thecairier  to  liaid  any  more  than  its  propiution  with  an  arrangement 
of  that  kind. 

Senator  liAKiMs.  lint  a  railroad  that  does  not  carry  its  proportion 
and  receives  Irom  tln»  railroad  that  <lid  j-arry  the  tratlic  any  amount, 
whether  large  or  small,  ^ets  that  amount  Irom  the  eouimerce  ol  the 
i'onntry  lor  no  .service  whatever,  d«K's  it  not  f 

Mr.  Sl'KAUK.  Yes,  .sir;  it  is  just  like  the  case  you  had  lM'f«ue  yon  in 
New  York.  Tiie  Ki  ie  p'ople  testilied  that  they  had  receivecl  a  hall 
million  of  dollars,  and  still  it  w.is  a  division  among  the  orh<-r  roacU  ot 
the  protits  of  what  they  considered  th-ir  lair  proportion  ol  the  husines-^ 
the>  .should  have  had  hetween  1h<»s«'  |M>ints. 

SiMiator  IlAKin.s.  If  tho>ie  railroads  that  carried  that  freight  and 
earned  that  half  million  dul  not  have  to  gi\«'  it  to  tin-  l-^rie  road,  could 
they  not  have  leiidered  that  .service  to  the  eonntry  for  a  hall  million 
less  cost  T 

Mr.  SPKAltK.  I'rohahly  they  cotihl  mtt.  In  the  lirst  iiistain'e  the 
cutting  would  not  In-  heiu'ticial  hecause  hy  and  hy  the  railroacls  would 
come  to  an  agreement  for  a  hig«*r  rate. 

Senator  llAiiiJi.s.  .My  ipiestion  is,  ctuild  they  not,  if  they  hid  not 
ilonati'd  that  half  million  dollars,  havt*  done  the  husine.ss  lor  $:»(Mi,(MM» 
less  cost  to  the  country  ? 

Mr.  SiM'.AlM"..  Certainly,  hecause  they  just  had  that  iiiii -h  more  money 
to  divide  among  their  stockholders. 

The  CiiAiiniAN.  Or  ihey  eoiild  have  redined  their  rates!  Jm\ 

.Mr.  Sn.AlJK.  Certainly.  tI 

Senator  IIiscorK.  Take  the  N<  w  York  Central  and  the  New  York. 
Lake  Kiie  and  ^VesteIll.  Now,  applying  the  doctrine  of  tin*  survival  ol 
the  strongest  to  those  two  roads;  they  warred  until  one  w.is  haiikrni)t; 
and  at  that  tiim'  tin*  hankrupt  roswl  W"uM  cease  to  he  a  regulator  oi 
the  rate,  and  the  victorious  roa<l  woidd  hold  a  inonoiM>Iy  of  that  trafli' 
would  it  not  I 


THE   UNITED   STATES   AND   CANADA.  491 

Mr.  Speare.  Yes,  sir. 

Senator  HiscocK.  And  you  think  if  pooling  could  be  legalized  and 
subject  to  the  scrutiny  of  the  Interstate  Commerce  Commission,  so  that 
no  unreasonable  and  excessive  rates  could  be  charged,  it  would  be  a 
benefit  to  the  transporter  ? 

Mr.  Speare.  iSot  only  to  the  transporter,  but  to  the  commnnitv  itself. 

Senator  Hiscock.  If  the  shipper  can  stand  it,  as  a  matter  ofcoiirse 
the  consumer  can  stand  it.  Their  interests  are  identical.  Wliat  the 
consumer  wants  is  to  get  cheap  goods,  and  what  the  shipper  wants  is 
to  find  the  market. 

Mr.  Speare.  And  in  the  old  state  of  pooling  our  rates  changed  very 
seldom.  Our  members  could  go  on  change  and  buy  with  contidem'e 
100  and  200  loads  of  grain  to  come  the  following  month;  but  a,s  it  is 
now,  with  a  liability  of  a  change  of  rate  in  ten  days  or  three  days,  tiiey 
never  know  when  to  buy  grain.  There  is  nothing  like  a  buyer  know- 
ing that  the  rate  will  be  stable. 

Senator  Blair.  I  suppose  this  is  all  a  blind  groping  after  the  con- 
solidation of  all  the  roads  and  their  operation  by  the  Government? 

Mr.  Speare.  I  do  not  know. 

Senator  Blair.  Then  whatdoes  itmean  ?  Here  are  difi'erent  interests 
that  are  to  be  allowed  to  bargain  together  for  freights,  and  the  loss  c>f 
one  is  to  be  made  up  by  another,  so  that  it  is  practically  the  same  thing. 
If  two  are  to  be  allowed  to  pool,  four  are  to  be  allowed  to  pool,  and  very 
soon  you  have  the  country  covered  by  a  combination  made  up  of  cor- 
porations competing  with  each  other  as  a  system.  Then  you  have  a  con- 
solidation of  the  transportation  interests  of  the  country  inevitably,  and 
all  that  taking  place  under  the  regulation  or  supervision  of  the  Inter- 
state Commerce  Commission,  which  means  supervision  by  the  Govern- 
ment, does  it  not?  Now,  would  not  that  be  the  best  thing  !  Mr.  Fink 
says  so. 

Mr.  Speare.  I  say  it  is  all  right  so  long  as  the  pool  is  under  the 
supervision  of  this  Commission  and  the  rates  of  all  shall  be  reasoiiiible. 

Senator  Blair.  And  the  Government  decides  what  is  reasonable  in 
the  interest  of  the  people. 

Mr.  Speare.  Certainly. 

Senator  Blair.  That  word  "consolidation"  some  years  ago  would 
have  driven  a  man  out  of  public  life,  and  yet  it  now  seems  to  be  ad- 
vocated by  merchants  and  shippers  and  everybody. 

Mr.  Speare.  Yes,  sir. 


STATEMENT  OF  WILLIAM  G.  BARKER. 

Mr.  William  G.  Barker,  a  lumber  merchant  of  Boston,  appeared. 

The  Chairman.  Where  do  you  reside  ? 

Mr.  Barker.  In  Bosion. 

The  Chairman.  What  is  your  business  ? 

Mr.  Barker.  My  business  is  lumber.  I  am  a  manufacturer  and  also 
a  selling  agent  of  various  manufacturers  of  lumber  through  New  Eng- 
land—in Vermont,  New  Hampshire,  and  Massachusetts.  We  have  t  liree 
mills  which  are  so  situated  that  if  legislation  were  passed  it  would  cause 
us  to  close,  as  that  would  mean  retaliation  by  tlu^  Canadian  Govern- 
ment. We  can  not  get  out  without  going  through  or  over  Cana<lian 
soil.  One  is  the  firm  of  Caswell  «S'  French,  located  at  UcWiaml,  V  t., 
shipping  over  Derby  Line  via  Passaic  Railroad.    Another  is  the  hrn> 


492 


TRANSPORTATION    INTERESTS    OF 


of  Lowelltown  Lumber  Company,  at  Caswell,  Me.,  on  the  Canadian  Pacific 
Kailrortd.  Another  is  thr  firm  of  Farnham  lirotliers,  located  at  Wash- 
burn,  Me  ,  and  slii]>]»inj;  from  Canl)()n,  Me.,  via  New  liriuiswick  Kail- 
n»ad.  In  sliippirifj  from  all  these  j>laces  we  have  to  jio  ovt*r  Canadian 
soil,  so  tliat  you  can  sec  that  if  w«'  liad  any  ivtaliation  wc  wunld  be 
j»n*tty  well  b()ttl«Ml  nj).  Our  capital  is  put  in  there  and  wc  shonhl  hav«' 
to  protest  vciT  vi<;oronslv  a^xainst  any  ie^'islation  whicli  woiiUi  iiiterftTc 
with  our  business.  There  are  U'sides  our  factories  several  other  manu- 
facturers there  and  alonjj  the  lineof  tiie  Canadian  l*acilie.  In  .Maine  the 
maiuifacture  of  hind>er  is  jjrowin;;  quite  rapidly. 

Tiie  Chairman.  Wliat  is  tlie  amount  of  your  manufactures! 

.Mr,  r.Ai:KKK.  Two  ofthe.se  mills  in  lon«;  bunber,  ten  milHons,  and  of 
shiiijrhs  lilieen  millions. 

The  <'1IAIKMAN.  Where  do  you  nend  tlio.se  manufsu'tnres  T 

Mr.  r.ARKKU.   All  throu;,'h  New  Kn^'hunl. 

Senator  llAKUis.  You  say  "millions" — millions  of  what? 

Mr.  P.AKKKli.  Millions  (•!  feet  o\  lumber  and  milli(Ujs  of  feet  of 
sliin;;les. 

Senator  I1arki.'<.  Do  you  send  any  of  that  lundn'r  outside  of  N«'w 
Mn^'Iand  ? 

.Mr.  r.Ai:KKR.  No,  sir,  except  a  verv  small  part  that  ^o«'s  to  New- 
York. 

Senator  Harris.  Have  youany<lelinit«»  knowledjjeof  the  total  amount 
of  the  lumber  business  «»f  .Maine  f 

Mr.  IJarkkr.  No,  sir,  I  have  not  that  at  hand. 

Senaf(U-  lii.Alu.  Is  not  the  Inmlter  in  the  loj^s  brouj,'ht  from  Cana<la  T 

.Mr.  Marker.  No;  American  1o;:s. 

Sen.itoi-  r.i.Ain.  Are  the  mills  > on  s|»eak  of  in  the  ;,'«Mieral  matiufact- 
ure  of  lundier  T 

Mr.  Harkkij.  Not  in  our  section  :  ojir  section  is  mostly  s])ruce.  There 
are  some  lou's  brou;;ht  in  from  Canada  that  are  manufactured  at  New- 
Iiort. 

S«'nalt>r  I'.r.AiR.   Yoii  i|m  not  manulacture  in  Canadaf 

.Mr.  1>ai:kkr.  N«»,  sir.  All  our  lo;,'s  are  (jf  .\uu*ricaii  j;rowth,  but  we 
are  obli;;ed  to  lto  throuudi  a  portion  of  Canada  to  ifet  out  airain  to  the 
States. 


STATEMENT  OF  S.  HENRY  SKILTON. 


Mr.  S.  IIenuv  Skilton,  of  Charles  II.  North  &  Co.,  of  Hoston,  pork 
]»aekers,  appeared. 

The  Chairman.  ^Vhe^e  do  you  reside,  Mr.  Skilt«)n1 

Mr.  Skilton.  In  Boston. 

The  Chairman.  ^Vhat  is  your  bu.sinesst 

Mr.  Skit. ION.  1  am  a  pork  i)acker. 

The  Chairman.  l'roce«'d  in  your  own  way  to  make  whatever  reinark.s 
you  Ihiidx  a|)plicable  to  the  subject  under  inquiry. 

Mr.  Skii.ton.  I  had  n«>t  expected  to  say  anythiiifr  on  this  occaHJoii, 
but  I  am  so  vt-ry  deeply  interested  in  this  matter  of  Caua<lian  railioads 
that  I  can  not  refrain  from  say  in;;  a  few  words.  I  <-onsider  that  the 
Caiiiidjan  r«iads  are  ol  vital  importance  to  the  coiiim<'r«'ia!  interest**  •>f 
Ilosttm.  \Yitliout  the  Canadian  railroads  JJo>t«ui  woidd  Ix'  entirely  at 
the  mercy  of  the  Vandcil»ilt  syst»Mn  of  road«^,  who,  I  am  e^mvinced, 
believe  that  there  should  be  otdy  tv.o  «  ities  of  lar^c  cumi nal  iiiip-n- 


THE  UNITED  STATES  AND  CANADA.  493 

tancc— New  York  aud  Chicago.  They  favor  New  York  as  a<caiu.sl  Boston 
every  time.  The  business  with  which  1  am  connected  here  in  lioston 
is  probably  next  in  size  to  any  firm  in  Ohicai^o. 

The  Chairman.  Where  doyour  hogs  come  from  ? 

Mr.  Skilton.  From  the  West;  largely  from  Chicago  and  from  p(»iiit.s 
further  west;  from  Missouri  liiver  points,  Omaha,  Kansas  (.'ity,  etc 
The  total  value  of  the  hog-packing  interest  of  Boston  is  ov«'r  AL'.'),(mo,(K)() 
a  year.  My  concern,  (3harles  H.  North  &  Co., do  a  business  of  l^etween 
$7,000,000  and  $8,000,000  a  year.  We  have  a  very  large  export  trade, 
whicli  we  have  had  for  years,  and  the  railroads  have  always  saitl  to  us 
that  they  would  give  us  the  export  rate  on  hogs  to  lioston.  Tliey  do 
that  when  the  rate  is  favorable  to  them;  but  when  large  cuts  are  made 
in  the  business,  that  is,  when  they  carry  goods  from  Chicago  to  Liver- 
pool at  the  same  or  less  prices  than  they^do  from  Chicago  to  Boston, 
they  do- not  make  that  corresiwnding  reduction  to  us,  and  they  merely 
say  that  they  car.  not  afford  it.  In  other  words,  Ihey  can  confine'our  busi- 
ness to  their  lines  as  long  as  we  are  in  Boston,  and,  geographically,  not 
in  as  good  a  situation  as  New  Y^ork.  They  say  "  You  have  no  business 
to  be  in  Boston  -,  either  go  to  New  York  or  to  Chicago.  Both  of  these 
places  have  good  facilities  for  the  export  business.  We  can  not  grant 
you  anj'  of  these  facilities  unless  you  go  to  Chicago  or  New  York." 

In  July  of  last  year  the  rate  on  hogs  from  Chicago  to  lioston  was  133 
cents,  while  the  rate  on  provisions  from  Chicago  to  Liverpool  was  'I'oh 
cents..  They  have  always  said  to  us  also  that  we  should  have  tlie  same 
rate  of  freight  on  live  hogs  as  New  York  slaughterers.  They  reduced 
the  rate  from  Chicago  to  New  York  Scents  a  hundred  and  refu.sed  to 
give  a  like  reduction  to  us.  This  discrimination  during  the  period  from 
July  to  October  cost  us  $15,000  in  freight  rates. 

We  consider  that  a  very  unjust  discrimination,  and  there  is  really  no 
chance  to  get  at  it.  They  know  that  while  the  Canadian  roads  are  fa- 
vorable to  Boston  and  New  England  interests  they  can  block  them  out 
entirely  or  hamper  them  so  that  the  Canadian  roads  will  be  obliged  to 
charge  more  for  freight  or  will  be  willing  to  enter  into  an  agreement 
with  them  to  run  the  freight  up  to  a  price  where  a  man  can  not  bring 
hogs  from  Chicago  to  Boston  and  slaughter  them  and  manufacture  the 
goods  for  export ;  so  that  they  can  practically  kill  this  large  busiiu'ss  in 
Boston.  They  think  if  the  Boston  business  is  killed,  Chicago  or  New 
York  will  get  it,  and  the  Vanderbilt  lines  will  have  the  entire  business. 

The  Canadian  railroads  are  bringing  our  hogs  to  us  at  present.  We 
do  not  get  anv  less  rate  from  them  that  we  would  over  the  Vanderbilt 
lines,  but  theVanderbilt  lines  are  a  much  shorter  route,  and  (u)uld  they 
succeed  in  getting  legislative  action  in  favor  of  them  as  against  the  Ca- 
nadian railioads,  or  have  an^v'  restriction  put  upon  the  Canadian  roads, 
they  would  no  doubt  shut  them  out  from  a  very  large  portion  of  the 
business  they  now  do. 

We  have  here  in  New  England  quite  a  mileage  of  roads— the  Boston 
and  Maine,  the  Fitchburg,  the  Cheshire,  the  Central  Vermont,  etc.— 
which  are  fully  equipped  to  do  their  share  of  the  trade,  but  there  is  a 
little  feeling  and  animosity  against  them,  a  desire  to  shut  them  otl,  and 
in  tliat  way  to  bring  the  business  entirely  over  the  \  anderbdt  roads. 
Could  the  Vanderbilt  lines  succeed  in  having  the  Grand  Inmk  put 
under  restrictions  it  would  be  a  very  easy  matter  for  them  to  so  hamper 
the  Canadian  roads  that  they  could  not  do  any  ot  the  through  exj.ort 
business,  for  the  reason  that  the  Vanderbilt  lines  have  got  much  the 
better  route,  and  they  would  give  the  shipper  twenty-lour  to  forty-eight 


494  TRANSPORTATION  INTERESTS  OP 

liours  better,  quirker  time,  which  would   be  of  iiiiriiense  vuUie,  and  the 
Canadian  road«  would  have  no  show  ofjiettinj;  a  share  of  the  business. 

Tlie  CuAiKMAN.  The  Aniericau  roads  would  pive  the  quicker  timet 

Mr.  8K1LTON.  Yes,  sir. 

The  CilAiKiiAN.  Why  could  not  the  Canadian  roads  give  the  same 
liiiK^  ? 

Mr.  8KILTON.  The  Canadian  roads  are  si nj^ie  tracked  for  a  larpe  part 
«(f  the  liin",  and  they  have  not  the  facilities  of  the  Vanderbilt  system. 
The  Xandi-rliilt  system  has  taken  a  great  d»'al  of  business  from  the 
Canadian  roads  on  account  t)f  their  superior  faciliti«'s  and  their  capacity 
to  make  faster  time. 

The  Chairman.  As  things  now  exist  the  American  roads  refuse  to 
give  you  the  cpiickt-r  time  I 

Mr.  Skilton.  No,  sir.  They  i)romise»l  us  very  much  <iui»kcr  time 
tlian  they  gave  u.s.  They  promised  to  bring  freight  through  in  sixty 
hours.  As  a  matter  61  fact  it  t(K)k  sixty  live  or  seventy  hours.  The 
Canadian  roads  bring  the  same  freight  through  in  eighty  hours. 

The  Chairman.  Irom  wlicreT 

Mr.  SKiLTCiN.  From  Chicago.  1  have  a  feeling  that  any  interference 
with  the  (.'anadian  roads  wouhl  be  very  «letrimental  to  the  port  of  Bos- 
ton, not  only  lor  its  h)cal  business  but  also  for  the  export  business.  In 
onh'r  lo  maintain  any  business  lierc  at  all  it  is  ne<'essary  to  have  g(K)d 
-cam  shi|ts  lo  carry  the  Ircight  as  cheaply  from  I'.oston  as  from  New 
\  oi  k.  We  have  a  good  llcel  now,  a  large  number  of  which  are  suj)pli<'d 
with  tVeight  trom  tin*  Canadian  roads. 

1  look  upon  it  as  tlM)Ugh  the  Can.idian  roads  have  a  pretty  hard  tight 
as  it  is,  ami  that  any  legislation  against  them  would  not  oidy  be  detri- 
mental to  the  Canaciian  roads  and  the  roatls  that  connect  with  them,  but 
also  to  the  merchants  of  IJoston,  ami  to  every  line  of  trade,  particularly 
our  line. 

Senator  Ulair.  Where  <lo  y«»u  market  your  pork  ? 

Mr.  Skii.ToN.  Forty  per  cent,  of  it  goes  alnoad.  A  large  amoiuit  of 
it  goes  to  Liverpool,  i.oudon,  (ila.sgow,  and  all  over  the  continent. 

Senator  IJI.AIR.   Where  tloes  the  <>()  per  cent,  got 

.Mr.  Skii.ton.  It  is  takt'ii  by  the  New  F.ngland  trade.  Perhaps  I 
might  say  lo  percent,  to  the  New  I^nglaiid  trade  and  L'd  ]u'V  cent,  to 
the  Mid(ile  States  and  the  South,  (^mte  a  proportion  of  our  g<M)ds  go 
South.  We  have  large  markets  in  Savannah,  (la.,  Charleston,  IS.  C, 
etc. 

Senator  Klair.  You  sell  your  goo<ls  there  in  competition  with  the 
|>ackers  from  the  West? 

Mr.  Skilton.  Yes,  sir. 

RATES   ON   LIVE-STOCK    IN   .JULY,    1H88. 

n  you  will  allow  me,  Mr.  Chairman,  I  would  like  to  put  in  the  record 
the  tarilV  sheet  on  livestock  which  was  in  clfect  in  July,  18.S.S,  sh()wing 
the  rates  upon  livi'-stock  in  carload  lots  from  Chicago  to  various  points. 

The  Chairman.  We  will  be  glad  to  have  you  do  so. 

The  tariff  sheet  is  as  follows: 


THE    UNITED    STATES    AND    CANADA.  495 

Live-stock  tariff  taking  effect  July  14,  1888. 
below  naS"^'  '^'^'  ^^  *^^  '^''*'^^  "^'°°  live-stock,  in  car-loads,  from  Chicago  to  points 

[In  cents  per  100  pounds.] 


From  Chicago,  EnKlewood,  Grand  Crossing.  South  Chicagc 
and  Colehour  to —  ' 


New  York  . . . 

Boston 

Philadelphia 

Alhany 

TJtica 

Syracuse  — 

Kochester 

Pittshmgh.  ) 
Buffalo :> 


Cattle.* 

Sheep. 

Hogs. 

5i 

25 

J8 

lOi 

2.5 

2.3 

5i 

23 

16 

Si 

20 

18 

SJ 

20 

17 

5i 

20 

l.Oi 

5i 

18i 

144 

5i 

15 

Hi 

Horni's 

and 
male«. 


60 

m 

.58 
48 
48 

40| 


32i 


*The  above  rates  on  cattle  will  not  apply  via  the  New  York,  Lake  Erie  and  "Western  Railway. 

Rates  to  an  intermediate  point  will  in  no  case  be  higher  than  to  a  point  Iteyoiid. 
Stations  east  of  Chicago  will  not  charge  higher  tban  troiii  (Uiicago,  subject  to  tlio 
following  minimnm  weights:  Cattle,  20,000  pounds  per  car;  sheep,  14, OOii  pounds  per 
car,  single  deck,  1^,000  pounds  per  car,  double  deck  ;  hogs,  16.000  pounds  per  car, 
single  deck,  22,000  pounds  per  car,  double  deck;  horses,  20,000  pounds  i)er  car. 

The  rates  named  in  this  tariff  are  subject  to  withdrawal  or  advance  at  any  time  on 
giving  the  ten  days'  notice  required  by  law. 

M.  S.  Chask, 
Assistant  General  Freight  Aqent,  Chicago. 
J.  T.  R.  McKay, 
General  Freight  Agent,  Cleveland. 
R.  Vaughan, 
Livestock  Agent,  Union  Stock  Yards,  Chicago. 

Mr.  Skilton.  I  would  also  like  to  insert,  as  beariiig:  upon  tliis  inves- 
tigation, a  letter  addressed  to  our  firm  from  A.  H.  Ilovey  «&  Co.,  of 
Chicago. 

The  letter  is  as  follows : 


[A.  H.  Hovey  &  Co.,  Eoom  612  Bialto  Building,  Chicago.] 

Chicago,  July  2?>,  18S8. 
Dear  Sirs  :  Referring  to  your  favor  of  20th,  we  wired  yon  2:5  to  Boston  ;  thi.si.s  for 
box  meats,  barrel  pork,  etc.,  as  usually  shipiied  (loose  and  green  meats  always  .''.  ceutn 
more).  We  wired  you  asking  25  to  Liverpool;  this  is  always  bos  or  i)acked  meats  and 
is  from  Chicago  to  Liverpool.  23.62^  was  accepted,  Chicago  to  Liverpool.  Our  niark.-i, 
is  booming,  7  cents  for  green  shoulders  and  10:^^  for  green  hams.  S.  P.  shoulders  7} 
and  S.  P.  hamsllj. 

Expect  last  car  G.  shoulders  will  be  shipped  to-morrow. 
Yours  truly, 

A.  H.  HovEY  &  Co. 

Chas.  H.  North  &  Co. 

THANKS  OF  BOSTON  ORGANIZATIONS,  ETC. 

Mr.  Alden  Speare.  Mr.  Chairman  and  gentlemen  of  the  committee, 
I  want  to  thank  you,  in  behalf  of  the  various  organizations  of  Boston, 
for  the  time  you  have  given  us  and  the  attention  shown  us. 

The  Chairman.  I  desire,  on  behalf  of  the  committee,  to  th:nik  tlie  Rail- 
road Commission  of  this  State,  the  president  and  the  other  tnenibi'ns  of 
the  commission,  for  the  kindness  they  have  extended  to  us  in  giving  us 
the  use  of  their  rooms  and  other  aids  rendered  us  in  the  investigation. 


496  TRANSPORTATION    INTERESTS    OF 

I  also  wish  to  thank  yctii,  Mr.  S|)t'aiv,  for  your  eflorts  in  the  direction 
of  k<Tj)in,<,'  the  coMiniittri'  suopliccl  witli  txtMitUMiicn  lo  bo  heard. 

If  there  are  no  others  desirinj;  to  be  heard  tlie  eoiniuittee  will  stand 
ailjoiimed  to  niei't  at  Detroit. 

At  3  oVlock  and  15  ininuto«  p.  m.  the  comniittee  adjourned  to  meet 
in  Detroit  July  11,  ISiJ'J. 


Detroit,  Mich.,  July  11,  1889. 
The  eoniiniiirr  niei  at  11  oVloek  a.  in.,  i)ursuant  to  adjounnnent. 

Thf  ("iiaii:m AN,  The  elerk  will  read  the  rertolution  under  whieh  the 
eoniMiittee  is  |>ursuinj;  its  investigation. 

The  resolution  was  rea<l. 

The  Chairman.  Mr.  Raymond  is  here  according  to  pro-arningemcnt. 
He  is  the  first  ;;entlenian  to  be  heard. 


STATEMENT  OF  ALONZO  C.  RAYMOND. 

Mr.  AinNzn  (\  Haymonh,  a  nirinlMr  of  a  connuittoe  appointed  by 
t!ie  Board  nf  Tnule  of  Detroit,  apijeanul. 

The  C'llAlKMAN.  Wln're  do  you  reside T 

Mi.  K  \v>h»M).   In  Detroit. 

Tile  Cil  MRM  \N.   NN'liat  is  your  busiiu'ss  T 

Ml.  KavmoM).   I  am  piaetieing  law. 

The  ("iiAiWMAN.   \\  lioiii  <h»  you  rep'c.seut  on  this  (H'easion  ? 

Mr.  Ua\M(>M).  I  was  formerly  a  memlH-r  of  the  Hoard  of  Triide  of 
this  city  for  about  thirteen  years,  and  am  one  of  a  committee  ap])()inted 
by  it  to  appear  l)ef»u»'  this  Senati-  eommitt«'e. 

The  CllAlUMAN.  Vou  are  familiar  with  the  resolution  under  which 
we  an'  acting,  and  y«)U  have  heard  and  read  .something  of  our  investi- 
gation heretotore.  You  may  pro«ee«l  to  state  your  views  generally 
in  such  maiinrr  as  you  deem  proper. 

Mr.  HA\MnM),  I  havrmadea  tew  notes  so  that  I  would  not  get  too  far 
v\\  the  tiaeU  of  this  impliiy. 

EFFECT   OF   CANADIAN   COMPETITION. 

The  tirst  (piestioii  suggested  by  the  committee  is — 

I>(i  tlu' ('.in;i<liiin  liiii'-s  of  triiUHportutioii  i)|ioriitiiiK  in  the  rnit4'(l  Matrs  alhrr  llio 
coiiiinorcial  int«Ti"nt»  of  this  country  t'avoriil)ly  or  uufavoral»ly  f 

Ir  seems  to  me  there  coiild  be  but  one  answer  to  that,  and  that  is 
favorably.  The  imitortance  (»f  these  Canadian  lines  to  our  Stair  and 
our  city  is  very  great.  In  faet,  the  i)rospeiity  of  the  Stat<'of  Michigan 
depends  largi'ly  iijxm  the  <'anadian  linrsof  transj>ortation.  Tln're  j-an 
not  l»e  any  two  «»i)inions  al.out  the  im]>ortance  of  leaving  them  undis- 
turbed, so  far  as  the  interests  of  our  State  and  city  are<'«»ncerne<l. 

As  to  their  intlueiu'e  upon  the  country  generally,  it  is  well  known 
that  the  Chicag<»  rates  of  freight   are  what   are  calle«l  the  unit  rate's, 
and  all  other  rates — at  least  as  far  west  as  the  Mi.ssissippi — take  nowt^ 
percentage  «»f  tlu^  Chi<ago  or  unit  rat**.     The  Cirand  Trunk  has  lar_ 
intlueuce  m  making  that  unit  rate  from  Chicago  reasonable. 


THE  UNITED  STATES  AND  CANADA.  497 

THE  UNIT  KATE. 

Seuiitor  Harris.  Will  you  explain  exactly  what  you  mean  by  the 
unit  rate? 

Mr.  liAYMOND.  For  instance,  if  the  rate  from  Chicago  to  New  York 
has  been  decided  upon  by  all  the  railroads,  includin.i;  the  Grand 
Trunk,  to  be  25  cents  per  100  pounds  on  a  certain  class  of  freight, 
Detroit  takes  78  per  cent,  of  that,  Peoria  takes  105  per  cent.,  St. 
Louis  takes  110  per  cent.,  and  so  all  sections  of  the  country  are 
grouped  by  percentages,  dependent  upon  the  Chicago  or  unit  rate. 

The  Chairman.  That  is  to  say,  Peoria's  percentage  is  higher  tliau 
Chicago's,  for  instance? 

Mr.  Raymonp.  Yes,  sir. 

The  Chairman.  And  then  it  is  a  certain  rate  at  St.  Louis  ! 

Mr.  Raymond.  Yes,  sir. 

Tbe  Chairman.  And  what  is  it  at  Detroit? 

Mr.  Raymond.  At  Detroit  it  is  lower,  but  the  whole  country  north 
and  south  is  divided  into  groups,  and  all  stations  and  cities  and  towns 
are  divided  into  groups,  taking  certain  percentages  of  the  Chiciigo 
rate,  so  that  whatever  influence  affects  the  Chicago  rate  in  the  means 
and  conditions  of  making  reasonable  rates  aft'ects  all  jtortions  of  the 
country,  even  though  no  part  of  the  traffic  of  the  country  passes  over 
the  Canadian  line. 

Senator  Harris.  Is  it  owing  to  the  fact  that  these  Canadian  lines 
form  a  cheaper  line  of  transi)ortatiou  to  the  seaboard  that  the  Detroit 
rate  is  78  per  cent,  of  the  unit  rate*? 

Mr.  Raymond.  No,  sir ;  but  Chicago  is  taken  as  100  per  cent. 

Senator  Harris.  That  is  at  the  initial  point  1 

Mr.  Raymond.  At  the  initial  point.  Detroit  in  distance  from  New 
York  to  Chicago  is  70  per  cent.,  and  we  claim  here  in  Detroit,  and  we 
had  a  case  before  the  Interstate  Commerce  Commission  based  on  that 
claim,  that  we  ought  to  have  70  per  cent,  of  the  Chicago  rate. 

The  Chairman.  Seventy  per  cent,  instead  of  78  percent. '? 

Mr.  Raymond.  Yes,  sir ;  but  Toledo,  Detroit,  and  Port  Huron  and 
certain  towns  in  Michigan  take  78  per  cent,  of  the  Chicago  rate— 78 
l)er  cent,  of  that  sum— and  the  grouping  extends  southward  to  the 
Ohio  River.  Then  at  another  dividing  point,  which  includes  Peoria,  it 
is  105  per  cent.  Peoria  and  all  the  towns  within  a  large  area  of  country 
take  5  percent,  more  than  the  Chicago  rate,  and  then  when  you  strike 
the  Mississippi  River,  all  points  from  r,uriingtoii  down  to  Cairo,  and  all 
ah)ng  the  river,  take  IIG  per  cent.  St.  Louis,  Hannibal,  liurlmgton,  and 
all  those  towns  take  this  110  per  cent.  rate.  So  that  wiiatever  milueiices 
favor  the  unit  rate  also  influence  the  freight  rates  ot  the  whoU'  country, 
and  that  is  the  advantage  of  the  Canadian  lines  to  sections  ol  country 
which  do  not  contribute  any  traffic  to  the  lines,  because  the  Canadian 
lines  make  the  unit  rate  reasonable.  ■     ^.,^    4. 

It  has  been  claimed  by  parties  in  some  of  these  investigations  that 
the  rates  would  not  advance  in  case  the  Canadian  competition  were 
removed,  but  the  same  parties  demand  the  removal  on  the  ground  that 
Canadian  competition  is  destroying  their  business.  ^;;^^''  <''^',-',^^J 
competitors  of  the  Grand  Trunk  system  of  course  are  the  Vand  r  It 
and  Pennsylvania  systems,  and  if  it  is  true  that  tlieir  bus.noNs  is  I  e  ng 
destroyed  and  their  interests  injured  the  fact  ought  to  show  m  their 
reports. 

Michig ,    r  o- 

now  it  is  worth  in  the  neighborhood  of  Jo. 

6513 32 


'Michigan  Central  stock  about  ^yearagoora  li ttle longer  was  worth  72 ; 
.^  ;^  ,-,,  .^^^fi,  ir.  fv.a  TiPio-hborhood  of  9d.     Lake  Shore  stock  tor  two 


498  TRAJS'SPOHTATION    INTKRESTS    OF 

or  three  years  hnn;::  around  85  ami  Oit.  It  is  now  in  the  neighborhood 
of  1(»5. 

INCREASED   EAUM.N...-      ■>    AMERICAN    ROADS. 

I  liavi'  h«'r»'  a  little  report  in  tin*  last  issue  of  the  Railway  A{je,  under 
datr  of  .July  ").  This  is,  jHTliaps,  the  leading  railway  jonriuil  of  the 
rountiy  and  tlrvotcd  espiMJally  to  railway  int«Tt'sts.  Tin*  report  shows 
the  coiidilion  of  the  New  York  t'entraianii  tlie  Pennsylvania  interests 
during  the  hist  year,  and  if  the  eominittee  would  like  to  have  that  read 
1  would  l»e  jilad  to  sIh»w  the  falsity  of  the  elaiuis  of  those  wh(»  favor 
the  removal  of  Canadiatropposit ion. 

This  report  states  that  tiie  N»*w  York  ("ential  and  its  leased  lines  for 
the  nine  months  enduj;;  dune  M  earned  $J."»,'.>'.M>,(KM»,  or  about  ?<j;:>L',(K>0 
less  than  in  the  sann*  periotl  last  year;  but  their  operatin;,'  expenses 
were  cut  down  tui.s7.(M»0,  ko  thai  the  net  earidn;j:s,  !j''<,«>"<>,<X)0,  were 
||.{(>,0<)I>  more  than  last  year,  and  that  they  wdl  allow  the  payment  of 
three  rpnirterly  1  per  (-ent.  dividends  and  leave  a  suiall  surplus. 

Th«'  la-^t  tpiarter's  showing'  is  mu<h  better,  there  being  an  increase  of 
$.'J1  <,()()(►  in  ;;rn>s  i-.irning.^  and  ^_'(H,«km>  in  net  earnings,  and  a  suiplus, 
alter  pavnig  dividends,  ot  ahout  if  1 1. (MX)  instead  of  a  delieieiiey  at  the 
saiiM'  tiuM*  last  year  of  $1S4, •»(»<».  'I'he  statt-meiit  is  therefore  encourag- 
ing. I'oituiiately  for  tlu'  New  York  Central  ('<uiipany,  it  has  an  im- 
mense local  business  not  atVected  hy  tin*  interstate  commerce  law  or  l»y 
ass«»ciation  (piarrels,  and  it  is  itot  constantly  harassed  by  hostile  i>tut4i 
legislation  like  many  (»f  the  W  e^u-rn  ro.ids. 

I  think  that  must  dispose  ot  this  question  of  Canadian  competition 
with  the  New  York  Central  system. 

On  page  4  lb  of  the  same  journal  it  says: 

RftnriiHiif  railway  •rirniiij;'*  wliii-fi  Imvo  com**  in  ttiin  work  iurliuJo  tin*  VaiifliTliiltn, 
Kri»»,  KfiKliti;^,  tln<  l')>nn>«ylv!iiiin.  Ni>rihw«»Mt,  Oinnliii.  SI.  I'lml,  I'liion  I'aciOc,  ami 
Can.'tiliaii  I'.ti  i(ic.     'I'lii'  Kri<  '  !.'    i  '  '  •■  pour  ri>tiirii-«,  as  all  roal  roailH  li.tve 

liffii  (Imii;;  lor  M»iiu' limr.      I  "h  iiN  friciiilN  l>y  r<|"iriiii;i  a  naiii  of 

$llH;,ltO(i  i.ir  .May.  aii.l  llio  C;i: >  uii  mcr.iafK- nfn  i:.,(M»u.     Tli«-  Van- 

<lerl>illH,  )MTlia|iM,  art'  nut  ^ujn;;  lia<kv\anlH,  aMhuii.;|i  tlio  iiioHt  that  oiiii  h«  Hnid  for 
tho  cxhiliitH  niiiili*  tins  wi-i-k  ii*  that  tln-y  mIiuw  iiiiHliTalf  |»n»H|Hrity.  KatuM  hav»i  Immii 
Htiililt',  tliuii;;li  not  iiipli,  and  cnMiiiariMin  it  made  with  thu  Mix  inoiitiiMof  laHt  year 
when  practically  th<*  Haiiii«  conditiuns  ■  visiiil.  fur  it  wan  not  nnlil  tlix  fall  whcii  all 
t.iiilTs  were  hiiia-"!!!!!,  c<>uf«c<|n<ii: '  ■\iMinnt  in   th«>  |»roi)crli<'s  this 

year  will  li.-  ajiiiannt  when  tlif   i  ilf  an*   niad<<    ii|».      I  hf  furiniT 

rato  of  di\  idcndM  hiw*  Imm-ii  niainta  •inpiinicH.      The  .May  Htati-mcnt 

inatic  l>y  tlio  iVnnsylvania  is  nni|i  !■•.     It  mIiows  a  ;:ain  of  $»'(37,0O0 

in  gross  carninj^fi  and   marly  ?1~.  ^s,  l>ul  frotn   the  latter  in  to  Imi 

dolncteil  H  lo*is  of  $4;ii,(Hm  made  lt.\  ilr.  vsc,->teiij  ,...,.  'I'ho  total  j;ros«  eHrnin;:^  for 
thp  month  weref,"»,*.*lM,slil,  a  jj.iin  «iJ|ill*J,noO  eomi..ire4l  with  the  correspond  in>;  month 
in  l.-^<;. 

I  refer  to  this  statement  to  show  that  tin*  alxtlition  of  Canadian  com 
petition  on  the  ground  of  its  ruining  American  lines  is  not  true — that 
it  is  not  well  Ibuiuled.  The  Union  I'at^ilic  even  shows  a  gain  of  $ll)(l, 
000  in  this  last  report. 

Now  if  this  Canadian  eompetilion   was  cut  ofT,  of  course  the  saii' 
lines  would  increase  their  protits   eimrmously.     They  «lo   not  need  th 
abolition  of  the  comjM'tili«ui  on  the  part  of  Caua<lian  lines  to  save  loss, 
but  would  simply  increase   their  piolits   by  the   removal   of  Canadian 
competition. 

Senator  IIaiiki.^.  Of  course  their  |»rofits  would  be  in(Tease<l  in  the 
aame  ratio  as  the  business  over  then  lines  would  be  increased  T 

Mr.  liAVMOND.  Their  pn)tits  wotild  be  iiureased  by  an  inen-jwie  of 
business  and  by  the  increase  of  rales  both,  as  the  well  known  Vander-  J 


THE    UNITED    STATES   AND    CANADA.  499 

bilt  maxim  is  that  the  trafic  shall  pay  what  it  will  bear,  just  as  auvone 
else  wonkl  do  their  business,  to  make  as  much  as  they  could  out  ot  it 
Of  course  if  they  can  defeat  competition  by  ^'ettiiiff  the  United  States 
Government  to  assist  them,  certainly  no  one  can  blame  them  :  but  the 
commercial  interests  of  the  great  mass  of  producers  and  shippers  and 
consumers  in  the  great  cities  of  the  States  that  are  dependent  on  these 
Canadian  lines  must  fight  their  selfish  interests. 

Senator  Hakris.  Whose  selfish  interests? 

Mr.  Kaymond.  The  selfish  interests  of  the  American  roads.  I  have 
always  telt  that  Canada  has  not  treated  the  United  States  fairly  with 
respect  to  their  Welland  Canal  tolls. 

Senator  Harris.  Can  you  give  us  any  exact  information  on  that  sub- 
ject? 

CANADIAN  CANAL  TOLLS. 

Mr.  Raymond.  It  is  well  known  that  the  rebates  allowed  to  vessels 
carrying  freights  down  the  St.  Lawrence  are  so  large  as  practically  to 
amount  to  no  tolls,  while  the  vessels  bearing  cargoes  to  American  ports 
through  the  Welland  Canal  pay  20  cents  a  ton.  Canadian  vessels,  bound 
down  the  St.  Lawrence,  only  pay  2  cents.  The  treaty  of  Washington 
certainly  intended  that  those  rates  should  be  made  uniform. 

But  aside  from  that  question  I  should  say  that  there  is  no  occasion 
for  any  change  in  the  present  transportation  relations  between  the 
United  States  and  Canada. 

Senator  Eeagan.  Does  that  discrimination  relate  to  the  transporta- 
tion going  through  the  Welland  Canal  alone,  or  does  it  relate  to  the 
transportation  going  through  the  Welland  Canal  and  the  St.  Lawrence 
Canal  ? 

Mr.  Raymond.  I  am  not  certain,  but  my  impression  is  that  it  relates 
to  the  Welland  Canal  alone,  because  when  the  property  is  bound  to 
Montreal  and  the  Canadian  merchants  are  going  to  get  the  handling  of 
it,  they  do  not  interpose  any  obstruction,  but  I  am  not  certain  of  that. 

THE  BONDING  SYSTEM. 

The  system  of  transit  in  bond  has  been  in  force  about  twenty-three 
years,  having  been  authorized  by  the  act  of  Congress  in  ISOO.  Since 
that  time  a  great  many  millions  have  been  invested  in  bnihling  rail- 
roads connecting  with  the  Canadian  lines.  A  great  many  more  millions 
have  been  invested  in  business  enterprises  dependent  upon  the  Cana- 
dian lines  and  their  connections,  and  it  seems  to  me  that  it  would  be 
exceedingly  bad  faith  on  the  part  of  the  Government  if  it  should  now 
withdraw  the  privileges  afforded  such  large  business  interests  as  have 
been  built  up  by  its  own  citizens. 

An  argument  has  been  made  before  this  committee  that  as  we  pro- 
hibit the  coastwise  shipping  business  with  Canada  we  ought  for  the 
same  reason  prohibit  a  railwise  business — a  railroad  business  being 
done  by  foreigners.  But  it  seems  to  me  that  the  statement  I  haveju.st 
made  with  reference  to  the  interests  that  have  grown  up  under  the 
present  system-  for  the  last  twenty-three  years  would  destroy  all  the 
force  of  the  coastwise  argument.  The  retaining  of  our  shipping  privi- 
leges and  the  training  of  American  sailors  are  important,  but  none  of 
those  features  enter  into  the  railroad  situation.  Any  change  in  our 
present  relations  will  not  take  up  a  single  Canadian  rail.  The  railroads 
are  built,  and  they  will  be  worked  and  used  in  peace  or  war  whether 


500  TRANSPORTATION  INTERESTS  OF 

we  allow  tlioin  to  eiij^a^^e  in  Ainericai:  trailic  or  not,  and  I  think  there 
is  no  parallel  whatever  between  the  prohibition  of  coastwise  business 
ami  the  prohil)ition  of  railroad  business. 

LAKE   TUANSrOETATION. 

The  CnAiiiMAN.  What  are  the  facts  as  to  the  business  on  the  lakes? 
Do  not  the  Canadians  enjoy  the  opportunities  (tf  shippinjj  from  Canada 
to  our  ports  across  these  lakes! 

Mr.  K'AVMONi).  Y«'s,  sir.  Cana<lian  vessels  conie  here  to  Detroit  and 
to  Chicago  an<l  loa«l  f«)r  Montreal,  but  jirobably  nothinj;  like  the  num- 
ber of  American  vessels  wliiih  load  at  Chicajjo  for  Collinwood,  Good- 
rich, Saniia,  and  Owen  Sound  j>orts,  up  in  ihe  northwestern  i)art  of 
(yanada,  bordering'  on  Lake  Huron.  The  number  of  American  v«*ssels 
which  carry  trailic  from  jxtrts  in  the  United  Stati's  to  ports  in  Canada 
is  much  lai;;cr  than  the  ninnber  of  vcssi-ls  which  carry  frci;;ht  from 
Canadian  ports  to  American  jiorts.  So  that  any  chan;,'e  in  that  respect 
would  j-ntail  a  far  ;;reater  l«)ss  upon  our  own  citizens  than  u|»ou  the 
Canadians. 

Scnatt»r  IliscoCK.  That  is  simply  international  commerce. 

Mr.  llAVMoND.  Yes,  sir.  I  do  not  suppose^  we  could  prevent  a  (-ana- 
dian  \ fssel  from  loadin;;  at  our  ports  if  she  obeyed  the  laws  of  the 
country,  unless  we  placed  an  i'mbar;;o  on  the  business  of  the  two  coun- 
tries, and  if  that  were  done  it  would  mean  war. 

AMERICAN    ROADS   HAVK   THE   ADVANTAGE. 

It  has  Iwen  stati-d  that  a  !arj;c  advanta;;c  rests  with  the  Canadian 
raib(»ads  by  reason  of  tlu-ir  exemption  from  the  lon^'  and  short  haul 
claust'  «)f  our  interstate  commerce  act.  I  do  not  think  that  is  so.  I 
think  the  advjinta;;e  is  all  with  the  American  roads.  The  Jsew  York  (Cen- 
tral has  a  thousand  miles  of  road — the  West  Shore  and  lea.sed  line — 
most  of  it  a  four-track  line;  so  that  you  can  double  tlu'  distance  abnost 
in  the  calcidation  as  to  these  lines  traversin;;  an  immensely  wealthy  and 
populous  coiumunity,  tilled  with  the  most  f^ertile  farms  and  dotted  with 
iiumense  factories.  Their  l<M-al  trathc,  jis  shown  in  this  report  t()  which 
1  have  leferrcd,  is  so  ^'reat  that  this  system  is  beyontl  the  inlluence  of 
the  int»Mstate  conuncrce  act,  and  it  has  a  great  udvanta{.'e  1  think  over 
any  Canadian  line. 

This  is  not  alone  true  of  the  New  Y'ork  Central  Hystem.  The  Penn- 
sylvania  system  tlocs  a  larj^e  local  business,  and  that  road  in  the  State 
of  Pennsylvania  is  ext'Uipt  Irom  the  operations  of  the  lonj;  and  short 
haul  clause  of  the  iwl,  as  well  as  the  New  York  Central  is  exempt 
within  tlu-i  State  of  New  York.  Thci  Michij;an  Central  has  7(M)  milesof 
road  in  the  State  of  Michi;,'an  over  which  the  interstate  act  ha.s  virtu- 
ally no  control.  The  Camulian  lines  stretch  lonj;  distances  over  sparse  !• 
settled  se<-tions  and  throu;;h  comj)aratively  poor  communities,  and  tii 
local  tratlic  amounts  to  a  small  item. 

Senator  Hakims.  Have  you  noticed  the  reports  of  the  Canadian 
roads  with  rcsju'ct  to  what  proportion  of  their  trailic  is  local  and  what 
l)roporiion  is  throu;;h  tratlic? 

Mr.  IwAYMoND.  I  have  not. 

CANADIAN  ROADS  CONTROLLED  BY  THE  LAW. 

On  all  interstate  business  the  (\inadian  roads  are  just  ;i,s  thoroughly 
controlled  by  the  iut«'rstate  commerce  Jict  ;is  are  our  American  linen. 
The  first  section  of  the  iuterst;ite  commerce  act  was  drawn,  jus  Senator 


THE    UNITED    STATES   AND    CANADA.  fjOl 

Cullom  knows,  with  a.  great  deal  of  care,  after  consultatiou  with  emi- 
nent lawyers  in  the  city  of  New  York,  so  as  to  govern  the  Canadian 
portion  of  our  interstate  traffic,  and  the  law  is  so  worded  that  then-  is 
no  escape  from  liability  under  the  act  for  the  Canadian  roads. 

The  Chairman.  On  business  touching  the  United  States? 

Mr.  Kaymond.  On  any  interstate  trathc.  Further  than  that,  the 
ruling  of  the  Interstate  Commerce  Commission  in  the  Bulfalo  coal' case 
shows  a  determination  on  the  part  of  the  Commission  to  construe  that 
law  strictly  against  the  Canadian  lines. 

The  argument  has  been  frequently  submitted  before  this  committee 
that  it  is  all  right  for  the  Canadian  lines  to  compete  with  the  American 
lines,  and  the  American  lines  are  not  afraid  of  the  competition  of  the 
Canadian  roads  provided  the  Canadian  roads  are  brought  under  the 
same  regulation.  That  is  a  very  plausible  statement,  and  every  one 
would  agree  to  it ;  but  I  have  yet  to  learn  of  the  first  witness  wlio  has 
pointed  out  wherein  the  Canadian  lines  are  not  regulated  by  tlie  hiw 
the  same  as  the  American  lines.  I  do  not  think  any  witness  has  yet 
done  that. 

I  think  the  first  section  of  the  law  covers  every  possible  case.  Of 
course  the  Canadian  lines  are  being  watched  day  and  night,  you  may 
say,  by  their  American  competitors  to  discover  any  infraction 'or  viola- 
tion of  the  interstate  commerce  act,  more  closely  watched  than  any 
other  system  of  railroads,  no  doubt,  and  yet  not  a  single  charge  of  will- 
ful violation  of  the  interstate  commerce  act  has  yet  been  substantiated 
before  the  Interstate  Commerce  Commission. 

The  railroad  company  which  is  most  nearly  affected  by  the  com])eti- 
tiou  of  the  Grand  Trunk,  the  Michigan  Central  Railroad  Company,  was 
the  first  railroad  company  caught  in  a  willful  violation  of  the  act. 

The  Chairman.  Which  road  was  that? 

Mr.  Kaymond.  The  Michigan  Central,  and  that  was  in  the  way  of 
underbilling  a  quantity  of  freight  on  their  lines— the  first  road  caught 
in  a  willful  violation  of  the  act  was  the  Michigan  Central. 

Only  a  few  weeks  ago  five  of  the  leading  officers  of  this  same  corpo- 
ration, the  Michigan  Central,  were  indicted  by  the  United  States  graml 
jury  in  Chicago  for  willful  violation  of  the  interstate  commerce  act. 

The  Chairman.  What  has  become  of  those  cases,  do  you  know  ? 

Mr.  Eaymond.  The  Chicago  cases  have  not  yet  been  tried. 

The  Chairman.  Are  they  still  pending  ! 

Mr.  Eaymond.  Yes,  sir;  'the  general  freight  agent,  the  assistant  geti- 
eral  freight  agent,  and  three  subordinate  freight  officers  of  the  .Michi- 
gan Central  in  the  city  of  Chicago  have  been  indicted  by  the  United 
States  grand  jurv  ibr  willful  violation  of  the  law.  This  is  the  tirst  in- 
stance in  this  countrv  of  an  indictment  by  a  United  States  court  for 
a  willful  violation  of  the  act,  and  that  violation  by  this  road  which 
complains  most  bitterly  of  the  unfair  competition  of  its  Canadian  com- 
petitors.    1  think  that"  fact  is  significant. 

opportunities  for  violating  the  law. 

The  only  charge  that  is  made  against  the  Canadian  lines  is  that 
they  have  opportunitv  for  violating  the  law  by  way  of  rebates  and  all 
that  sort  of  thing.  Now,  the  American  lines  have  the  same  oi)por- 
tunity  if  they  choose  to  violate  the  law  as  the  Canadian  roads,  and  1 
think,  if  this  committee  will  recall  Mr.  John  Newell's  testimony  given 
I  before  the  committee  in  New  York,  he  stated  that  it  was  an  easy  thing 
for  railroads  to  pay  rebates— an  easy  thing  for  any  railroad  to  pay  re- 
bates—without its  appearing  on  their  books  or  in  their  vouchers. 


.502  TRANSPORTATION    INTERESTS    OF 

So  far  as  opportiinily  is  concerned  it  seems  to  me  that  the  Ameri- 
can lines  au<l  the  Canadian  lines  .\vv  alike,  and  the  mere  eharj;*'  that 
the  Canadian  roads  do  these  wrongful  thinjzs  beeanse  they  have  tin- 
opportunity  should  havt'  no  wi'i^dit  with  this  oonmiittt'e  in  t'onsidiT- 
in;;  this  ^icat  question  of  the  importance  of  tlu'  Canadian  lines  to 
American  ImsinesH  iiit<'rests. 

Senator  llAUHis.  The  opportnnity  being  eommt»n  to  all  railroiulsY 

Mr.  K'AVMnM),  Ves,  sir. 

The  CiiyMRMAN.   Trovideil  they  are  not  ean;;ht. 

Ml.  llAVMoNi).  Yes,  sir.  And  linther.  it  seems  to  me,  that  the  Cana- 
<lian  roads  are  in  a  more  dan;:eroiiK  po^ition  an«l  less  likely  to  violate 
intentionally  the  interstate  commerce  act  than  the  American  roa«ls, 
beeanse  I  .should  be  in  favor,  and  1  think  every  Am«riean  citizen  would, 
that  if  they  willfidly,  inn'ntionally,  ami  detiantly  <lisobey»'d  the  law  that 
they  should  be  cut  otV,  and  I  think  they  are  eonseious  that  they  woid«l 
be  the  loser.  So  that  the  restraint  upon  Cana<lian  lines  is  very  much 
i;realcr  than  upon  the  American  lines,  and  the  Canadian  lines  are  less 
likely  to  violate  the  law,  an<l  so  far  it  has  not  been  shown  that  they 
ha\i'  willlull.N  violated  it. 

ACCE.SSinil.lTV    OF    Ur.COKD.S   OF   CANADIAN    ROADS. 

I'urlliei  than  that,  all  the  books  an«l  jiapers  of  the  Canadian  roads 
can  i>e  ltrou;.'ht  belbre  the  Interstate  C«)mnu'rce  Commis.sion  Irtmi  the 
hcad(iuart<  IS  of  the  roads  in  Montreal,  «)r  any  other  place.  Just  as  well 
as  the  books  and  pa|M'is  of  the  Miclii;:an  Central  c.in  be  olttained  froui 
the  ot1i(;e  ot  that  company  in  Detroit.  If,  on  bein;;  summoned  to  pro 
ibiee  smh  books  and  pa|K'rs  :ind  ha\f  any  case  invest ipiti'd,  the  Cana- 
dian roads  should  reln.se,  I  think  the  I'onseipieiices  which  they  could 
foresee  would  <«tm«'  upon  them  wouhl  be  such  that  they  wouhl  not  <lare 
to  relu.se  ;  at  least,  they  never  have.  That  Inin;:  the  case,  lhe.se  va;:ue 
char;,'es  (d'  what  the  Canadian  roads  mi;,dit  <lo.  it  seems  lo  mc,  should 
have  no  weight  on  this  <pustioii. 

REGULATION    OF   CANADIAN    INTERNA!.    TRAFFIC. 

I  do  iM)|  see  how  Cjmpre.'^.s  can  h-gislate  for  the  regulation  of  the  in- 
ternal tralVn*  of  Camula.  They  »an  not  for  any  American  State,  and 
of  course  it  is  absurd  to  supjjose  that  the  Congre.s.s  of  the  lTnile«l  Sialcs 
<'an  regulate  any  of  the  internal  comii.erce  of  Caiiatla. 

lU'sides.  Canada  has  her  own  railroad  a<*ts,  a«h»pted  in  18.SS,  b\  wliiih 
their  local  trailers  are  j)rotected  very  much  as  are  our  own  by  our  In- 
teistate  Commerce  ( "ommissiou.     Tlit-y  have  there  a  railw  ay  coiiimif  te«'. 

Section  S  of  the  railway  a«'t  of  ISS.S  provules  : 

Tlio  railway  (•niiiiiiitl<c  i>f  tin-  pnvv  cdiiinil  r<liiill  cohkisI  <>f  tin-  iiiiiii'^iir  ni  i.iil- 
wavs  and  caiLiN.  who  sli.ill  In-  <  liainii.iii  t ln'rc«it".  nf  tin-  iuiiiiHt«T  of  Jnsiirr,  ami  of 
two  or  iMorr  of  till-  otlirr  rm-mlMrs  of  tli<- C^ik  t-n'M  jirivy  rotincil  for  C'aii:i<la,  lo  1»6 
from  tmn«  to  tiinr  a]i|i(>iiittil  liy  tln>  ^o\  ••riior  in  couin  il.  tlirro  of  wIkihi  Hliall  lonn  a 
«|iioriim;  ami  hikIi  cominiftiM'  Hliall  have  tin-  jioworH  ami  p<-rfr)rin  tho  diitirs  .•m.kj^ii.mI 
it  hy  tins  art. 

Senator  Harris.  Is  the  act  from  wliidi  \nu  have  iiist  re:i<l  a  ( 'ana- 
dian  act  ? 

Mr.  Raymond.  Yes,  sir. 

Now,  w  ithout  nd'erring  to  the  sections,  I  vvould  say,  in  general,  those 
powTMs,  including  the  authority  to  consider  all  questions  of  discrimina- 
tion on  tlu'  part  of  any  railroad  ofCaiuida  against  any  citizen.  an<l  the 
rulings  of  this  railway  committee  as  to   what  is  Just  or  unjust,   and 


THE  UNITED  STATES  AND  CANADA.  508 

whether  or  not  there  is  a  discrimiuatiou,  are  given  the  force  of  an  order 
of  the  court,  and  the  wrongs  to  which  Canadians  may  be  subjected  by 
their  railways  can  be  controlled  by  this  railway  comiiiittee  just  «^xactly 
as  our  own  railroads  are  controlled  by  the  Interstate  Commerce  Com*- 
mission. 

PROVISIONS  OF   RAILWAY  ACT   OF  CANADA. 

The  Chairman.  Are  there  any  general  provisions  in  that  statute 
Mr.  Raymond,  against  unreasonable  charges  ? 

Mr.  Raymond.  All  thosi?  things  are  provided  for. 

The  Chairman.  Are  they  provided  for  substantially  as  in  our  intt-r- 
state  commerce  act? 

Mr.  Raymond.  Yes,  sir;  substantially.  They  are  provided  for  in 
this  act  from  which  I  read. 

Senator  Harris.  Are  they  prohibited? 

Mr.  Raymond.  Yes,  sir;  t^hey  m-q  all  prohibited.  I  will  refer  to  them 
so  that  we  will  be  sure  about  it. 

Section  11  reads  as  follows: 

Sec.  11.  The  railway  committee  shall  have  power  to  inquire  into,  hear,  and  de- 
termine any  application,  complaint,  or  dispute  respecting — 

Various  things,  among  which  are — 

unjust  preference,  discrimination,  or  extortion. 

The  Chairman.  Is  there  any  positive  prohibition  of  those  things  by 
the  statutes'? 

Mr.  Raymond.  Yes,  sir ;  I  will  read  them. 

Senator  Harris.  I  would  suggest,  as  a  means  of  saving  time,  that 
Mr.  Raymond  furnish  the  statutes  to  the  stenographer  and  allow  thi-m 
to  go  in  as  part  of  his  remarks. 

Mr.  Raymond,  I  will  do  so. 

The  statutes  are  as  follows : 

Sec.  223.  Subject  to  the  provisions  and  restrictions  in  this  and  in  the  special  act  con- 
tained, the  company  may,  by  by-laws,  or  the  directors,  if  thereunto  authorized  by  the 
by-laws,  may,  from  time  to  time,  fix  and  regulate  the  tolls  to  be  demanded  and  taken 
for  all  passengers  and  goods  transported  upon  the  railway,  or  any  steaui-\eK.sel8  be- 
longing to  the  company. 

Sec.  224.  Such  tolls  may  be  fixed  either  for  the  whole  or  any  particular  portions 
of  the  railway ;  butallsuth  tolls  shall  always,  under  the  same  circu instance.'*,  be 
charged  equally  to  all  persons,  and  at  the  same  rate,  whether  per  ton.  per  mile,  or 
otherwise,  in  respect  of  all  passengers  and  goods  and  railway  carriages  of  the  same 
description,  and  conveyed  or  propelled  by  a  like  railway  carriage  or  engine,  pasMiig 
entirely  over  the  same  portion  of  the  line  of  railway  ;  and  no  rednctinn  or  advan<-c 
in  any 'such  tolls  shall  be  made,  either  directly  or  indirectly,  in  favor  or  against  any 
particular  company  or  person  traveling  upon  or  using  the  railway. 

Sec.  230.  The  company  shall  from  time  to  time  cause  to  be  printed  and  posted  up 
in  its  offices  and  any  other  place  where  the  tolls  are  to  be  collected,  in  some  conspic- 
uous position,  a  printed  board  or  i>aper  exhibiting  all  the  rates  ol  tolls  pa.\ able,  an(l 
particularizing  the  price  or  sum  of  money  to  be  charged  or  taken  lor  the  carriage  oi 
any  matter  or  thing.  ,    ,,         ,      ,.,  ,...  , 

Sec.  232.  No  companv  in  fixing  any  toll  or  rate  shall,  un.ler  like  conditions  and 
circumstances,  make  any  unjust  or  partial  discrimination  between  dillerent  locali- 
ties, but  no  discrimination  between  localities,  which  by  reason  ot  comj.e  ition  i.n 
water  or  railway,  it  is  necessary  to  make  to  secure  traffic  shall  be  deemed  to  be  un- 
just or  partial.  .   ,  .  n       ^        i    ♦,  ,1..,,.. 

Sec.  237.  No  company  shall  make  or  give  any  secret  special  toll,  rate,  rebate,  dr.n  - 
back,  or  concession  to  anv  person,  and  every  company  shall,  on  the  demand  ot  .n  > 
person,  make  known  to  him  any  special  rate,  rebate,  drawback,  or  concession  gn.  u 

*VE°a  240."  Every  company  shall,  according  to  its  power  afford  ''"..'"''f  "";|\'[*;,fj;:i.': 
tiesto  any  other  railway  company  for  the  receiving  and  '"^-^^-''^i'"^'  ;\"^,;;." ''\^'' 
of  traffic  upon  and  over  the  several  railways  belonging  to  or  worked  by  such  com- 


504 


TRANSPORTATION    INTERESTS    OF 


panif'H  reH]>octivply,  an<l  for  iho  rotiirn  of  carriajjes,  tniikK,  an<l  other  vcliicles,  and 
HO  Hiich  conijiaiiy  «liall  iiiako  or  jjivf  any  nmint'  or  nnn-ji.sonanlo  pn-ferenct'  or  udvan- 
tn}if  to  or  in  favor  of  any  particular  p«-i-j4on  or  company,  or  any  particular  deticriji- 
tion  of  tratlic  in  any  rcMpect  wliai.>x>cvcr,  nt<r  mIkiII  any  Hucb  company  subject  any 
]>articnlar  i»irM)n  <>r  rompany,  <>r  any  parlnnlar  description  of  trallic  to  any  nntlnc 
or  nnr«MHoiial)lc  pn'jndic4' or  disadvaniaf;*'  in  any  rc:<p<'ct  wInittMM'Ver.  and  every  com- 
jiany  wlin  h  iian  or  workn  a  railway  which  f«>rin(*  part  «»f  a  contiunoiis  line  of  railway 
or  which  interw>ctM  any  otht*r  railway,  or  which  hatt  any  terminns,  Htution,  i>r  wharf 
near  to  any  termiiiiiH,  Htation,  or  wharf  of  itny  other  railway  shall  atford  all  dne  and 
reuHonalile  facilitieH  for  ro-eiviiij^  and  furwardinn  l»y  it«  railway  all  traffic  arrivin^j 
l»y  snch  III  her  railway  without  any  nnreasonaMe  delay  and  without  any  hudi  pretir- 
en<e  or  advantage,  or  pn-judice  or  dis;idvantaj;e  as  aforesaiil,  ami  so  that  no  ol>sl ruc- 
tion is  otfered  to  tin-  puMic  desirous  t^f  usin<;  such  railway  as  a  continuous  lin<  of 
rommunieation,  atnl  mi  that  all  reasonable  accomuKMlation  hy  means  of  the  railways 
<d  the  several  companies  is  at  all  times  alVordiMl  to  tho  public  in  that  behalf,  and  any 
ajjreeuient  ma«le  b«'t\veen  any  two  or  more  companii*  contrary  to  thiswction  shall  be 
unlawtnl,  and  null  and  voi<l. 

Mr.  Haymom),  All  tli«'  internal  afVairs  of  the  Caiuuliaii  railr«»a<is  arc 
siilistantially  ;:o\«'ni«'<l  as  an-  <»ur  own,  and  il  tlu'Caiiadiari  iM'oplf  wnr 
iM'iii;,'  imi>()sr«l  upon  in  tlu-if  loral  ratrs  lor  tin'  privile;:*'  <»f  piMinitlin^ 
the  Canadian  r«)ad.s  to  do  AiniTiran  hnsincas  at  a  loss,  I  think  the  r.iil- 
way  cotnniittri' of  Cainnla  \void<l  havi*  phMity  <»f  t'oinplaint.s  lu-lore  them, 
;iiid  until  that  is  shown,  tin*  va;;ne  ehaims  that  they  are  so  doing  has  no 
wri;,dit. 


STATISTICS    OF    RKCEIFTS    Am- 


-I'KUATING    KXFKNSES. 


It  is  claimed  that  tin*  Canadian  n)ads  work  min*h  eheaper,  ean  haul 
fn'i^'ht  eheapef  than  <»nr  Amrrican  roads,  and  herr  are  a  few  stiitistit's 
In'arin;;  on  that  <pu'stion,  showinj;  the  jHTcenla^je  of  tiie  workinj;  e\ 
pi'iises  to  the  total  reeiMpts  of  tin*  Canadian  lines,  and  showiir^  thr 
ntiinlMTof  train  miles  tin'ir  hwomotives  haid  theii  ears  as  ecMii pared  with 
tilt"  niiiiiln'r  of  train  niih-s  that  Io<diiiotives  hani  <ars  on  the  Anu-ricaii 
lines,  whi«*li  1  can  ^ive  yon  in  only  a  inonnMit. 

'1  hcsc  arc  what  arc  (-ailed  Johnson's  (iraphie  Statisties  of  ('anada,  in 
which  alt  the  statislit^s  are  ;iivcn  in  dia;;nims  in  this  nninner.    |Kxliil»it 

Senator  I1ai;kis.  Is  Mr.  .lohnson  a  Cana<lian  oflicial  T 

TheCiiAtUMAN,  I  Mippos*.  th«'  liouk  is  ;,'<»ttcn  iijt  l»y  pri\ ate  enter 
j»rise  ? 

Mr.  liAVMOM).  Mr.  Cieor;,'e  .lohnson,  of  Ottawa,  is  the  j-ompiler.  It 
covers  the  entire  hiisiness  of  Canada,  all  ela.s.ses  of  hnsiness.  the  rail- 
roads, of  cotir.se,  bein^  htit  a  small  portion  of  it. 

The  nnnd)cr  of  tiain  miles  per  loctunotivc  in(*»nada  i820,(HH  :  in  tlic 
lTnite<l  States,  L*L',r).S.{. 

Senatt)r  IJeagan.  Do  those  fi;;nres  apply  to  the  roads  in  tin'  I'nitcd 
States  operated  hy  Canadian  companies T 

Mr.   Ka^monh.  No,  sir:  these  apply  t<»  roads  operiitetl  in  Canada. 

Senator  IIakuis.  Do  they  refer  to  all  the  Canadian  roa<ls? 

Mr.  KayM(»m>.  Yes,  sir.  The  avera^rc  ntimi»cr  of  train  miles  run  by 
each  locomotive  in  Canada  is  L'O.O'.H  ;  the  avera;:e  ntimln-r  of  train  mdea 
run  by  a  locomotive  in  the  Cnited  States  is  L"J,56.'3. 

Senator  Haukis.  This  is  the  mileajre  of  each  ItK-otnotiveT 

Mr.   Kavmond.   Vcs,  sir;  showinj;   that  onr  locomotives  tlo  a  preatj 
deal  more  work  than  those  <»f  the  Canadian  roads. 

Senator  HistHiCK.   In  what  period  «lo  the  locomotives  rnti  that  nnmber] 
of  miles  ? 

Mr.  liAYMONi).  These  ti;;iires  are  lor  a  year.     Now,  theearninj;s  for  a 
hx'omotive  in  Can.ida  aie  .f.ll.l.'id;  the  earnings  for  a  l^^eomotive  in  thoj 
I'nitcd  States  are  !?ll,l>o,  :'in.nii(i  moie. 


THE    UNITED   STATES    AND    CANADA.  505 

Senator  Hiscock.  How  are  those  earnings  miule  up  ?  I  am  curious 
to  know  what  elements  are  considered  in  making  up  the  euruiugs  of  a 
locomotive,  it  being  a  special  machine  h.y  itself. 

Mr.  Raymond.  1  suppose  the  number  "of  cars  hauled  bv  a  locomotive 
and  the  total  earnings  on  all  cars  hauled  are  taken  and  (livided  hy  the 
number  of  locomotive^  used  to  give  the  earnings  per  locomotive. 

Senator  Eeagan.  The  figures  of  earnings  and  miles  run,  etc.,  which 
you  have  given  are  for  what  year  ^ 

Mr.  Raymond.  This  is  the  report  for  18S8 ;  it  goes  down  to  1888; 
includes  the  year  1887. 

The  Chairman.  You  mean  it  goes  down  to  1889,  do  you  not! 

Mr.  Raymond.  No,  sir ;  down  to  1888,  for  the  year  1887.  Now,  the 
l)erceutages  of  gross  receipts  expended  in  working  the  railways  in  the 
United  States  and  those  in  Canada  for  the  year  1884 — all  countries  are 
given  here,  Germany,  England,  Russia,  etc.,  but  1  suppose  you  do  not 
care  anything  about  them. 

The  Chairman.  It  is  not  worth  while  to  spread  it  out,  1  guess. 

Mr.  Raymond.  In  the  United  States  60.78  i)er  cent,  of  the  gross 
receipts  of  railroads  was  expended  in  working  the  roads.  In  Canada 
the  same  year  76.58  per  cent,  of  the  gross  receipts  was  expended  in 
working  the  roads. 

INCREASE   OF    BUSINESS   ON  CANADIAN   ROADS. 

Senator  Reagan.  Do  you  understand  that  there  has  been  a  very 
large  increase  in  the  business  of  the  Grand  Trunk  ar.d  other  Canadian 
railroads  in  the  last  eighteen  months  that  would  modify  those  figures 
very  much? 

Mr.  Raymond.  No,  sir.  When  the  committee  was  in  session  in  New 
York  it  was  stated  that  the  Grand  Trunk  was  taking  the  largest  pro- 
portion, larger  than  it  was  entitled  to,  of  the  tonnage  of  the  Central 
Traflic  Association— some  39  per  cent.— but  that  very  day  the  report 
for  that  week  showed  their  proportion  had  dropped  to  about  19  or  I'O  per 
cent. 

Senator  Harris.  Do  you  mean  their  actual  business  ? 

Mr.  Raymond.  Their  percentage  of  the  whole  traificout  of  Chicago. 

Senator  Harris.  The  actual  tonnage  carried  by  the  Grand  Trunk 
amounted  to  19  or  20  per  cent.  ? 

Mr.  Raymond.  Yes,  sir ;  as  against  39  per  cent,  for  the  previous 
week.  The  business  fluctuates  ;  sometimes  the  Vanderbilts  carry  the 
largest  proportion,  sometimes  the  Pennsylvania  (iarries  the  largest; 
but  the  average  has  not  changed  very  much.  The  Grand  Trunk  averages 
from  18  to  20  per  cent.  ,    <.  n 

Senator  Harris.  Have  you  an  approximate  estnnate  ot  what  the 
percentage  of  tonnage  carried  on  the  Grand  Trunk  was  for  the  last  six 

months?  ,        ,  ^  •      ,   i-         *i 

Mr  Raymond.  No.  sir;  I  have  not.  It  can  be  obtained  iroir.  the 
Central  Traffic  Association.  Mr.  Blanchard  will  furnish  almost  any 
figures  bearing  on  those  subjects  for  which  you  may  call,  and  it  .\ou 
were  to  ask  him  for  those  figures  he  would  carry  them  back  for  several 
years  and  tell  you  exactly  what  they  were. 

SUBSIDIES  to  the   CANADIAN  PACIFIC. 

Now,  Mr.  Nimmo  has  been  claiming-aud  it  has  been  Maimed  by 
various  others-that  the  Canadian  Government  has  given  he  Cana- 
dian Pacific  something  like  $215,000,000  hi  subsidies.     It  ma>  bt  in- 


606  TRANSPORTATION  INTEREST^  OP 

teresting  to  look  at  the  federal  debt  of  Cauatla,  in  view  of  those  fig- 

UH'S. 

TIm'  federal  ^jross  debt  of  Caiiiwla  for  twenty  years  is  shown  in  this 
pamphlet,  and  I  can  j;ive  any  |>artif.ular  year  desired,  lii  IHSl  the 
roiistriu-tiou  of  the  Canadian  i'aeitic  road  was  bej^un.  Tin'  net  debt  of 
Canada  at  that  time  was  ♦15.">,;{1».'»,7S() ;  m  1887,  afier  the  Canadian 
Pa<-itie  was  e(.mpU'ted,  it  was  <«liL'7,31.{,lHl. 

StMiator  Kkaoan.  I)<m's  that  embraee  credits  «)f  tlie  Dominion  Ciov- 
erntnent  to  these  railroads  of  which  Mr.  Ninuno  s|)oke  T 

Mr.  Kaymond.  Yes,  8ir.  I'nder  the  title  of  "1887"  are  these 
words  : 

Ton  iiiillinn  on«»  liiiiiiire<l  ami  eiylit  \ -iiiiio  thon»and  fiv»»  hiiiHln-iI  mid  twi-nty-mie 
dolluDt  utlded  to  il«>lit,  Ixmii^  ])unliaN«-  inotiey  of  (),71M,014  acrcH  from  tlio  I'uiiiuhan 
Pacitic. 

Tliat  is  imlntled  hire.  Included  in  it  al.so  are  the  provincial  debts 
which  were  a.<sum«'d  duiiii;;  that  time. 

Senator  HisccuK.   Did  .Mr.  Nimmo  j;ive  his  statrnu-nt  in  tlrtail  T 

Mr.  liAYMt)M).   1  have  not  seen  it  in  tletail. 

Senator  IIiscock.   I  think  he  did. 

The  Chairman.  The  statement  will  ap|M'ar  in  hiH  paper,  I  suppose. 

Senator  Iliscoc'K.  It  would  bf  nunc  satisfactory  to  (pn'stion  the  items 
if  he  ^'ivcs  lliem  in  detail. 

.Mr.  UavmoM).  If  his  ti;;ures  are  correct,  tlnii  <'anada  could  not 
bavi'  owed  a  <"ent  in  IH-Sl. 

Senator  IliscocK.  If  h«*  j,'ives  the  <litail  of  ea<h  loan  or  each  credit 
or  each  ;,'uarantee  it  wonhlbe  nu>re  satisfa<'toty  to  show  that  the  state- 
ment, in  some  of  its  <letails,  is  untrue. 

Mr.  liAVMoNi).   I  think  it  <ould  easily  be  .shown  to  be  untrue. 

Senator  IIiscock.  His  statement  has  b«cu  published,  I  believe.  It 
is  in  detail  and  it   never  ha.s  been  challen;;ed. 

.Mr.  Kaymond.  I  think  .Mr.  Nimmo's  figures  have  never  lucn  «hal- 
lenpMl.  but  I  «-liallenge  them  myself,  »lecidedly. 

Senator  HiscoCK.  .Mr.  Ilick.son  wjw*  Ix-fore  the  committee  in  New 
York  and  saw  the  statement,  and  there  ditl  not  se«'jn  to  be  any  dispute 
about  the  fli,'ures. 

The  Cn.viiiMAN.  .Mr.  \'an  Ilorne  questioned  some  of  the  items  in  the 
Btatement.     Ilis  testimony  will  apiM-ar  in  full. 

Mr.  liAYMd.Ni).  Mr.  \'an  Ilornr  claims  that  the  total  (lovernmcnt  aid 
r«'<'«'ived,  including  the  guarantee  (d"  the  interest  on  the  .i'I.'»,0(M»,(K»o  to 
j)ay  for  relin(|uishin^  the  monopoly  clause  in  .Manitoba,  including  tlie 
Ci(»vernnM'nt  portion  of  the  Canadian  Pacific  mad.  wlii«-h  cost  (he  Ciov- 
ernnuMit  ^.{."»,(I00.(M»0,  und  which  .Mr.  Van  Home  estimated  not  to  bi 
worth,  and  could  l>e  duidicatcil  for,  :^IL',(MK>,(KM>— he  claims  that  tli. 
total  (lovernment  aid  received  is  about  ninety  nnllions. 

The  CiiAiKMAN.  My  impression  is  Mr.  Van  Home  admitle<l  that  the 
(^ana<lian  Pacific  received  aid  from  the  (loxfrnment  to  the  auM>nnt  «»f 
$1  lO.OOn.OOO  altogether.     I  am  not  very  cirtaiu  about  that,  however. 

Mr.  Pavmond.  'Ihat  is  figuring  the  land  grant  on  the  basis  of  fl-.^d 
an  acre.  If  you  figure  it  higher  if  wtiuld  be  more.  The  higlnT yon  fig 
nn'  it  so  much  greatcT  you  woid<I  make  it.  If  these  figures  are  c<nre<  t 
the  aid  rec-eived  by  the  Canadian  Pacific  from  the  Dominion  (Jovern 
nieiit  from  the  time  the  roa«l  was  begun  until  it  was  liniNlied  was  onl> 
about  *;»(». (too. (»(K).  If  they  are  correct,  of  course  Mr  Nimmo*H  fignn's 
are  out  of  the  way  a  good  deal. 

Senator  IlAiiiU.s.  Do  you  not  lo^o  sight  of  the  fact  that  the  Canaclian 
Government  uv.\y  Inive  increased  <>i  ibiiiinlMlieti  il.s  debt  laii'i  K.  wlmlly 


THE    UNITED    STATES    AND    CANADA.  507 

independent  of  any  subsidy  given  to  the  Canadian  Pacific  or  any  other 
internal  improvement  enterprise? 

Mr.  Eaymond.  Yes,  sir;  they  may  have,  but  I  think  it  has  not  been 
chiimed  that  anything  has  been  done  to  reduce  the  federal  debt  of  Can- 
ada since  it  began  to  subsidize  the  Canadian  Pacific.  The  imprt'ssion 
seems  to  be  that  the  Canadian  Government  is  running  wildly  into  debt 
for  this  railroad  corporation. 

Senator  Harris.  It  does  not  seem  to  me  that  it  is  absolutely  conclii- 
sive  as  to  the  amount  of  subsidy  given  by  the  Canadian  Goveniiiu-iit 
to  the  Canadian  Pacific  whether  the  federal  debt  has  increased  or  tU- 
creased. 

Mr.  Raymond.  That  is  true,  only  it  shows  that  the  federal  debt  of 
Canada,  if  these  figures  are  correct,  does  not  bear  out  the  claim  which 
has  been  made  as  to  the  enormous  amount  of  money  whi<;h  has  been 
given  to  this  railroad.  Here  is  just  one  other  set  of  statistics  bearini,' 
on  this  question,  which  I  will  give. 

VALUE   OF   CANADIAN   SECURITIES. 

If  Canada  were  running  wildly  into  debt  and  getting  into  trouble  the 
price  of  her  securities  in  London  would  reflect  such  a  disastrous  condi- 
tion of  affairs.  But  in  1867  Canada  5  per  cent's  were  worth  80  in  Lon- 
don ;  in  1888  they  were  worth  118.  Her  4  per  cent's  were  worth  O'J  in 
1875,  and  116  in  1888.  Her  3^  per  cent's  were  worth  93  in  1885  and  1(»U 
in  1888. 

Senator  ReagtAN.  In  which  class  of  securities  are  the  bonds  of  the 
Canadian  Pacific  found  ? 

Mr.  Raymond.  That  I  do  not  know.  These  are  the  securities  issued 
by  the  Canadian  Government  from  time  to  time  bearing  these  diflVrcnt 
rates  of  interest.  The  Canadian  Government  has  guaranteed  the  inter- 
est of  some  bonds  of  tlie  Canadian  Pacific,  but  1  do  not  understand  that 
the  Canadian  Government  has  issued  its  own  bonds  for  the  pur[)0se  of 
giving  the  proceeds  to  the  Canadian  Pacific. 

Senator  Reagan.  Would  they  not  be  classed  as  Canadian  secnrities  ? 

Mr.  Raymond.  ISTo,  sir ;  they  would  not  be  classed  as  Canadian  se- 
curities, but  the  figures  I  have  quoted  only  show  the  condition  of  tlio 
Canadian  securities  in  London.  They  go  to  show  that  in  London  they 
have  full  faith  in  Canadian  bonds.  They  show  that  if  the  Canadian 
Government  were  plunging  so  recklessly  into  debt  that  its  seciuitics 
could  not  have  advanced  at  this  rate. 

Senator  Reagan.  The  reason  I  asked  the  question  was  this :  If  the 
securities  of  that  company  have  6  per  cent,  interest  guaranteed  by  the 
Canadian  Government,  would  not  that  account  in  a  large  measure  for 
the  increased  price  of  the  securities  ! 

Mr.  Raymond.  I  do  not  understand  that  these  securities  are  Canadian 
**acific  securities,  but  are  Canadian  Government  securities,  the  same  as 
our  United  States  bonds. 

Senator  Reagan.  What  securities  are  referred  to  ! 

Mr.  Raymond.  Here  is  the  loan  of  1869,  at  4  and  5  per  cent. ;  the  loan 
of  1873,  the  loan  of  1874,  the  loan  of  1875,  the  loan  of  18<6,  the  loan  of 
1878,  and  the  loan  of  1879.  Now,  up  to  that  time  the  Canadian  1  acthc 
road  had  not  been  begun. 

The  Chairman.  There  is  nothing  in  the  table  yon  have  winch  shows 
anvthing  in  relation  to  Canadian  raih'oad  bonds  at  all. 

Mr.  Raymond.  No,  sir;  but  these  are  the  Federal  bonds  ol  the  J^o- 
minion  of  Canada,  the  same  as  our  United  States  bonds. 


608  TRANSPORTATION  INTERESTS  OF 

The  Chairman.  Wliat  you  are  endeavorinjr  to  show  is  that  Canadian 
bonds  ^o  np  iii.stead  of  down  ? 

Mr.  J{AYMOM).  Yes.  sir;  that  the  ernlit  of  Canada  i^  hijrh. 

Senator  KkA(;an.  W'oidil  a  lial)ility  of  Canaila  Ik*  stated  witliont 
showin;;  the  (rredit  that  she  pivt*  th«*  Canadian  I'acilir  iJailway  T 

Mr.  Kavmoni).  No,  sir;  Init  any  pnrchase-r  of  Canadian  (lovernincnl 
bonds  in  London  would  consider  the  ;^»'neral  liabilities  of  tho  (lovern- 
nient  in  inakinj;  his  investrntnt,  an<l  if  h«*  is  willin;;  to  pay  11(»  or  IIS 
for  Canadian  (lovernnient  bonds  lir  is  not  worrying;  wry  nnu-h  alxMii 
the  condition  of  tlic  liabilities  of  the  Canadian  (lovernnient.  That  is 
all  it  shows. 

SUBSIDIES   TO    AMERICAN    ROADS. 

Now,  on  the  estimate  I  made  a  few  months  a;;o  that  tlie  Canadian 
Pa4ine  received  tVum  the  Canadian  (lovernnient  about  ij<Mi),(KM>,(Min,  I 
think  it  is  fair  to  make  a  comparison  of  the  ai<l  the  Canadian  Pacilic 
has  iHM'cived  with  the  aid  ;,'iven  the  I'nion  Tai-ilic  by  our  own  «'ountry. 
If  the  Slim  of  .'j<!»0,0(M(,(HM)  is  about  the  ri;:ht  (i;:nre  if  is  h'ss  than  one- 
half,  a<<oidin;i  to  .Mr.  ratteis<»n,  of  the  raeitic  IJailway  Commission,  of 
the  amount  ot  nioiM*y  tiaiidiilently  taken  Irom  the  (lovernmeiit  by  lour 
men  alone  in  building'  the  1  nion  I'acilic  Hallway.  It  is  less  money  than 
the  lictilioiis  <-apital  swoin  to  by  tour  men,  the  atlidavits  of  wImuii  aie 
on  tile  in  the  city  of  Washin;;ton  to  day.  Certain  men,  and  one  of  them 
a  Cnited  Stati's  Senator,  inakt>  allidavit  as  to  the  amount  of  money 
capital  stock  ))aid  in  for  the  Union  I'acdie  Railway.  Tbey  nnike  it 
^!>7,(MK>.(MK>,  while  Mr.  Patterson,  in  his  investi;,'ation,  «-Iaims  that  the 
amount  actually  pai*l  in  was  ^l.T.'tO.tHN).  This  shows  that  these  allidav 
its  were  false  to  the  extent  of  im>re  money  than  tin*  entire  aid  received 
fiom  the  (amnlian  (io\ernment  by  the  Can.idian  I'acilic  Kaijway. 
Mr.  Patterson  sIm>ws  in  his  report  tiiaf  the  excess  friM;,'ut  cliar;:«<l  the 
patrtMis  of  the  Cnion  racilic  Kailway  Coi!ij»any  every  year,  and  still 
beiii;;  chai;;ed,  is  over  :^S,0(K),(M»(»,  due  to  the  «lishone>t  iiietlKMis  by 
which  that  road  wiis  built. 

Senator  IIiscock.  Why  do  you  take  the  minority  report  f  Why  <lo 
you  not  taki'  the  majority  report,  if  you  cIkmisc  to  att}i4k  this  railway  f 

Mr.  liAYMOM).  1  take  Mr.  I"att«'r.son's  rejMJrt  and  1  rely  upon  his 
Htatements;  if  tiiey  are  untrue,  of  cour.s*'  tiu'y  have  no  wi'i;,'ht. 

Senator  IIiscoCK.  I  do  not  wish  to  no  int<t  an  examination  in  reler- 
ence  to  these  matters,  but  I  submit  to  you  whether  it  would  not  be 
more  just  to  take  the  mai«)rity  report  instead  of  the  minority  report  on 
those  <piestions. 

Mr.  IlAVMoM).   Is  tlieie  any  dispute  about  tlio.s*-  figures? 

Senafoi-  IIiscock.   I  do  not  want  to  take  the  time  to  no  into  this  mat 
ter,  because  I  think  it    forei;,Mi  to  this  invest i;,Mti<Mi.     I>ut  I  only  call 
your  attention  to  the  tact  that  a  majority  and  a  minority  ix'port  wci»' 
made,  and  you  base  your Jud;:iiient  on  the  minority  report. 

Mr.  Kavmonh.  I  understood  that  ilu'  majority  report  referred  to  a 
certain  course  of  pro«-edure  bein^  ilesirable  and  lh«'  inin«>rity  reported 
that  another  course  of  proce«lure  was  desirable,  and  that  i>ra<-tic,ally 
the  only  dilVerence  was  with  respect  t«»  tin*  courst'  to  1k"  pursued. 

Senator  lIl.scocK.  Have  you  read  the  majority  report? 

Mr.  Kay.moND.  Not  in  detail,  llowi'ver,  if  these  statements  are  not 
true,  Mr.  Patterson  has  stated  untruths.  If  his  statements  are  true,  it 
si'cms  to  me  thai  it  comes  with  ill  ;,'race  from  the  riii<m  Pacilic  Hail 
roa«I  Company  to  demand  that  the  ctunpetition  of  the  C^anadian  Pacific, 


THE    UNITED    STATES   AND   CANADA.  509 

whicli  has  conferred  more  or  less  benefit  upon  the  American  people, 
should  be  cut  oft  through  the  action  of  the  United  States  Government 

The  Chaikman.  Mr.  Adams  did  not  make  any  admission  of  that 
kind.     On  the  contrary,  he  intimated  that  he  did  not  tliink  the  Cana- 
dian roads  were  doing  his  lines  any  substantial  damage. 
_    Mr.  Eaymond.  Did  not  Mr.  Melleu  ? 

The  Chairman.  Mr.  Mellen  talked  somewhat  differently.  He  is  the 
train c  manager. 

Mr.  Raymond.  Yes,  sir;  and  vice-president.  I  tbink  Mr.  Adams's 
statement  in  New  York  was  exceedingly  fair,  and  I  thiuk  Mr.  MeUen's 
testimony  was  exceedingly  unfair.  These  facts  being  o])en  to  the  piib- 
hc  lor  examination  through  this  report  made  by  the  Pacific  Railway 
Commission,  I  think  it  is  also  right  that  these  facts  shoukl  be  brc.ugirt 
out  and  put  on  record  in  this  investigation,  because  comparatively  few 
people  of  the  whole  number  can  wade  through  the  report  of  the  p'aeitic 
Railway  Commission. 

It  is  the  blackest  crime,  according  to  Mr.  Patterson,  thai  I  ever  hrard 
of.  Th«  Northern  Pacific  received  46,000,000  acres  of  liind  for  its  sub- 
sidy. The  Northern  Pacific  was  a  cheaper  road  to  build  and  a  much 
less  expensive  road  in  every  resi)ect  than  the  Canadian  Pacific  and  the 
other  Pacific  railroads.  We  all  know  what  help  they  have  received.  1 
only  refer  to  that  on  the  ground  that  the  mere  acceptance  or  receiving 
of  Government  aid  ought  not  to  be  a  factor  in  considering  the  advisa- 
bility of  cutting  off  the  Canadian  roads  from  American  traflic. 

Senator  Reagan.  There  was  a  gentleman  before  us  tlie  other  day  in 
Boston  who  spoke  of  the  much  higher  grades  on  the  Northern  Pacific 
than  on  the  Canadian  Pacific.  Have  you  information  that  shows  you 
that  it  cost  less  to  construct  the  Northern  Pacific  than  it  did  to  construct 
the  Canadian  Pacific,  or  vice  versa  f 

Mr.  Raymond.  I  can  not  give  figures.  I  only  know  what  Mr.  Van 
Home  claims,  and  I  can  not  go  any  further  than  his  authority  for  it, 
that  it  cost  more  to  build  the  200  miles  of  the  Canadian  Pacific;  road 
north  of  Lake  Superior  than  to  build  any  800  miles  on  the  Northern 
Pacific.    Mr.  Van  Home  claims  that. 

The  Chairman.  The  road  was  built  before  he  was  connected  with  it. 
I  believe  he  has  only  been  president  a  brief  time,  and  I  think  he  has 
not  been  connected  with  the  road  very  long. 

Mr.  Raymond.  I  could  not  answer  as  to  those  facts. 

THE  TRANSCONTINENTAL  TRAPFIC. 

The  American  transcontinental  roads  are  complaining  of  the  diver- 
sion of  American  traffic  by  the  Canadian  Pacific  Railroad  Company. 


around  into  American  ports  again,  only  1^  per  cent,  in  the  year  ending 
January  1,  1880,  and  that  the  earnings  of  the  Canadian  Pacilii;  were 
only  11  per  cent,  of  the  total  earnings  of  the  transcontiiieiital  lines. 
That  is  the  tremendous  diversion  of  business  that  is  breaking  up  the 
American  transcontinental  lines. 

As  to  the  business  that  is  going  over  the  Canadian  Pacific  from  Asia, 
I  do  not  see,  if  the  Canadian  lines  are  cut  off  from  any  bonding  system 
in  transit,  how  that  is  going  to  affect  it.  All  that  business  i>ays  duty 
at  the  American  border  anyway.  You  could  not  ])reveiit  the  Canadian 
Pacific  from  delivering  that  Asiatic  merchandise  at  Ne\Nport,  \  t.,  lor 


510  TRANSPORTATION    INTERESTS    OF 

iustaiice,  to  the  Boston  and  Maine  Railroad,  or  to  whatever  road  it  con- 
nects witli  at  that  point,  short  of  ])uttinj;  an  embargo  on  doinj]^  bnsiness 
\vilh  Canada.  Tliey  have  a  right  to  deliver  goods  here  it*  they  conform 
to  our  regulations.  Neither  could  you  i)revent  the  American  lines  from 
delivering  to  tlu'ir  Canadian  connections  at  Newport  our  domestic 
rnannlactures  in  Canada  hound  for  China  and  Japan.  So  it  seems  to 
me  that  the  diversion  of  the  Asiatic  trade  over  the  Canadian  Pacific 
has  no  etfect  whatever  on  this  transit  in  bond  question,  and  if  the 
Canadian  roads  talce  from  the  American  transcontinental  lines  every 
dollar  of  their  business  it  would  be  no  reason  for  cutting  them  off  from 
tlie  transit  in  bond  system.  You  could  not  prevent  them  from  doing 
that  business  anyway. 

The  Chairman.  Not  unless  we  prohibited  the  goods  from  coming 
into  the  country  at  all. 

Mr.  Eaymond.  Yes;  unless  you  put  an  embargo  on  the  Canadian 
business,  and  that  means  war.  It  seems  to  me  that  the  strongest  argu- 
nu'ut  made  against  the  claim  that  the  Canadian  Pacific  is  able  to  com- 
l)ete  by  reason  of  the  great  subsidies  it  lias  received  is  in  this  fact, 
that  there  are  several  other  transcontinental  lines  now  projected. 
What  is  known  as  the  Jim  Hill  system,  and  the  St.  Paid,  Minneapolis 
and  Manitoba  system,  are  rapidly  ])ushing  their  lints  to  the  Pacific 
coast.  Mr.  Hill  suggested  it  in  New  York,  and  I  remember  the  chair- 
man asked  him  which  point  on  the  Pacific  coast  he  was  going  to  touch, 
and  he  declined  to  name  the  point.  The  Illinois  Central  is  considering 
the  advisability  of,  and  it  is  reported  has  partly  arranged  to  push  its 
line  through  to  the  Pacific. 

The  Chairman.  From  what  point? 

Mr.  Raymond.  I  can  not  tell  you  from  what  point,  but  from  their 
extreme  western  [)oint,  1  take  it. 

The  Chairman.  Sioux  City  is  where  they  stop  now,  I  believe. 

Mr.  Raymond.  Yes,  sir,  I  believe  that  is  the  place. 

THE  NORTHERN  PACIFIC'S  CANADIAN  LINE. 

The  Northern  Pacific  itself,  one  of  our  American  transcontinental 
lines,  has  just  purchased  the  Northwestern  Central  of  Canada,  which  it 
proposes  to  extend  to  Skeena  Bay,  on  the  Pacific,  up  through  the  Sas- 
katchewan Valley,  striking  the  Pacific  at  Skeena  Bay,  about  50  miles 
below  the  Alaska  border. 

The  Chairman.  Which  is  about  how  far  from  their  present  ter- 
minus ? 

Mr.  Raymond.  I  do  not  know ;  GOO  or  700  miles,  is  it  not  ? 

The  Chairman.  I  really  do  not  know. 

Mr.  Raymond.  Skeena  Bay  is  about  50  miles  below  the  Alaska  bor- 
der. There  are  now  two  lines  competing  for  this  transcontinental  busi- 
ness, and  the  competition  of  this  business  will  be  entirely  destroyed  if 
the  Canadian  Pacific  is  cut  oft".  It  seems  to  me  the  question  of  subsidy 
does  not  enter  into  the  matter. 

The  Chairman.  Our  roads  are  running  into  Canada  as  an  offset  to 
the  Canadian  roads  running  into  our  country. 

Mr.  Raymond.  Yes.  It  seems  to  me  the  subsidy  question  disappears 
in  the  face  of  those  matters. 

Senator  Reagan.  You  spoke  of  a  road  which  was  to  run  from  the 
Northern  Pacific  across  the  border  to  a  point  north  of  the  Canadian 
Pacific.     I  wish  you  would  explain  more  fully  as  to  that  road. 

Mr.  Raymond.  The  Northern  Pacific  has  recently  purchased  the 
Northwestern  Central  Railroad  of  Canada,  the  present  terminus  of 


THE    UNITED    STATES    AND    CANADA.  511 

which  is  about  250  or  300  miles  west  of  WiDiiipef?,  I  think,  and  they 
propose  to  extend  that  line  through  the  Sasksitchewan  Valley  north- 
westerly to  the  Pucitic  coast,  terminating  at  Skeena  Bay. 

Senator  Reagan.  We  have  had  statements  given  hcfon'  us  to  the 
eflect  that  the  Canadian  Government  had  lorbidden  tlui  l)iiilding  of  any 
road  within  60  miles  of  the  Canadian  Pacitic  Railroad. 

Mr.  Raymond.  This  route  is  farther  tuan  00  miles  frotn  tin*  Canadian 
Pacific.  It  is  a  Canadian  corporation,  and  the  line  was  purchased  by 
this  American  corporation,  which  will  operate  it  undoubtedly  undt-r  tlu* 
Canadian  charter. 

The  Chairman.  There  was  a  prohibition  or  embargo  against  build- 
ing a  road  on  either  side  within  GO  miles  of  the  Canadian  racilic  IJoad, 
but  they  yield  as  to  that,  as  1  understand  it,  and  will  allow  this  pro- 
poseil  road  to  run  into  that  country. 

Senator  Reagan.  They  gave  way  with  respect  to  Winnipeg.  That 
was  understood  to  be  a  special  thing,  and  to  o]m\  n\)  and  (h'vclop  Win- 
nipeg the  Dominion  gave  to  the  Canadian  Pacihc  a  large  amount  of 
money. 

Senator  Harris.  I  understand  Mr.  Raymond  to  say  that  this  lu-w 
road  of  which  we  are  now  speaking  is  more  than  00  miles  from  the  line 
of  the  Canadian  Pacific. 

Senator  Reagan.  From  the  Northern  Pacific  to  a  point  north  of  the 
Canadian  Pacific  they  would  have  to  run  across  the  Canadian  Pacific 
road. 

Senator  Harris.  Certainly. 

Mr.  Raymond.  I  have  here  a  map  of  the  Canadian  Pacific  road,  and 
I  think  1  could  show  you  about  the  location.     [JOxhibiting.j 

MAIL   SUBSIDIES  COMPARED. 

In  regard  to  the  mail  subsidies  that  are  granted  to  the  Canadian 
Pacific,  and  I  suppose  to  the  Grand  Trunk,  for  all  1  know,  the  Ameri- 
can Government  pays  the  American  railroads  $20,(»(»0,(»(»(»  a  year  to 
carry  the  mails.  1  suppose  the  Canadian  Government  pays  its  roads 
for  carrying  the  mails  in  the  same  way,  and  a  mail  subsidy  to  a  Cana- 
dian road  is  no  more  a  menace  to  American  transportation  interests 
than  is  a  mail  subsidy  to  American  roads  a  menace  to  Canadian  trans- 
portation. I  think  the  mail  subsidy  question  has  small  bearing  on  the 
main  question  of  cutting  oii"  the  Canadian  roads. 

I  do  not  know  whether  this  committee  cares  to  hear  any  dis(!ussi»>n 
of  the  long  and  short  haul  clause,  or  the  question  of  pooling,  that  h;us 
been  brought  into  these  investigations. 

RAILROAD  FACILITIES  OF  DETROIT. 

The  Chairman.  That  is  hardly  within  our  a.ithority.  You  may  give 
the  committee  the  exact  number  and  names  of  roads  which  accommo- 
date vour  people  here — American  or  Canadian  roads,  (iive  us  a  list  of 
the  lines  that  come  into  Detroit,  or  are  in  any  way  used  by  your  people. 

Mr.  Raymond.  Beginning  with  the  American  roads  on  the  south,  we 
have  a  branch  of  the  Lake  Shore  and  ^Michigan  Southeru  from  Toledo. 

The  Chairman.  What  is  the  length  of  it  ? 

Mr.  Raymond.  About  GO  or  G5  miles.  ^ 

The  Chairman.  And  that  is  entirely  on  American  soil  ? 

Mr.  Raymond.  Yes,  sir. 

The  Chairman.  What  other  road  have  you  on  Amcruau  soil  7 


512  TKANiSPORTATlON    INTERESTS    OF 

Mr.  Raymond.  Wcliave  the  Wabash  Railway,  which  ruus  from  here 
to  Kansas  City,  uiuler  the  new  reorji^auizatioii  of  the  Wabash  Company. 

Tlie  Chairman.  If  you  want  to  go  east  from  Detroit  where  does  that 
road  talcc  yoiif 

Mr.  Raymond.  It  does  not  go  east  from  here. 

Tlie  Chairman.  Do  you  not  have  a  Wabash  connection  from  here  to 
ToletU)? 

Mr.  Raymond.  There  is  a  roundabout  connection,  but  it  is  seldom 
used. 

The  Chairman.  What  other  connections  entirely  on  American  soil 
have  you  if  you  want  to  go  east*? 

Mr.  Raymond.  None  but  the  Vanderbilt  roads — the  Lake  Shore  and 
the  jMichigaii  Central. 

The  Chairman.  And  that  is  all  ? 

Mr.  Raymond.  Yes,  sir;  that  is  all.  We  could  get  to  Toledo  by  this 
roundabout  Wabash  route,  but  tlie  Wabash,  when  it  gets  there,  would 
connect  with  the  Vanderbilt  lines. 

Tiie  Chairman.  Have  you  any  line  that  you  can  use  to  good  advan- 
tage in  going  east  except  this  short  road  from  here  to  Toledo,  where  you 
strike  the  Lake  Shore  road? 

Mr.  Raymond.  No,  sir;  we  have  no  outlet  for  business  except  the 
Canadian  lines  aside  from  these  two  I  have  named. 

The  Chairman.  Do  you  call  the  Michigan  Central  a  Canadian  line? 

Mr.  liAYMOND.  Yes,  sir;  we  do;  that  is,  the  southern  division  of  it. 

The  Chairman.  So  that  the  eastern  outlet  for  your  people  is  by  way 
of  Canada! 

Mr.  Raymond.  Yes,  sir. 

The  Chairman.  You  strike  the  New  York  Central  at  Buffalo? 

Mr.  Raymond.  Yes,  sir ;  and  at  the  bridge  we  strike  the  New  York 
Central,  the  Delaware,  Lackawanna  and  Western,  the  Lehigh  Valley, 
and  the  West  Shore. 

The  Chairman.  What  is  the  distance  from  here  to  the  Canadian 
border  by  the  Michigan  Central? 

Mr.  Raymond.  About  229  miles. 

The  Chairman.  How  nearly  does  that  one  road  come  to  being  suffi- 
cient to  accommodate  the  commercial  interests  of  this  community  I 

Mr.  Raymond.  Do  you  refer  to  the  Michigan  Central  ? 

The  Chairman.  Yes. 

Mr.  Raymond.  The  Michigan  Central  road  carries  across  the  river 
here  back  and  forth  about  twice  as  much  freight  as  does  the  Grand 
Trunk. 

The  Chairman.  You  have  a  Grand  Trunk  connection  here  ? 

Mr.  Raymond.  Y^es,  sir. 

The  Chairman.  Where  does  it  strike  the  Grand  Trunk  proper  ? 

Mr.  Raymond.  There  are  two  ways  out  of  Detroit  to  the  Grand  Trunk ; 
one  is  by  way  of  Port  Huron,  and  the  other  is  directly  east  from  here, 
crossing  the  river  on  the  ferry  and  going  directly  to  the  Niagara  fron- 
tier. 

The  Chairman.  And  not  striking  the  Grand  Trunk  proper  ? 

Mr.  Raymond.  And  not  striking  the  main  line.  The  main  line  runs 
from  Toronto  to  Port  Huron.  This  division  I  speak  of  runs  from  Wind- 
sor to  Detroit. 

The  Chairman.  So  you  use  that  as  a  Canadian  road  ? 

Mr.  Raymond.  Yes,  sir. 

The  Chairman.  And  then  you  can  run  up  to  Port  Huroi^  aud  strike 
the  main  line. 


THE  UNITED  STATES  AND  CANADA.  513 

Mr.  Kaymond.  Yes,  sir ;  and  go  east  to  lUiffalo  over  that  lino. 

The  Chairman.  Uave  you  any  other  eastern  outlet  by  rail  ? 

iMr.  liAYMOND.  The  Cauada  tSoutliera  division  ot  the'iMiehigau  Cen- 
tral.    We  liave  no  outlets  east  except  across  Canadian  territory. 

The  Chairman.  And  this  little  road  running  to  Toledo  '. 

Mr.  Kaymond.  Yes,  sir. 

The  Chairman.  So  you  would  be  badly  bottled  up  if  tlie  Ciinadian 
roads  were  cutoff? 

Mr.  Raymond.  \\\s,  sir;  I  think  it  would  practically  destroy  the  city 
of  Detroit  for  business  puri30ses.  Detroit  would  make  a  good  summer 
resort. 

The  Chairman.  On  the  assumj)tion  that  you  have  sufficieut  facilities 
on  American  soil  for  transportation,  do  you  think  the  Canadian  roads 
have  the  effect  of  enabling  Detroit  to  secure  very  much  cheaper  trans- 
portation rates  than  otherwise  would  be  the  case  ? 

Mr.  Raymond.  The  effect  upon  Detroit  of  cutting  off"  the  Canadian 
roads,  even  if  the  facilities,  so  far  as  trackage  and  rnotive-i)ower,  etc., 
are  concerned  were  equal  to  the  demands,  would  be  just  about  the  same, 
because  the  Michigan  Central  Railroad  Company,  incase  these  Cana- 
dian lines  Avere  cut  oft*,  would  build  a  branch  from  its  main  line  perhaps 
50  or  GO  miles  at  some  desirable  point  west  of  Detroit  directly  across 
to  Toledo,  which  would  place  Detroit  at  the  end  of  two  plug  lines 
of  road  and  entirely  out  of  the  main  channel  of  business.  The  main 
line  of  the  Michigan  Central  would  run  down  to  a  point  as  one  i)lug 
road  and  the  Grand  Trunk  would  be  running  as  another  plug  road. 
There  would  be  no  business  for  the  railroads  to  haul  to  Detroit  except 
at  a  local  rate  from  Toledo,  or  at  a  rate  in  addition  to  a  rate  that  they 
would  receive  in  hauling  business  to  Toledo.  It  would  be  the  same  on 
business  going  into  and  out  of  Detroit  from  and  to  the  West.  Putting 
even  a  small  arbitrary  on  the  business  outof  Detroit  would  destroy  our 
jobbing  business  and  our  grain  business  in  so  far  as  they  depend  on 
railroads,  and  Detroit  would  cease  to  be  a  distributing  point  for  mer- 
chandise.   That  is  undoubtedly  so. 

Tho  Chairman.  Do  your  people  here  know  anything  about  an  ar- 
rangement by  which  the  Canadian  roads  get  a  ditterential  ? 

Mr.  Raymond.  I  do  not  think  the  Canadian  roads  get  a  difterential 
on  Detroit  business ;  they  do  on  business  1  believe  Irom  Chicago.  I  do 
not  know  positively,  however,  whether  they  do  or  not.  1  think  all  the 
rates  are  uniform. 

The  Chairman.  Is  there  any  understanding  or  combination  "  by 
which  the  same  rates  are  given  to  you  business  gentlemen  here  on  all 
the  roads  going  eastf 

Mr.  Raymond.  They  give  the  rates  that  are  designated  ou  their  pub- 
lished tariff's. 

The  Chairman.  They  are  all  alike  ? 

Mr.  Raymond.  Yes,  sir. 

The  Chairman.  So  that  the  American  roads  are  charging  just  iha 
same  as  the  Canadian  roads,  and  vice  vesa. 

Mr.  Raymond.  Y'es,  sir;  1  think  the  experience  of  merchants  here  is 
much  as  my  experience  was  while  I  was  engaged  in  the  shipping  trade 
largely  for  a  good  many  years,  namely,  that  the  Grand  Trunk  was  the 
most  inclined  to  favor  the  local  interests. 

The  Chairman.  What  do  you  mean  by  "  loca-l  ioterests  I"  TUo  locfvl 
interests  of  Detroit "? 

Mr.  Raymond.  Yes,  sir, 


514  TRANSPORTATION  INTERESTS  OF 

The  Chairman.  What  percentage  of  the  coiimierce  here  is  carried 
by  rail  and  what  percentage  by  water  1 

Mr.  liAYMOND.  The  percentage  carried  by  water  is  insignilicant,  ex- 
cept, of  course,  during  certain  periods  of  tlie  year.  In  the  fall  tliere. 
are  large  shii)ments  of  wheat  by  water,  but  the  merchandise  is  carried 
nearly  altogether  by  rail. 

The  Chairman.  For  the  local  trade  1 

Mr.  Kaymond.  Yes,  sir;  and  for  the  distributing  trade.  There  are 
no  regular  lake  lines  running  between  J3etroit  and  Buffalo  carrying 
traffic  to  amount  to  anything. 

The  Chairman.  Vast  shipments  come  through  Detroit  to  the  east,  do 
they  not  °? 

Mr.  Raymond.  Yes,  sir ;  to  the  east  and  west  both. 

The  Chairman.  1  suppose  large  shipments  of  grain  and  everything 
else? 

Mr.  Raymond.  Yes,  sir. 

The  Chairman.  Does  the  Michigan  Central's  traffic  both  east  and 
west  cross  the  border  at  this  point — 1  mean  by  water"? 

Mr.  h'AY^MOND.  O,  yes;  the  entire  upper -lake  traffic  for  Buffalo  or  for 
St.  Lawrence  ports  passes  our  city  front. 

The  Chairman.  How  near  do  the  shipments  from  Duluth  hy  water 
pass  this  city? 

i\lr.  Raymond.  All  upper  lake  shipments  pass  this  jioiut. 

The  Chairman.  So  that  it  must  be  a  very  great  t  horoughfare  by  water 
of  shipments  from  farther  west  ? 

Mr.  Ray'MOND.  Y'es,  sir.  a  great  deal  more  traffic,  several  times 
more,  passes  here  than  passes  through  the  Suez  Canal. 

The  Chairman.  Do  you  suppose,  if  the  same  restrictions  could  by 
any  means — I  am  not  saying  that  it  can  be  done  by  act  of  Congress  at 
all,  but  suppose  by  any  arrangement  between  the  two  governments 
the  same  regulations  should  jirevail  in  both  countries  as  now  i»revail  in 
this  country,  do  you  sup])ose  it  would  injure  your  commerce  any  ? 

Mr.  Ray'MOND.  I  can  not  see  that  it  would.  I  think  the  same  regula- 
tions exist  in  both  countries  to-day  practically. 

The  Chairman.  You  think  that  the  regulations  existing  in  this  country 
to  day  and  those  existing  in  Canada  are  nearly  the  same  1 

Mr.  Raymond.  Yes,  sir.  I  have  not  seen  any  one  who  has  shown 
wherein  they  are  different. 

THE   SHORT-HAUL   QUESTION. 

The  Chairman.  It  is  alleged  some  times  that  the  American  railroads 
are  restricted  by  virtue  of  the  long  and  short  haul  clause,  etc.,  from  re- 
couping on  local  traflic,  and  that  in  that  respect  the  Canadian  loads, 
not  being  so  restrained,  can  recoup  and  thereby  get  an  advantage.  Do 
you  know  whether  anything  of  that  kind  is  being  done  ? 

Mr.  Ray'MOND.  1  do  not  think  there  is,  and  in  my  earlier  remarks 
gave  my  understanding  of  that.  I  think  Mr.  Hickson  testified  before 
your  committee  in  New  York  that  if  the  long-haul  traffic  were  unprofit- 
able they  would  not  take  it  at  all.  The  trouble  about  the  long  and 
short  haul  clause,  it  seems  to  me,  is  this  :  When  the  agitation  for  some 
regulation  of  the  railways  began,  and  Senator  Reagan  was  formulating 
his  first  bill,  it  was  on  the  basis  that  the  railroad  companies  made 
no  money  on  the  long  haul,  but  made  all  their  profits  on  the  local 
business,  and  recouped  on  the  local  business  for  the  loss  sustained 
on  the  long  haul.    That  was  a  false  statement  by  the  railroads.    That 


THE  UNITED  STATES  AND  CANADA.  515 

was  the  statemeut  the  railroads  always  made  when  ;i  local  sliijiper 
came  to  them  and  said,  "  You  are  haulinp-  500  or  000  isiiles  (or  r>  or 
()  cents  a  luuidred,  but  you  want  to  cli:irt;e  me  lor  (Mi!y  L'OO  mih's 
10  cents  per  hundred."  The  railroad  invariably  replied,"  wlien  tliev 
were  questioned  about  that,  "That  is  where  \ve  make  our  nuuiey. 
We  would  not  make  any  money  if  it  were  not  for  this  local  business. 
We  are  doing  through  business  merely  to  keep  our  cars  in  motion." 

That  is  the  basis  on  which  the  law  was  enacted.  The  railroads  told 
an  untruth,  and  subsequent  events  have  confirmed  what  1  say,  1  think, 
that  the  long-haul  rates,  since  the  passage  of  the  interstate-commerce 
act,  have  not  been  advanced,  but  the  short-haul  rates  have  all  beeu 
lowered. 

Senator  Harris.  Have  the  long-haul  rates  been  reduced  since  the 
passage  of  the  interstate-commerce  act  "^ 

•  Mr.  Eaymond.  They  are  about  the  average.  Short-haul  rates  have 
all  been  reduced,  or  nearly  so.  The  railroads  are  now  beginning  to 
acknowledge,  and  they  so  state  in  their  cases  before  the  Interstate 
Commerce  Commission,  that  the  profit  is  on  the  long  haul,  and  that  the 
expense  of  doing  business  diminishes  per  ton  per  mile  with  the  dis- 
tance. 

The  Chairman.  That  is  a  very  clear  proposition,  too,  I  reckon  ? 

Mr.  Raymond.  Yes,  sir ;  it  is. 

The  Chairman.  So  you  think  the  long  and  short  haul  clause  does  not 
cut  very  much  figure  ? 

Mr.  Raymond.  No,  sir. 

THE  SHUTTING  OUT  OF  CANADIAN  ROADS. 

Senator  Hiscock.  Do  you  understand  that  anybody  wants  to  pro- 
hibit Canadian  trunk  lines  doing  business  in  this  country? 

Mr.  Raymond.  There  can  be  but  one  interest  that  desires  them  cut 
off. 

Senator  HiscoCK.  I  am  not  asking  you  to  speculate  on  it.  You  have 
made  an  argument  here  on  the  assumption  that  some  one  was  trying  to 
do  that  very  thing.     Have  you  any  evidence  of  that  fact  ? 

Mr.  Raymond.  The  only  evidence  that  anybody  desires  the  Cana- 
dian roads  cut  oft",  if  anybody  wants  evidence,  it  seems  to  nie,  must 
come  from  the  competing  railroad  interests  in  America. 

Senator  Hiscock.  Have  you  seen  the  evidence  of  any  one  who  wanted 
to  cut  oft"  the  Canadian  roads  ? 

Mr.  Raymond.  Well,  no  American  railroad  manager  has  stated  in 
terms  that  he  wanted  it  done. 

Senator  Hiscock.  Has  any  one  iuferentially  asked  it  ? 

Mr.  Raymond.  It  seems  to  me  that  if  it  had  not  been  iuferentially 
asked  this  committee  would  not  have  been  appointed  to  investigate 
whether  it  should  be  done. 

Senator  Hiscock.  You  have  not  seen  any  published  statement,  or 
any  statement  on  the  part  of  any  one,  asking  or  suggesting  it,  have 
you  ?     I  say  frankly  I  have  not. 

Mr.  Raymond.  I  have  not,  in  so  many  words. 

Senator  Hiscock.  But  I  would  not  even  qualify  it  by  saying  "  in  so 
many  words."  Have  you  heard  or  seen  any  argument  from  which  that 
deduction  could  be  drawn?  Have  you  heard  of  any  argument  on  the 
part  of  any  American  trunk  line  asking  to  eliminate,  or  destroy,  or  pro- 
hibit competition  by  the  Canadian  raiUoalsl 


516  TRANSPORTATION  INTERESTS  OF 

Mr.  Raymond.  I  tbink  it  was  pretty  clearly  deinanded  by  Mr.  Towne, 
of  the  Southern  Pacific  road,  at  San  Francisco,  and  by  Mr.  JNlellen,  of 
the  Union  Pacific  road. 

Senator  HiscocK.  I  do  not  know  about  Mr.  Towne,  of  San  Francisco. 

Mr.  liAYMOND.  1  so  understood  Mr.  Mellen  and  Mr.  Bliss,  who  were 
before  your  committee  in  Boston.  I  think  many  of  the  railroad  mana- 
gers do  not  in  terms  ask  it,  but  still  are  in  favor  of  it. 

Senator  HiscocK.  I  say  frankly  that  1  have  not  heard  such  an  argu- 
ment made  on  the  part  of  Mr.  Bliss,  or  anybody  else,  nor  even  heard  it 
suggested.     Have  you  heard  anybody  even  suggest  it  I 

Mr.  Raymond.  Mr.  Nimmo,  of  course,  is  not  a  railroad  man.  Gen- 
eral Wilson,  of  Delaware,  started  this  agitation.  He  is  not  at  ])resent 
a  railroad  man,  although  he  is  an  ex-railroad  man,  and  is  very  intimate 
with  railroad  interests. 

Senator  Hiscock.  His  theory  in  advancing  this  question  was  not 
with  reference  to  the  railroads  at  all,  but  with  the  idea  of  securing  gov- 
ernmental assistance  to  build  up  (Canada  and  procure  its  annexation. 
Have  you  ever  seen  any  evidence  on  the  part  of  the  Vanderbilt  system 
that  they  wanted  the  Canadian  roads  eliminated  or  cut  oft? 

Mr.  Raymond.  I  think  the  most  bitter  complaints  made  before  this 
committee  against  Canadian  competition  interfering  with  thebusiiiess 
of  the  American  roads  and  destroying  it,  etc.,  have  been  made  by  the 
Michigan  Central  and  the  Lake  Shore  interests,  which  are  Vanderbilt 
interests. 

Senator  Hiscock.  When  were  such  complaints  made? 

Mr.  Raymond.  When  the  committee  was  in  New  York. 

Senator  Hiscock.  Did  represeniatives  of  those  roads  make  argu- 
ments in  favor  of  destroying  or  prohibiting  Canadian  competition,  or 
even  suggest  it  ? 

Mr.  Raymond.  I  think  it  was  very  clearly  suggested.  I  can  not  re- 
call the  words,  but  it  seems  to  me  it  was  very  clearly  suggested,  or  else 
why  the  bitterness  of  the  complaint  1  This  committee  is  investigating 
the  desirability  of  such  legislation. 

Senator  Hiscock.  Do  you  not  understand  this,  that  the  American 
trunk  lines,  in  the  arrangement  between  the  roads,  give  to  the  Canadian 
trunk  lines  a  differential  rate  on  freight  both  ways,  if  they  choose  to 
adopt  it? 

Mr.  Raymond.  Yes,  sir;  and  the  Canadian  roads  give  the  American 
lines  the  same  differential. 

Senator  Hiscock.  The  Canadian  trunk  lines  are  allowed  a  differential, 
but  on  east-bound  freight  the  Canadian  trunk  lines  do  not  choose  to 
adopt  it ;  they  maintain  standard  rates. 

Mr.  Raymond.  I  do  not  think  a  differential  is  allowed  the  Canadian 
roads  on  east-bound  freight. 

Senator  Hiscock.  The  evidence  is  that  the  Canadian  roads  can  use 
it  east-bound,  if  they  choose.  Governor  Smith,  of  Vermont,  said  that 
was  the  understanding. 

Mr.  Raymond.  If  I  were  a  railroad  man,  and  my  competitors  said  I 
might  take  freight  a  little  less  than  they  would  take  it,  if  I  chose  to,  I 
think  I  would  take  it. 

Senator  Hiscock.  Governor  Smith's  argument  was  that  so  far  as 
freight  was  concerned,  the  American  triiuk  lines  had  all  they  could  do 
at  the  present  time ;  that  they  did  not  care,  one  way  or  the  other,  and 
that  the  Canadian  road  could  carry  freight  at  5  cents  per  hundred  less, 
if  it  chose  to,  but  that  it  did  not  choose  to. 


THE    UNITED    STATES    AND    CANADA.  517 

Senator  Hiscock.  Now,  your  niKlerstaudiiig,  as  I  uiulerstood  you  lo 
say  to  Senator  Cullom,  is,  that  yon  see  no  reason  why  I  lie  trunk  lines  in 
the  United  States  and  in  Canada  shoukl  not  be  put  on  the  same  basis 
before  the  hiw  ? 

Mr.  llAYMOND.  Yes,  sir;  except  so  far  as  Congress  can  not  control 
local  traffic  in  Canada,  any  more  than  Congress  can  control  local  traffic 
in  Michigan. 

Senator  Hiscock.  I  am  not  talking  abont  any  exception      If  that 
could  be  done,  you  think  it  is  right  that  it  should  be  ? 
Mr.  Raymond.  Certainly. 

Senator  Hiscock.  Now,  the  Canadian  lines  say  that  they  absolutely 
and  literally  obey  the  interstate  commerce  law,  not  onlj'  with  reference 
to  through  freight,  but  also  with  reference  to  the  long  and  short  haul 
clause.  The  American  trunk  lines — and  I  have  heard  more  com[)hiint 
so  far  as  American  trunk  lines  are  concerned,  on  account  of  a  sup- 
posed rebate,  or  drawback,  or  something  of  tbat  kind  to  the  Canadian 
roads  from  the  ocean  transportation  than  I  have  heard  of  any  abuse  on 
the  part  of  the  Canadian  lines  under  the  long  and  short  haul  clause, 
but  it  is  denied  by  Mr.  Hickson  that  anything  of  that  kind  is  being 
done.  Now,  then,  you  agree  that  they  should  be  equal  before  the  law. 
Mr.  Raymond.  Yes,  sir. 

Senator  Hiscock.  And  if  at  the  present  time,  in  practice,  they  are 
equal  before  the  law,  and  the  Canadian  and  American  lines  are  both 
under  the  provisions  of  the  interstate  commerce  law,  do  you  see  any 
objection  whatever,  if  other  provisions  could  be  incorporated  in  the  law 
to  insure  the  two  systems  being  on  an  exact  equality  "? 
Mr.  Raymond.  No,  sir. 
Senator  Hiscock.  You  say  you  do  not  ? 

Mr.  Raymond.  No,  sir.  The  most  glaring  instances  of  ocean  draw- 
backs have  been  furnished  by  the  Pennsylvania  system. 

Senator  Hiscock.  I  am  not  on  that  subject.  I  only  ask  you  this  ques- 
tion ;  whether  if  on  both  sides  of  the  line  between  the  tJnited  States 
and  Canada  all  trunk  lines  i)rofessedly  are,  as  they  insist,  living  up  to 
the  interstate  commerce  law,  and  it  is  agreed  on  all  hands  that  America 
should  not  discriminate  against  its  own  roads,  that  the  Canadian  roads 
should  be  on  an  equal  footing  with  the  American  roads — I  ask  you  if 
there  is  the  slightest  objection  in  the  world  to  putting  ])rovisions  into 
the  law  which  will  insure  that  the  same  regulations  exist  on  both  sides 
of  the  line,  if  they  do  not  exist  to-day,  but  whicli  would  not  in  any 
sense  discriminate  against  the  Canadian  lines  or  have  the  effect  of  driv- 
ing them  out  of  existence  or  embarrassing  them  or  placing  additional 
weight  on  them  ■? 

Mr.  Raymond.  I  do  not  think  any  one  will  object  to  any  such  pro- 
vision as  that,  if  some  one  can  evolve  such  a  condition  of  things. 

Senator  Hiscock.  As  1  put  my  question  to  you  squarely  you  say 
"  No,"  and  yet  you  make  an  argument  here  on  the  line  that  nothing 
should  be  (Tone,  because  there  is  no  necessity  for  its  being  done. 

Mr.  Raymond.  I  see  no  necessity  for  additional  legislation  in  respect 
to  the  Canadian  roads. 

Senator  Hiscock.  That  is  simply  because  you  may  not  know  about 
it.     There  may  be  necessities  on  both  sides  for  further  legislation. 

Now,  then,  if  it  is  agreed  upon  all  hands  that  the  American  and  Cana- 
dian lines  should  be  on  an  equal  basis  and  be  i)laced  on  e(|uai  terms  by 
the  interstate-commerce  law,  you  see  no  objection  to  legislation  which 
will  not  infringe  upon  any  of  the  C'anadian  roads  or  injure  or  destroy 
them  in  any  way  as  competitors  to  the  American  lines,  but  which  will 


518  TRANSPORTATION    INTERESTS    OF 

simply  insure  their  being  on  an  equal  basis  witb  the  American  roads? 

Mr.  itAYMOND.  I  do  not  for  an  instant  defenil  the  Canadian  roads  as 
an  institution,  but  I  defend  the  commercial  interests  of  the  country 
which  are  dependent  upon  the  comjietition  of  the  Canadian  roads. 

Senator  HiscoCK.  I  want  to  disabuse  your  mind  of  the  impression, 
if  you  have  that  impression,  that  there  is  any  disposition  to  cut  off  the 
Canadian  roads.  If  I  know  anything  about  the  trunk  lines  that  pass 
through  New  York,  there  is  not  the  slightest  disposition  on  their  part 
to  cripple  tlie  Canadian  lines,  or  to  weight  them  excessively  as  against 
themselves;  but  the  American  lines  simply  want  to  be  sure  that  they 
have  a  fair  chance  with  the  Canadian  roads. 

Mr.  Raymond.  My  experience  as  a  merchant  and  a  shipper  is  quite 
different  from  that,  Senator. 

Senator  HiscoCK.  I  am  not  talking  about  it  practically.  I  assume 
that  both  the  American  and  the  Canadian  lines  will  get  all  the  advan- 
tage they  can.  I  anl  simply  discussing  the  matter  as  it  occurs  in  the 
way  of  legislation. 

Mr.  Raymond.  Yes,  sir.  Our  opinions  here  are  colored  by  our  ex- 
perience, and  we  in  Detroit  think,  and  I  think  we  know,  that  the  feel- 
ing between  competitive  American  and  Canadian  systems  of  rail- 
roads is  bitter — exceedingly  bitter — and  has  been  for  many  years,  and 
that  if  the  American  systems  of  roads  through  the  intervention  of  the 
United  States  Government  couhl  cut  off  Canadian  com])etition,  they 
would  not  hesitate  to  use  any  reasonable  means  to  accomplish  that  end. 

Senatoi"  HiscoCK.  That  may  be,  although  we  have  not  seen  any  evi- 
dence of  it. 

Mr.  Raymond.  We  here  in  Detroit  have  seen  evidence  of  it. 

Senator  HiscocK.  I  mean  in  the  way  of  asking  legislation.  There 
was  a  suggestion  in  Mr.  Depew's  testimony  that  he  did  not  ask  or  de- 
sire anything  of  the  kind.  Take  the  Vanderbilt  system  of  lines  which 
are  to-day  running  through  Canada — — 

Mr.  Raymond.  The  Canada  Southern  division  of  the  Michigan  Cen- 
tral. 

Senator  HiscooK.  How  long  is  that? 

Mr.  Raymond.  Two  hundred  and  twenty-seven  miles. 

Senator  Hiscook.  Take  the  Vanderbilt  system  of  roads  which  are  to- 
day running  through  Canada,  and  any  legislation"  in  reference  to  Cana- 
dian roads  affects  tliem  as  much  as  the  Canadian  roads. 

Mr.  Raymond.  The  American  roads  would  be  willing  to  surrender 
their  Canadian  connections  in  a  minute  if  they  could  get  proper  legisla- 
tion. 

Senator  Hiscock.  The  only  point  I  am  after  is  not  to  fight  a  phan- 
tom unless  it  has  commenced  to  materialize.  That  is  the  only  point 
with  me.  [Laughter.]  I  think  all  my  associates  on  this  committ<'e  will 
agree  that  there  has  never  been  any  suggestion  from  the  representa- 
tives of  the  trunk  lines  who  have  appeared  before  us  that  they  should 
have  anything  in  the  world  ov^er  the  Canadian  roads,  except  that  the 
Canadian  roads  should  be  put  under  the  same  jurisdiction  and  under 
the  same  supervision  as  the  American  roads. 

Senator  Harris.  That  the  Canadian  roads  should  be  placed  under 
lirecisely  the  same  regulations  as  are  the  American  roads. 

Senator  Uiscook.  Nothing  more  and  nothing  less. 

Mr.  Raymond.  No  one  has  shown  where  the  Canadian  roads  are  not 
under  the  same  regulations  as  the  American  roads. 

Senator  Hiscock.  That  is  a  disputed  <pu'stion  whether  they  are  or 
not.     Right  there  the  horns  lock.     As  I  understand  you,  you  agree  that 


THE    UNITED    STATES    AND    CANADA.  519 

if  there  is  auy  chance  for  it,  the  Canadian  roads  should  be  under  the 
same  limitations,  restrictions,  and  control  as  the  American  roads. 

Mr.  Raymond.  Yes,  sir;  including  the  producers  and'the  consumers. 

Senator  Hiscock.  Certainly. 

Mr.  Raymond.  That  is  all  we  want. 

Senator  Hiscock.  That  is  all  there  is  of  it — the  mere  question  whether 
we  sbali  meet  the  issue  and  say  that;  no  undue  advantage  shall  be 
given  by  Congressional  legislation,  if  it  can  be,  in  favor  of  Canadian 
trunk  lines,  and  I  do  not  understand  that  you  ask  it. 

Mr.  Raymond.  No,  sir;  we  do  not  ask  it. 

The  Chairman.  That  is  all,  Mr.  Raymond. 

CARS   CROSSING   THE   RIVER  AT   DETROIT. 

Mr.  Raymond.  I  would  like  to  submit  a  statement  of  the  number  of 
cars  crossing  the  Detroit  River  at  Detroit. 
The  Chairman.  We  would  be  glad  to  have  it  go  in  the  record. 
The  statement  is  as  follows : 

Total  number  of  cars  crossing  the  Detroit  Elver  at  Detroit,  oast  and  wostlKumd,  dnr- 

iug  the  years  1887  and  1888: 

Cars. 

Via  Michigan  Central  R.  R G:?;"),  158 

Via  Grand  Trunk  K.  K 231,079 

Total  uiiuiber  of  cars  crossing  the  St.  Clair  Eiver  at  Port  Huron,  east  and 

west  bound,  during  the  years  1887  and  1888  (about) :>'.)4, 000 

Grand  total  via  Canadian  lines  at  Detroit  and  Port  Huron  for  two 

years l,]GO,2,57 

Average  number  of  cars  crossing  at  both  places  per  year 580, 1 14 

STATEMENT  OF  JOHN  B.  MULLIKEN. 

Mr.  John.  B.  Mulliken,  vice-president  and  general  manager  of  the 
Chicago  and  West  Michigan  Railway  Company,  appeared. 

The  Chairman.  Where  do  you  reside,  Mr.  Mulliken  f 

Mr.  Mulliken.  Detroit. 

The  Chairman.  What  is  your  business  1 

Mr.  Mulliken.  I  am  vice-president  aiul  general  manager  of  the 
Chicago  and  vV'est  Michigan,  president  and  general  manager  of  tlie 
Saginaw  Valley  and  St.  Louis,  and  general  manager  of  the  Detroit,  Lan- 
sing and  Northern  Railroad  companies. 

The  Chairman.  How  long  is  your  line? 

Mr.  Mulliken.  About  800  miles. 

The  Chairman.  From  and  to  where  does  it  run  ? 

Mr.  Mulliken.  From  Detroit  to  Howard  City  and  Big  Rai)ids,  in 
Michigan  ;  from  Saginaw  across  to  Howard  City,  and  from  La  ('rosse 
to  Pentwater. 

The  Chairman.  Your  line  is  mainly  in  your  own  State? 

Mr.  Mulliken.  Yes,  sir ;   there  are  oidy  35  miles  in  Indiana. 

The  Chairman.  You  heard  read  the  resolution  under  which  this 
committee  is  operating  and  understaiul  the  subject  of  inquiry.  Will 
you  please  proceed  to  give  your  views  about  the  matter  as  you  see 
proper  ? 

Mr.  Mulliken.  I  do  not  know  that  I  have  any  peculiar  views  in  re- 
gard to  the  matter.  1  do  not  see  any  occasion  for  any  complaint  any- 
where. 


520  TRBNSPOETATION    INTERESTS    OP 

Q'he  Chairman.  Everything  is  all  ri;[>ht  as  far  as  you  know. 

Mr.  MuLLiKEN.  Yes,  sir;  as  far  as  I  know. 

The  ChairbIan.  What  roads  do  you  connect  with  in  your  transporta- 
tion interests  east! 

Mr.  IMuLLiKEN.  Principally  with  the  Michigan  Central.  We  also 
connect  here  with  the  Grand  Trunk  interest,  and  also  at  Trowbridge 
with  the  main  line  of  the  Grand  Trunk. 

The  Chairman.  That  is  north  of  Detroit? 

Mr.  MuLLiKEN.  Yes,  sir ;  up  at  Lansing,  85  miles  above  here. 

The  Chairman.  It  is  not  on  the  water,  is  it  ? 

Mr.  MuLLiKEN.  No,  sir;  it  is  in  the  interior  of  the  State. 

The  Chairman.  Have  you  any  knowledge  of  the  business  opera- 
tions of  these  Canadian  lines'? 

Mr.  MuLLiKEN.  No,  sir ;  not  particularly. 

The  Chairman.  Do  you  do  any  business  with  the  American  lines 
with  respect  to  your, transportation  east  ? 

Mr.  MullikeN.  Yes,  sir;  with  the  Michigan  Central  and  Lake  Shore. 

The  Chairman.  The  Michigan  Central  is  a  Canadian  line  and  owned 
by  American  parties,  I  believe. 

Mr.  MULLIKEN.  Yes,  sir  ;  running  from  here  to  Buffalo.  At  Detroit 
we  give  business  to  the  Lake  Shore ;  also  at  different  points  to  the 
Pennsylvania  lines. 

The  Chairman.  Do  you  have  any  difficulty  in  getting  all  the  accom- 
modations you  want  on  the  Lake  Shore? 

Mr.  MuLLiKEN.  We  never  have  had  very  much  occasion  to  ask  them 
for  any  great  accommodations.  I  suppose  they  could  take  care  of  all 
the  business  we  have  going  east. 

The  Chairman.  Your  principal  business  is  with  the  Michigan  Cen- 
tral. 

Mr.  MULLIKEN.  Yes,  sir. 

The  Chairman.  Is  there  any  difference  in  the  charges  on  the  difler- 
ent  lines? 

Mr.  MuLLiKEN.  ISo,  sir,  the  rates  are  all  the  same. 

Senator  Harris.  Is  there  a  difference  in  time  *? 

Mr.  MuLLiKEN.  Yes,  sir;  there  would  be  a  difference  in  time  where 
we  went  around  by  way  of  Toledo. 

The  Chairman.  You  heard  Senator  Hiscock's  question  to  Mr.  Kay- 
mond  as  to  whether  he  would  have  any  objection  to  the  same  regula- 
tions prevailing  with  respect  to  the  Canadian  lines  as  prevail  with  re- 
spect to  the  American  lines.  Have  you  any  objection  to  such  a  condi- 
tion of  things  ? 

Mr.  MuLLiKEN.  I  think  the  same  regulations  should  obtain  in  both 
cases. 

The  Chairman.  And  if  they  do  not  obtain  now  in  both  cases  you 
would  be  willing  to  advocate  a  law  that  would  have  that  effect? 

Mr.  MuLLiKEN.  Yes,  sir. 

The  Chairman.  And  all  the  people  in  tliis  section  are  anxious  about 
is,  that  you  shall  not  be  cut  oif  from  the  competition  that  you  now  enjoy 
on  account  of  the  Canadian  roads  ? 

Mr.  Mitlliken.  Yes.  sir. 

The  Chairman.  I  think  no  one  has  any  desire  to  interfere  with  that. 

Mr.  Mitlliken.  No,  sir ;  1  have  not  seen  any  indication  of  that. 

The  Chairman.  Have  you  heard  any  complaint  by  railroad  men  that 
they  were  at  a  disadvantage  on  account  of  tlie  interstate  commerce  act 
as  between  themselves  and  the  Canadian  roads? 

Mr.  Mulliken.  No,  sir;  not  as  regards  busiiuvss  from  ont;  point  in 


THE    UNITED    STATES    AND    CANADA.  521 

the  United  States  to  another  point  in  the  United  States  goin^j  lhrou<;li 
Canada,  I  have  beard  complaint  of  discriminations  in  favor  of  sliippers 
living-  in  Canada  sliipping"  from  the  United  States  to  Canadian  points. 

Tlie  Chairman.  On  whose  part  have  you  heard  those  complaints? 

Mr.  MULLIKEN.  By  the  Michigan  Central.  The  Grand  Trunk  paid 
rebates  on  business  going-  to  Canadian  points. 

The  Chairman.  You  know  nothing  as  to  whether  it  was  true  oruotf 

Mr.  MuLLiKEN.  I  do  not, 

The  Chairman.  Have  you  ever  had  to  pay  any  yourself? 

Mr.  MuLLiKEN.  No,  sir;  we  have  never  had  any  complaint  of  that 
kind. 

Senator  Harris.  Do  you  know  whether  the  business  of  the  Canadian 
roads  has  increased  or  diminished  within  the  last  few  months— say  the 
last  six  or  eight  months"? 

Mr.  MuLLiKEN.  1  do  not  know  anything  of  the  kind,  sir. 

Senator  Harris.  As  a  railroad  man,  do  you  know  whether  through 
rates  have  increased  or  diminished  since  the  passage  of  the  interstate 
commerce  act  f 

Mr.  MuLLiKEN.  I  do  not  think  through  rates  have  diminished  at  all. 

Senator  Harris.  Do  you  think  they  have  increased  ? 

Mr.  MuLLiKEN.  No,  sir. 

Senator  Harris.  They  stand  about  where  they  did  before  the  law 
was  passed. 

Mr.  MuLLiKEN.  They  remain  about  the  same. 

Senator  Harris,  Have  local  rates  increased  or  diminished  ? 

Mr.  MuLLiKEN.  Local  rates  have  decreased  very  much. 

Senator  Reagan.  Have  you  been  informed  of  any  discriminations 
against  American  commerce  passing  through  the  Welland  Canal  ? 

Mr.  Mulliken.  I  know  of  nothing  of  the  kind.  I  have  seen  it 
hinted  in  the  papers,  that  is  all. 


STATEMENT  OF  CHARLES  C.  BOWEN. 

Mr.  Charles  C.  Bowen,  of  the  firm  of  Ferry  &  Co.,  seedsmen,  of 
Detroit,  appeared. 

The  Chairman.  Where  do  you  live  ? 

Mr.  Bowen.  I  reside  here  in  Detroit. 

The  Chairman.  What  is  your  business  ? 

Mr.  Bowen.  Seedsn)an. 

The  Chairman.  And  carrying  on  a  large  business? 

Mr.  Bowen.  Yes,  sir. 

The  Chairman.  Yon  are  connected  with  the  largest  business  of  that 
character  in  the  northwestern  country,  I  believe. 

Mr,  Bowen,  I  am  associated  with  other  men  who  carry  on  a  large 
seed  business. 

The  Chairman,  Y'ou  have  yonr  own  views  on  this  subject  and  I 
would  thank  you  to  proceed  to  give  them. 

Mr.  Bowen.  I  came  here  with  the  impression  that  there  was  an  ef- 
fort upon  the  i)art  of  interested  persons  to  blockade  the  business  of 
Detroit  and  Toledo  with  the  northeast  through  Canada. 

The  ('hairman.  To  put  up  a  gate  that  would  prevent  your  getting 
east? 

Mr.  Bowen.  Yes,  sir;  and  therefore  what  little  argument  I  had  to 
make  has  vanished  into  thin  air. 


522  TRANSPOKTATION    INTERESTS    OP 

The  Chairman.  We  thought  that  wonhl  be  so  when  yon  discovered 
wliat  was  really  soils'  on.  Give  us  your  views,  however,  as  it  will  be 
well  to  have  them  in  the. record. 

Mr.  BowEN.  Taking  that  view  of  it,  I  took  occasion  yesterday  to  use  a 
railroad  guide  and  make  certain  notations  with  respect  to  distances. 
From  Port  Huron  to  Buflalo  by  way  of  Detroit  and  Toledo  is  421  miles ; 
the  distance  from  Port  Huron  to  Buffalo  by  way  of  Grand  Trunk  Rail- 
way is  198  miles,  a  difference  of  223  miles  in  favor  of  the  Grand  Trunk. 

The  Chairman.  Do  your  people  here  get  that  advantage  ? 

Mr.  BowEN.  No,  the  peoi)le  at  Port  Huron  do.  The  distance  from 
Detroit  to  Niagara  Falls,  by  way  of  Great  Western  is  229  miles;  the 
distance  from  Detroit  to  Niagara  Falls  by  way  of  Toledo  is  379  miles; 
a  difference  of  150  miles  in  favor  of  the  Great  Western. 

In  view  of  these  facts,  I  submit  that  the  denial  of  these  short  routes  to 
the  commerce  of  Michigan  would  be  an  outrage  to  the  citizens  of  this 
Commonwealth  and  wowld  impose  upon  us  a  burden  destructive  not  only 
to  our  material  interests,  but,  in  my  opinion,  would  foster  and  encourage 
disloyalty  among  our  citizens.  It  seems  to  me  our  Government  can  not 
afford  to  antagonize  a  large  portion  of  her  citizens  unless  some  adeqiuite 
couipensation  is  to  follow.  If  the  British  Government  has  subsidized 
railroads  in  Canada,  and  thereby  brought  immeasurable  advantages  to 
us,  it  is  our  duty  to  foster  this  state  of  affairs. 

If  it  is  desirable  to  have  in  mind  the  acquisition  of  Canada  peacefully, 
we  should  cultivate  close  commercial  relations.  On  the  other  hand, 
it  may  be  urged  that  in  so  doing  we  strengthen  the  hands  of  a  foreign 
people.  True,  we  do  ;  but  if  we  add  to  our  own  strength  by  this  process 
in  the  ratio  of  five  to  their  one,  which  I  think  is  our  experience  in  the 
past,  it  is  the  only  true  course  to  pursue. 

The  Chairman.  You  do  a  great  deal  of  shipping  east  and  west,  do 
you  not '? 

Mr.  BowEN.  Yes,  sir. 

The  Chairman.  What  lines  of  railroad  do  you  ship  over  1 

Mr.  BoWEN.  All  the  lines  that  come  into  Detroit. 

The  Chairman.  From  and  to  where  are  your  main  shipments? 

Mr.  Bowen.  Chiefly  west. 

The  Chairman.  Do  you  raise  your  seed  here? 

Mr.  Bowen.  Some  of  them. 

The  Chairman.  W^here  do  you  buy  the  balance  ? 

Mr.  Bowen.  We  buy  from  $50,000  to  $75,000  worth  in  Europe  an- 
nually. 

The  Chairman.  By  what  route  do  they  come  to  Detroit  ? 

Mr.  Bowen.  Chiefly  by  the  Blue  Line  to  New  York,  or  by  the  Mer- 
chants' Dispatch,  I  sliouhl  say,  which  is  the  New  York  Central  Rail- 
road, and  the  Canadian  division  of  the  J\lichigan  Central. 

The  C/HAiRMAN.  You  ship  mainly  to  the  Western  States? 

Mr.  Bowen.  Yes,  sir ;  we  distribute  these  goods  here. 

The  Chairman.  You  ship  over  the  various  American  railroads  lead- 
ing to  points  which  reach  your  customers? 

Mr.  Bowen.  Yes,  sir. 

The  Chairman.  You  have  come  to  the  conclusion  that  we  are  not 
trying  to  destroy  these  Canadian  roads? 

Mr.  Bowen.  I  judge  so  from  the  remarks  made  here. 

'Jlie  Chairman.  You  do  not  want  to  put  up  an  embargo  against  your 
traveling  or  shipping  over  the  Canadian  roads,  but  if  there  is  anything 
to  be  done  at  all  you  simply  want  the  Canadian  roads  placed  exactly  on 
an  e(]uality  with  our  own  roads'? 


THE   UNITED   STATES    AND   CANADA.  523 

Mr.  BowEN.  That  is  it. 

The  Chairman.  And  to  do  that,  if  it  should  befoimd  necessary,  by 
whatever  arrangement  woukl  be  potential  between  the  two  govern- 
ments.    Have  you  any  objection  to  that? 

Mr.  BoWEN.  No,  sir;  not  the  slightest. 

At  1  o'clock  p.  m.  the  committee  took  a  recess  until  2  o'clock. 
At  the  expiration  of  the  recess  the  committee  resumed  its  session. 


STATEMENT  OF  0.  J.  ATKINSON. 

Mr.  O.  J.  Atkinson,  an  attorney  at  law  of  Port  Huron,  appeared. 

'    The  Chairman.  Where  do  you  reside? 

Mr.  Atkinson.  Port  Huron. 

The  Chairman.  On  which  side  of  the  river? 

Mr.  Atkinson.  On  the  north  side  of  Black  River. 

The  Chairman.  Are  you  an  American  citizen  ? 

Mr.  Atkinson.  I  am  Canadian  born  and  an  American  citizen. 

The  Chairman.  I  suppose  you  have  been  listening  to  these  hearings 
to- day. 

Mr.  Atkinson.  Yes,  sir. 

The  Chairman.  What  is  your  business  or  profession  ? 

Mr.  Atkinson.  I  am  an  attorney  at  law. 

The  Chairman.  If  you  have  anything  to  suggest  on  the  line  of  this 
resolution,  please  proceed  to  state  your  views. 

Mr.  Atkinson.  I  scarcely  know  what  is  pertinent  to  your  inquiry. 

The  Chairman    You  may  talk  in  your  own  way. 

Mr.  Atkinson.  We  have  a  city  on  the  north  bank  of  the  St.  Clair 
Eiver  very  largely  dependent  on  the  commerce  carried  over  the  Cana- 
dian roads  for  its  business  existence.  The  city,  with  its  suburbs,  has 
about  15,000  inhabitants.  We  have  the  Grand  Trunk  system  from  Chi- 
cago. We  have  a  local  road  built  to  Saginaw,  which  has  recently  been 
purchased  by  the  Flint  and  Pere  Manjuette;  we  have  the  Detroit  divis- 
ion of  the  Grand  Trunk  Railroad,  and  we  have  the  Port  Huron,  Sarnia 
and  Duluth  line  ot  steamers.  We  have  about  $35(>,0()0  invested  in  ele- 
vators. 

The  Chairman.  Grain  elevators  ? 

Mr.  Atkinson.  Yes,  sir ;  grain  elevators  recently  constructed.  We 
look  upon  all  those  interests  as  closely  interwoven  with  the  Canadian 
system  of  railroads. 

To  the  east  we  have  the  main  line  of  the  Grand  Trunk  leading  from 
Port  Edward  through  Toronto  east  to  Montreal.  We  also  have  the 
Sarnia  branch  of  the  Great  W\^stern  Railroad,  the  main  line  of  which 
reaches  Detroit.  We  are  nearer  Buflalo  and  all  i)oints  east,  of  course,  by 
that  system  of  railroads  than  by  any  other. 

The  figures  were  given  by  the  last  witness  here  before  you,  Mr.  Bowen. 
Our  shipments  of  merchandise  from  the  east,  as  far  as  we  could  loarn, 
amount  to  about  $5,000,000  a  year,  nearly  all  over  the  Canadian  rail- 
road. 

I  asked  the  mayor  of  Port  Huron  yesterday  to  give  me  a  statement 
of  what  I  conceived  might  be  the  headings  of  inquiries  before  this  com- 
mittee, and  he  gave  rae  a  letter  which  I  will  read.     It  is  as  follows : 


5^4  TRANSPORTATION    INTERESTS    OF 

COMMERCIAL   INTERESTS   OF  PORT   HURON. 

Mayor's  Office 
Port  Huron,  Mich.,  Jnlij  10,  i8rt9. 

Gentlemen:  I  heave,  at  the  request  of  your  committee,  ascertaiued  the  buHincHS 
done  by  some  of  the  principal  dry  goods  and  grocery  merchants  of  tliis  city,  shipping 
from  tlio  East  over  the  Grand  Trunk  Railroad  to  Port  Huron.  I  find  that  in  a  total 
business  of  about  $4,000,000  annually  done  by  our  merchants  during  the  last  year,  at 
at  least  $"<;,500,000  worth  of  goods  were  })urchased  in  the  East  and  shipped  to  Port 
Huron  over  tli(i  Grand  Trunk  Railway.  These  ligures  do  not  include  the  business 
done  by  tlie  foundry  :  nd  machine  shops  of  this  city.  In  my  opinion  this  business 
would  bo  hxrgely  suspended  if  direct  shipment  from  the  East  over  the  Canadian  roads 
was  in  any  way  restricted  or  embarrassed. 

I  also  learn  that  our  city  has  paid  for  railroad  purposes  $150,000  to  the  old  com- 
panies leading  westward,  and  to  the  Narrow  Gauge  $15,000. 

Our  i)eop]e  have  invested  in  railroad  stock |150,000,  all  of  which  was  influenced  and 
induced  by  railroad  connection  through  Canada. 

There  is  invested  in  elevators  in  this  city  as  follows : 

Botsford's  Elevator ■ $135,000 

McMorran&  Co.'s  Elevator 150,000 

Sanborn's  Elevator 65,000 

Jenkiuson's  Elevator   100,000 

Making  a  total  of  $450,000  invested  within  a  few  years,  and  the  successful  opera- 
tion of  which  is  entirely  dependent  upon  railroad  connection  through  Canada. 

The  advantages  of  our  location  have  aided  largely  in  the  establishirient  of  this 
important  branch  of  business,  and  during  the  last  year  there  has  been  shipped  from 
this  point  east  about  7,000,000  bushels  of  grain,  including  that  which  was  purchased 
here  by  our  citizens  and  that  which  was  elevated  here  lor  the  purpose  of  transship- 
ment. 

A  company  has  been  foi'med  here  known  as  the  Port  Huron,  Sarnia  and  Duluth 
lino  of  steamers,  with  three  large  boats,  sheds,  etc.,  costing  $175,000,  and  depend- 
ent upon  the  same  interest  for  their  existence. 

We  have  two  ferry  lines  connecting  Port  Hui'ou  and  Sarnia,  employing  each 
one  boat  in  connection  with  the  railroad  business,  which  boats  are  worth  between 
$20,000  and  $'25,000. 

Our  mef^hants  are  very  emphatic  and  unanimous  in  the  opinion  that  any  restric- 
tions placed  upon  shipments  from  the  east  over  the  Canadian  railroads  will  be  very 
disastrous  to  their  business,  both  in  causing  delays  in  the  receipt  of  goods  purchased 
and  also  increasing  rates  of  freight.  Goods  can  be  received  here  from  New  York  direct 
through  Canada  in  four  days,  while  to  ship  around  on  American  roads  would  take 
from  eight  to  twelve  days. 

Those  engaged  in  the  elevator  business  are  very  pronounced  in  their  expression  of 
opinion  that  to  place  restrictions  upon  the  shipment  of  grain  east  over  the  Canadian 
roads  would  substantially  mean  the  entire  ruination  of  the  elevator  business  in  thia 
city. 

Very  respectfully,  yours, 

J.  B.  McIlwaix. 

The  Port  Huron  Board  op  Trade, 

Port  Huron,  Mich. 

Senator  Harris.  Do  you  rei)reseiit  the  board  of  trade? 

Mr.  Atkinson.  Yes,  sir ;  in  that  regard.  I  have  a  statement  from 
the  custom -house  of  tlie  cars  that  crossed  at  Tort  Huron  during  the 
year  1888-'89.     The  loaded  cars  amounted  to  70,500. 

The  Chairman.  From  where  did  that  statement  come? 

Mr.  Atkinson.  This  I  received  from  the  custom-house  this  morning. 

The  Chairman.  Where  did  the  traffic  come  from  that  crossed  at  that 
point  *? 

Mr.  Atkinson.  From  Chicago  and  other  western  points. 

The  Chairman.  Going  where  ? 

Mr.  Atkinson.    To  points  east. 

The  ('hairman.  Going  to  points  in  the  United  States  or  h\  Canada? 


THE  UNITED  STATES  AND  CANADA. 


525 


Mr.  Atkinson.  In  the  United  States  principally.     I  will  submit  this 
statement  of  loaded  cars. 
The  statement  is  as  follows : 


CARS   CROSSINa  AT   PORT  HURON. 
Number  of  loaded  cars  in  transit  through  Canada  June  liO,  1888,  to  June  30,  1889. 


Date. 


1888 

July 

August 

September 

October 

November 

December 


No.  cars. 


4,617 
4, 37;t 
5,147 
5, 432 
6,762 
8,146 


Date. 


1889. 

January  

February  

March 

April 

May 

June 


No.  cars. 


6.032 
5, 675 
6,888 
5, 219 
6. 274 
5,971 


Mr.  Atkinson.  I  have  a  table  here,  which  was  published  in  yester- 
day's Times,  of  Port  Huron,  showing  the  total  number  of  loaded  :ind 
unloaded  cars,  which  I  will  insert  in  my  remarks,  if  <lesired.  It  contains 
a  good  deal  of  statistics. 

The  Chairman.  What  is  the  nature  of  the  statistics  ? 

Mr.  Atkinson.  The  business  is  divided  into  three  classes  :  Imports  of 
dutiable  goods,  imports  of  dutiable  merchandise,  and  domestic  exports 
to  foreign  countries.  This  list  gives  the  totals  of  exports  and  imports 
for  several  years,  including  1S89.  When  I  say  1889,  I  mean  up  to  the 
last  of  June,  1889. 

The  Chairman.  Did  these  goods  pay  duty,  or  were  they  just  passing 
through  ? 

Mr.  Atkinson.  The  lists  of  free  goods  are  here  and  also  the  list  of 
dutiable  goods. 

The  Chairman.  Are  the  dutiable  and  free  goods  separated  in  those 
tables  1 

Mr.  Atkinson.  Yes,  sir. 

The  Chairman.  What  does  the  importation  of  free  goods  amount  to? 

Mr.  Atkinson.  Eighty-six  thousand  nine  hundred  and  seventy  dol- 
lars. 

The  Chairman.  What  is  the  total  amount  of  the  imports  of  dutiable 
goods  ? 

Mr.  Atkinson.  Fourteen  thousand  seven  hundred  and  fourteen  dol- 
lars. 

The  Chairman.  It  is  a  mere  indication  of  what  the  business  of  your 
town  is. 

Mr.  Atkinson.  The  table  shows  the  business  of  our  city,  which  is 
dependent  upon  the  present  railroad  connections  for  its  existence.  I 
■will  submit  the  table  without  further  comment. 

The  table  is  as  follows : 


526 


TRANSPORTATION    INTERESTS    OF 


IMPORTS  AND   EXPORTS   OF   PORT   HURON. 

Imports  from  and  exports  to  foreign  coantries  from  the  port  of  Port  Huron  tturi.,/j  the 

monlh  of  Jniie,  1889. 


Articles. 


Imports  of  free  goods : 

Horses number.. 

Americau  goods,  rated  . 

Egjis dozen.. 

Fresh  fish pounds . . 

Lobsters 

Hair 

Household  goods 

Unmanufactured  wood. 
All  other  merchandise 

Total  free 


Imports  of   dutiable  mer- 
chandise: 

Horses number . . 

Books 

Barley bushels . . 

Oatmeal pounds . . 

Machinery 

Stone 

Mineral  oil gallons. . 

Salt pounds.. 

Peas bushels . . 

Pulp pounds.. 

Other  merchandise 


Total. 


Total  imports  in  June . 


Amount  duty  collected. 
Amount  duties  bonded  . 


Domestic  exports  to  foreign 
countries: 

Cattle number. . 

Hogs do  — 

Books 

Corn bushels.. 

Com  meal barrels . . 


Quantity. 


81 


7,660 
284, 058 


2,864 
20, 700 


16,  769 

56,  000 

438 

90,  000 


7 
5,433 


14. 000 
626 


Value. 


$28,  877 

3,364 

862 

9,912 

1,500 

774 

28,  728 

ll!l37 

1,816 

86,  970 


1,669 

348 

1,  417 

440 

2,050 

1,452 

432 

345 

297 

2,250 

4,014 


14,714 


101,  684 


2, 184.  20 
1, 121.  75 


3,  000 
39,  777 

1,546 
26, 000 

1,878 


Articles. 


Domestic  exports — Cont'd : 

Oats bushels.. 

Flour barrels . . 

Broom-corn 

Bituminous  coal.  .tons.. 

Cotton pounds . . 

O.  fruits 

Glassware 

Glucose pounds.. 

Grease 

Hides 

Pig-i]'on tons. . 

Macliinery  -    

Mauut'actured  iron 

Manufactured  stone 

Oil-cake pounds.. 

Lard  oil gallons . . 

Paper 

Canned  beef  ..pounds.. 

Pickled  beef do 

Tallow do 

Bacon do 

Hams  do 

Pickled  pork do 

Lard do 

Imitation  butter  do 

Batter do 

Cheese do 

Timothy-seed do 

Leaf-tobac  co do 

Onions bushels . . 

Potatoes do 

Lumber M  feet.. 

Staves 

Hewn  timber. Mcu.  It.. 

Logs 

Wooden  ware 

Manufactured  wood 

Other  merchandise 


Total  exports  for  June . 


Quantity. 


1,000 
7,  129 


311 
636, 224 


Value. 


62,  200 
""366 


291,  900 
3,000 


748, 950 

17.5,  500 

54. 400 

,  652,  848 

213,7.55 

843, 107 

760,  670 

22,  000 

232,  9:10 

424,  330 

58,311 

351,430 

1,  300 

1,500 

1,2:0 


96 


$280 

33,  802 

3,250 

1,011 

66,  804 
20,  125 

4,  525 
2,177 
9, 200 
19,  575 
5,400 
3,550 

2,  000 
1,475 

3,  648 
1,800 
1,1.0 

50,171 

7,020 

:',  176 

540,  803 

l-.>,  238 

51,040 

51  346 

2,800 

30,  281 

33,  947 

1,749 

67,  715 

2,  080 
1,200 

18,750 

3,100 

24,000 

J9,  O.jO 

1,200 

3,  1,50 
15,  094 


1,175,204 


Exports  for  June : 

1888 

1887 


1886 

Exports  year  ending  June  30: 
1889." 


$961, 747 
1,422,057 
1,015,497 


1888. 
1887. 
1886. 


1885 

Imports  year  ending  June  30 : 


1889. 
1888. 
1887 
1886. 
1885. 


789,  345 
501.  120 
667, 199 
297,310 
437,  572 

692,  710 
404,  800 
395,  341 
608,  272 
271,  314 


Mr.  Atkinson.  I  notice  your  first  question  in  the  circular  given  us, 
which  reads : 

Do  the  Canadian  lines  of  transportation  operating  in  the  United  States  affect  the 
commercial  interests  of  this  country  favorably  or  unfavorably  ? 

We  say  favorably. 

In  what  manner  do  they  affect  such  interests  and  to  what  extent  ? 

We  say  they  afford  the  shortest  and  of  necessity  the  clieapest  method 
of  transportation. 

Is  traffic  originating  in  the  United  States,  and  wliicli  would  naturally  bo  carried 
over  American  lines,  diverted  from  them  to  Canadian  lines  ;  and,  if  so,  to  what  extent 
and  by  what  means  ? 


THE  UNITED  STATES  AND  CANADA 


527 


We  should  say  not.  That  is  the  experience  of  myself  and  the  infor- 
mation I  have  gathered. 

Do  you  consider  any  additional  iHgislation  expedient  or  desirable  for  the  regulation 
of  the  coinniercc  carried  ou  by  ra.lroad  or  water-routes  between  the  United  Statea 
and  Canada  ?  If  so,  what  measures  would  you  suggest  ? 

We  have  none  to  suggest,  except  that  the  Interstate  Com merce Com- 
mission expresses  itself  as  unable  to  correct  an  unfairness  in  freight 
with  respect  to  the  eastern  border,  which  operates  against  our  city. 

The  Chairman.  In  what  way  ? 

Mr.  Atkinson.  We  are  charged  the  rate  that  pertains  to  interior 
portions  of  the  State  and  points  farther  west,  and  that  hurts  our  mill- 
ing interest  particularly  and  some  other  interests ;  it  affects  the  eastern 
border  of  the  State,  as  I  understand.  If  the  Interstate  Commerce 
Commission  were  empowered  to  make  an  equitable  adjustment  of  that 
we  should  consider  it  desirable. 

Senator  Harris.  That  would  lead  to  the  Commission  fixing  rates, 
would  it  not? 

Mr.  Atkinson.  That  objection  has  been  raised ; 
committee  suggested  that  it  might  lead  to  that, 
treated  unjustly  and  unfairly  as  to  that  matter, 
like  to  see  it  remedied. 

The  total  number  of  cars  crossing  there,  which  I  omitted  to  give, 
during  the  year  1889  up  to  June  30,  1889 — for  the  year  eudiug  June  30, 
1889 — was  184,000  through  cars  and  13,o00  local  cars,  making  a  total  of 
197,500  cars. 

The  Chairman.  From  where  do  the  through  cars  come  ? 

Mr.  Atkinson.  I  should  say  from  Chicago  chiefi}'. 

The  Chairman.  Those  are  Grand  Trunk  cars  mainly,  are  they  not! 

Mr.  Atkinson.  Weil,  the  Grank  Trunk  now  controls  the  Detroit, 
Grand  Haven  and  Milwaukee. 

The  Chairman.  So  that  they  are  all  Canadian  cars  ? 

I  think  not;  they  are  largely  owned  by  American 


yes,  sir.  One  of  our 
We  feel  that  we  are 
however,  and  would 


Mr.  Atkinson. 

roads. 
The  Chairman 
Mr.  Atkinson. 

American  cars. 


But  connecting  with  Canadian  roads  ? 
Yes,  sir;  Mr.  Howard  tells  me  that  they  are  chiefly 


VESSELS  ENTERED  AND   CLEARED   AT  PORT  HURON. 

I  have  here  a  table  from  the  collector  of  customs,  giving  the  number 
of  vessels  entered  and  cleared,  and  with  your  permission  1  will  insert  it. 
The  Chairman.  You  can  do  so. 
The  table  is  as  follows  : 

Vessels  engaged  in  theforeign  trade  entered  and  cleared  during  the  year  1888  in  the  district 
of  Huron,  State  of  Michigan. 


Month. 


April 

May 

Jane.  

July 

Aucnst 

September. 

Oi'tobor 

November  . 
December  . 

Total 


Entered. 


No. 
17 
68 
70 
08 
88 
90 
90 
4S 
19 


588 


Tons. 
672 
8,  550 
10,C9l 
10,  207 
i:>,  283 
15. 1G6 
12,  661 
4,010 
1,166 


78, 406 


Cleared. 


No. 
20 
47 
49 
72 
67 
65 
57 
36 
15 


428 


Tons. 
725 

3,  4J5 
4,509 

4,  243 
8.C86 

5,  726 
3,  673 
2,  650 
1,020 


34, 677 


528 


TRANSPORTATION    IN'IERESTS    OF 


SHIPMENTS    IN   BOND   FROM   PORT    HURON. 

Mr.  Atkinson.  1  have  a  statement  of  the  value  of  merchandise  re- 
ceived at  and  forwarded  in  bond  Irom  the  port  of  Port  Huron  to  inte- 
rior i)orts  during  the  year  ending  June  30,  1889,  which  I  would  like  to 
jjut  in  the  record  also. 

The  statement  is  as  follows: 

Value  of  merchandise  received  at  mid  fonvarded  in  bond  from  the  port  of  Port  Huron  to 
interior  ports  dtiruuj  tlie  year  ending  June  30,  1889. 

[Does  not  include  luerchandise  received  under  consular-seal  manifests,  which  amounts   to  over 

$1,000,000  a  year.] 


Period. 


1888. 

July 

August 

September  ... 

October 

Kovember  . .. 
December 


"Warehouse 
aud  trans- 
portation. 


Immediate 
transpor- 
tation. 


$2,  308 
599 
4,657 
97, 958 
157,  758 
99,  232 


$13,484 
12,418 
2,  722 
9,  842 
9,413 
7,351 


Period. 


1889. 

January 

February 

March 

April 

May 

June 

Total  for  fiscal  year 


"Warehouse 
and  trans- 
portation. 


.$58,  488 

65,  210 

GO,  995 

8,688 

8,549 

3,183 

573, 625 


Immediate 
transpor- 
tation. 


$406 

'  "4,'438 
13,  415 
4,  512 

78,  001 


Mr.  Atkinson.  This  statement  comes  from  the  collector  of  customs 
of  that  district.  I  should  say  that  the  business  interests  of  our  part 
of  the  State  are  dependent  upon  the  present  condition  of  transporta- 
tion very  largely.  Any  disturbance  of  that  condition  would  be  disas- 
trous.    I  do  not  know  that  I  have  anything  further  to  suggest. 

REGULATION  OF   THE   CANADIAN  ROADS. 


The  Chairman.  You  do  not  suppose,  if  the  American  lines  are  now 
operating  at  a  disadvantage  under  our  system  of  regulation,  that  it 
would  do  your  people  any  injury  if  by  any  arrangement  the  Canadian 
roads  could  be  put  under  the  same  systeui  of  regulation,  do  you  ? 

Mr.  Atkinson.  No,  sir,  unless  the  Canadian  roads  have  some  em- 
barrassments in  their  own  country.  If  they  were  compelled  to  come 
under  our  interstate  commerce  law  and  to  submit  also  to  embarrass- 
ments at  home,  then  they  could  not  compete. 

The  Chairman.  Why  could  not  the  Canadian  lines  compete  if  the  in- 
terstate commerce  act  were  applied  to  them  1 

Mr.  Atkinson.  Jf  they  are  not  as  well  situated  in  Canada  as  the 
American  roads  are  here  they  could  not  live  on  the  same  revenue. 

The  Chairman.  It. is  alleged  here  that  the  Canadian  roads  are  really 
operating  under  the  interstate  commerce  act  in  so  lar  as  respects  any 
commerce  that  touches  the  United  States  in  any  manner.  Now,  if  that 
is  not  true,  and  it  should  be  made  true,  would  there  be  any  objection 
to  it? 

Mr.  Atkinson.  I  do  not  see  any. 

I  might  mention  a  circumstance  here.  The  American  roads  are  sup- 
posed to  control  lines  of  steam  boats,  and  an  independent  boat  or  line 
of  boats  in  no  way  connected  with  the  American  roads,  bringing  freight 
to  Port  Huron,  for  instance,  if  there  were  no  Canadian  takers  for  that 
In^i^Ut,  PQ  Qaniidjaft  rp^^ls,  ^oftld  be  compelled  ^o  pa.y  Jocal  rates  from 


THE    UNITED    STATES    AND    CANADA.  523 

Port  Huron  to  Buffalo,  or  to  some  other  i)oiut,  aud  that  woiiUI  drive  tlio 
boats  oft'  the  lakes.  The  owners  of  the  boats  tell  me  so.  One  ol  thera 
is  here  today,  and  can  tell  you  better  about  it  than  I. 


STATEMENT  OF  ASHLEY  POND. 

Mr.  Ashley  Pond,  solicitor  of  the  Michigan  Central,  appeared. 

The  Chairman.  What  is  your  judgment  from  your  experience,  Mr. 
Pond,  as  to  the  question  of  whether  the  American  roads  and  the  Cana- 
dian roads  are  on  the  same  level,  or  whether  the  American  roads  are  at 
a  disadvantage  in  comparison  with  the  Canadian  roads  under  existing 
circumstances  ? 

Mr.  Pond.  So  far  as  I  have  been  able  to  judge,  the  American  roads 
since  the  interstate  commerce  law  has  been  enacted  have  been  and  are 
now  working  at  a  disadvantage. 

The  Chairman.  Please  explain  the  reason  why. 

THE  GRAND  TRUNK  AND  THE  INTERSTATE  LAW. 

Mr.  Pond.  To  begin  with,  up  to  this  time  there  has  been  a  contro- 
versy as  to  just  to  what  extent  the  Canadian  roads  are  subject  to  this  in- 
terstate commerce  act.  Almost  every  step  of  the  way  has  been  contro- 
verted by  the  Canadian  roads,  or  by  the  Grand  Trunk  road — every  step 
of  the  attempt  to  enforce  the  act  against  them  has  been  controverted. 

Mr.  Ledyard,  in  his  testimony  before  your  committee  in  Isew  York,  1 
think,  cited  the  case  which  came  up  before  the  Commission  on  the  ques- 
tion of  the  tarilfon  coal  from  the  United  States  to  Canada.  Comi)hiint 
was  made  by  the  Michigan  Central  Company  against  the  Grand  Trunk 
road,  charging  a  violation  of  the  interstate  commerce  act,  in  that  v,'ht!e 
they  published  a  tariff"  rate  from  Buffalo  and  Black  llock  to  points  in 
Canada,  they  did  not  adhere  to  those  rates,  but  paid  rebates  to  large 
shippers. 

The  Grand  Trunk  Company  admitted  such  to  be  the  fact,  but  contended 
that  that  traffic  was  not  within  the  interstate  commerce  law.  1  say  ad- 
mitted the  fact.  When  the  case  was  called  up  before  the  Commission 
the  counsel  stated  that  the  road  paid  the  bridge  tolls  over  the  Interna- 
tional bridge,  whatever  they  might  be,  and  then  they  made  a  rate  from 
the  other  side  of  the  bridge  to  the  stations.  But  correspondence  had 
taken  place  betw^een  the  managers  of  the  two  com])anies  and  the  tariff's 
were  before  the  Commission.  The  Commission  held  the  fact  to  be  as 
shown  by  this  correspondence  and  by  these  tariff's — that  the  tariff"  was 
made  from  Buffalo  and  Black  Rock.  Incidentally  the  Commission  held 
that  all  traffic  going  into  Canada  or  through  Canada  into  the  United 
States  was  within  the  act. 

So  far  as  I  am  advised,  while  the  Interstate  Commerce  Commission 
has  so  decided,  the  Grand  Trunk  road  still  adheres  to  its  original 
method  of  business.  Of  course  we  have  no  direct  evidence  of  that 
fact;  we  can  get  none.  The  committee  will  see  that  if  the  claim  of  the 
Grand  Trunk  was  correct  in  that  instance,  that  the  act  does  not  affect 
traffic  going  from  any  point  in  the  United  States  to  any  point  in  Can- 
ada, that  all  the  grain  traffic  for  export  going  to  Montreal  is  outside 
of  the  act. 

The  Chairman.  You  mean  where  it  originates  in  the  United  States? 

Mr.  Pond.  Yes,  sir.  Then,  as  to  the  i)assenger  traffic,  we  are  advised 
6513 34 


530  TRANSPORTATION  INTERESTS  OF 

and  Lave  credible  intbnnatiou — of  course  it  is  difficult  to  muke  Iej;al 
proof — that  a  lower  rate  is  given  to  passeugers  who  cross  over  the  river 
on  the  ferry  and  take  the  Grand  Trunk  road  on  the  other  side  tlian  to 
through  passengers  starting  on  this  side.  Then  there  are  metliods  by 
which  the  Grand  Trunk  can  evade  the  law. 

Senator  Hiscock.  So  far  as  the  last  instance  is  concerned,  I  should 
think  you  would  have  no  trouble  in  demonstrating  whether  the  Grand 
Trunk  does  it  or  not. 

Mr.  Pond.  If  we  could  call  the  passengers  before  us  and  get  the  in- 
forMiation  from  them  we  might  demonstrate  it. 

Senator  HiscoCK.  You  could  send  men  there  and  have  them  pur- 
chase tickets. 

Mr.  Pond.  We  might  do  that,  perhaps,  but  beyond  that  there  is  a 
difficulty  in  getting  at  the  facts  and  getting  the  evidence.  This  Grand 
Trunk  is  a  Canadian  corporation.  It  does  not  come  into  the  Ujiited 
States  for  the  purpose  of  operating  any  railroad  unless  it  bo  the  short 
road  between  Detroit  and  Port  Huron.  I  am  not  certain  as  to  that.  It 
is  possible  that  that  is  another  line  of  the  Grand  Trunk  Ooiupany  in  the 
United  States.  But  the  Grand  Trunk  controls,  as  tlie  largest  stock- 
holder, the  Chicago  and  Grand  Trunk,  which  runs  from  Port  Huron  to 
Chicago.  It  is  the  only  stockholder  of  the  Detroit  and  Milwaukee  Kail- 
road,  which  runs  from  Detroit  to  Grand  Haven,  and  in  that  connection 
owns  a  line  of  steamers  across  the  river.  It  has  recently  acquired  the 
control  of  a  road  from  Muskegon  to  Durand,  or  somewhere  near  there. 
All  these  roads  are  not  operated  by  the  Grand  Trunk  proper,  but  in  the 
name  of  the  several  corporations  under  which  they  are  organized. 

Now,  these  companies  can  literally  obey  the  interstate  commerce  law, 
and  rebates  can  be  given  by  the  Grand  Trunk  proper  in  Canada,  the 
payment  of  which  it  is  very  difficult  to  discover.  We  assume  that 
the  Grand  Trunk  is  not  adhering  to  the  law  from  the  results  of  its  busi- 
ness compared  with  the  business  of  the  American  roads.  Thus,  for  quite 
a  number  of  weeks,  I  do  not  know  but  months,  some  two  months  ago, 
the  Grand  Trunk  took  out  of  Chicago  from  30  to  40  per  cent,  of  all  the 
business  for  Eastern  points.  I  sa^'  the  Grand  Trunk  Company.  I  mean 
the  Chicago  and  Grand  Trunk  Company,  the  Chicago  connection  of  the 
Grand  Trunk. 

The  Chairman.  As  the  connection  of  the  Grand  Trunk  between 
Chicago  and  Port  Huron? 

Mr.  Pond.  Yes,  sir.  Now,  we  know  from  past  experience  that  adher- 
ing to  the  law — that  is,  adhering  to  the  tariff  rates  as  published  by  the 
Grand  Trunk  and  filed  with  the  Interstate  Commerce  Commission — 
would  not  naturally  secure  them  any  such  amount  of  business. 

The  Chairman.  What  was  the  character  or  quality  of  most  of  that 
business  ? 

Mr.  Pond.  Grain  and  dressed  beef.  The  Grand  Trunk  for  the  last 
two  years  has  been  taking  a  large  portion  of  the  dressed  beef  business. 

The  Chairman.  At  published  rates  ? 

Mr.  Pond.  I  suppose  so.  The  Grand  Trunk  Company  made  an  agree- 
ment some  two  years  since  with  large  dressed  beef  shippers,  fixing  tho 
rates  for  some  time  in  the  future.  I  do  not  remember  for  how  long. 
By  this  arrangement  or  agreement,  I  think  the  maximum  rate  was  40 
and  the  minimum  30,  and  1  presume  it  published  its  rates  accordingly. 

In  addition  to  that  the  Grand  Trunk  has  been  paying  a  cent  a  mile 
for  the  use  of  the  refrigerator  cars  which  are  owned  by  the  sliipjx'rs, 
while  the  other  roads  were  paying  but  Ihree-cpiarters  of  a  cent.  This 
cent  a  mile  seriously  affects  the  rate^  but  it  is  not  published  as  a  part 


THE  UNITED  STATES  AND  CANADA.  531 

of  the  rate.     The  tariff  sheets  do  not  show  what  uiileage  is  paid  for  the 
use  of  the  cars. 

The  Chairman.  Yon  say  the  tariff  sheets  do  not  show  it? 

Mr.  Pond.  No,  sir;  they  do  not.  Our  ])rincii>al  evidence,  excoptinj? 
the  cases  I  have  stated,  ti.at  the  Grand  Trunk  does  not  adhere  to  liio 
law,  is  the  fact  that  it  takes  a  much  larger  pro[)ortion  of  the  business 
than  it  could  naturally  be  expected  to  take  if  it  adheied  to  its  publislied 
tariffs. 

The  Chairman.  What  was  the  per  cent,  that  the  Grand  Trunk  car- 
ried during  the  period  you  mentioned  ? 

Mr.  Pond.  From  30  1:o  40  per  cent.  I  think  over  40  per  cent,  for  one 
or  more  weeks. 

The  Chairman.  When  was  that? 

Mr.  Pond.  I  should  say  from  two  to  four  months  ago. 

The  Chairman.  What  is  their  per  cent,  now  ? 

Mr.  Pond.  The  report  for  last  week  puts  it  at  18  per  cent.,  I  think. 

The  Chairman.  How  do  you  account  for  such  a  dr()[»[)ing  down  f 

Mr.  Pond.  I  account  for  it  on  the  supposition  that  for  the  hist  two 
weeks  they  have  been  adhering  more  strictly  to  the  law,  maintaiuing 
published  rates,  and  making  no  concessions  in  any  form. 

The  Chairman.  How  is  it  that  they  happen  to  do  that  now? 

Mr.  Pond.  It  happens  to  occur  in  connection  with  the  movements  of 
this  committee.     [Laughter.] 

Senator  HARRIS.  About  how  long  did  that  condition  of  things  con- 
tinue in  which  they  were  carrying  over  their  supposed  due  proportion  of 
business  ? 

Mr.  Pond.  I  do  not  know  exactly.  My  attention  was  called  to  it  at 
the  meeting  of  the  Central  Traffic  Association  in  Chicago. 

The  Chairman.  What  indicalions  have  you  now  that  the  Grand 
Trunk  is  adhering  to  the  published  rates? 

Mr.  Pond.  I  suppose  so  from  the  fact  that  they  are  not  getting  the 
lion's  share  of  the  business.  Under  the  ohl  pooling  arrangement  they 
were  allowed  somewhere  near  22  per  cent,  of  the  business. 

The  Chairman.  Their  percentage  is  a  little  below  that  now,  is  it  not? 

Mr.  Pond.  Yes,  sir. 

The  Chairman.  What  did  you  say  their  percentage  was  now  ? 

Mr.  Pond.  The  report  for  last  week  states  it  to  be  18  per  cent.  It  va- 
ries from  week  to  week. 

The  Chairman.  For  what  road  are  you  solicitor? 

Mr.  Pond.  I  am  solicitor  for  the  Michigan  Central. 

The  Chairman.  What  share  of  the  business  is  the  Michigan  Central 
getting  from  here? 

]\]r.  Pond.  1  can  not  tell  you  what  share  of  the  business  wo  are  get- 
ting from  Detroit.  Of  the  passenger  business  we  get  the  larger  pro- 
portion. 1  am  not  in  the  operating  department  and  do  not  keep  track 
of  exactly  how  the  traffic  runs. 

The  Chairman.  You  spoke  a  few  moments  ago  of  passengers  cross- 
ing the  river  by  ferry  and  then  taking  the  Grand  Trunk.  Your  pas- 
sengers could  cross  the  river,  too,  could  they  not,  and  then  start? 

Mr.  Pond.  Our  passengers  could  go  across  the  river  and  start  sim- 
ilarly; but  we  have  desired  to  obey  the  law  strictly,  because  we  have 
felt  a  fear,  whether  there  is  any  occasion  for  it  or  not  I  do  not  know, 
that  if  the  Canadian  roads  did  not  obey  the  law  there  migiit  be  some 
restrictive  legislation  that  would  greatly  decrease  the  value  of  our  roads 
on  the  other  side  of  the  river.  I  do  not  know  what  we  might  not  do  if 
we  were  not  under  some  fear. 


532  TRANSPOKTATION    INTERESTS    OF 

The  Chairman.  Do  you  think  that  legislation  which  would  in  any- 
wise restrict  Canadian  roads  would  injure  you  on  the  other  side  of  the 
river  ? 

Mr.  Pond.  Yes,  sir;  it  would  ruin  the  Michigan  Central  on  the  other 
side  of  the  river.  Its  main  line  is  from  Detroit  to  Chicago.  Then  it 
has  the  other  lines  further  north.  It  operates  a  road  from  Jackson  to 
the  Straits  of  Mackinaw,  and  a  road  from  Detroit  to  Bay  City,  con- 
necting at  Bay  City  with  that  line;  also  a  branch  from  Jackson  to 
Grand  Kapids.     So  that  its  business  naturally  comes  to  Detroit. 

REGULATION  OF   THE   CANADIAN  ROADS. 

The  Chairman.  Is  it  your  opinion  or  not,  Mr.  Pond,  that  something 
different  from  what  now  exists  ought  to  be  done  to  protect  American 
roads  as  against  Canadian  roads  ? 

Mr.  Pond.  I  think  that  either  the  interstate  commerce  law  should  be 
repealed  or  that  it  should  be  so  amended  that  the  Canadian  roads 
would  be  made  subject  to  the  same  restrictions  as  the  American  roads. 

The  Chairman.  Do  you  think  that  they  are  not  subject  to  such 
restrictions  now"? 

Mr.  Pond.  Yes,  sir ;  practically. 

The  Chairman.  Do  they  evade  the  law  ? 

Mr.  Pond.  Yes,  sir ;  and  I  do  not  think  there  is  any  remedy  pro- 
vided by  the  law. 

The  Chairman.  As  a  lawyer,  have  you  any  suggestions  that  would 
enable  the  American  Congress  to  improve  the  situation  in  that  regard  H 

Mr.  Pond.  It  is  a  situation,  I  must  confess,  which  it  is  difficult  to  im- 
prove. I  think  some  things  can  be  done,  however,  to  improve  the  situa- 
tion. 

The  Chairman.  What  are  they? 

Mr.  Pond.  My  idea  is  that  these  Canadian  roads  should  be  required 
to  obtain  licenses  from  the  Interstate  Commerce  Connnission  to  enter 
iuto  this  traffic,  and  perhaps  give  bond  to  comply  with  the  law. 

The  Chairman.  And  forfeit  the  bond  in  case  of  violation  of  the  law  ? 

Mr.  Pond.  Certainly.  In  my  opinion  they  should  be  required  to 
obtain  a  license  from  the  Interstate  ('ommerce  Commission,  and  the 
license  should  be  revoked  if  they  do  not  obey  the  law. 

The  Chairman.  So  that  if  a  road  did  not  obey  the  law  in  all  particu- 
lars the  license  should  be  revoked  and  they  should  go  out  of  business 
so  far  as  the  United  States  business  is  concerned  ? 

Mr.  Pond.  Yes,  sir;  so  far  as  they  would  be  compelled  to  go  out  of 
business  by  being  refused  permission  to  use  through  cars  in  this  through 
traffic.  They  might,  perhaps,  obtain  some  passenger  business  by  trans- 
ferring passengers  from  this  side  of  the  river  to  the  other,  and  then  to 
the  Niagara  frontier,  and  some  freight  business  by  vessels  into  Canada, 
not  through  Canada. 

The  Chairman.  Your  road  from  here  to  the  bridge  being  a  Canadian 
road,  would  you  put  it  under  the  same  restrictions  as  the  Canadian 
roads  ? 

Mr.  Pond.  Yes,  sir;  we  ask  no  favors;  we  ask  no  discrimination. 
We  are  willing  to  stand  ui)ou  the  same  footing  as  all  Canadian  roads; 
we  expect  to  stand  there. 

Senator  HiscocK.  And  you  want  them  to  stand  on  the  same  footing 
with  you  ;  you  only  ask  that  no  discrimination  be  made? 

Mr.  Pond.  Yes,  sir. 

Senator  HiscocK.  You  do  not  want  any  legislation  which  x^uts  the 


THE    UNITED    STATES    AND    CANADA.  533 

Canadian  roads  under  any  other  restrictions  than  you  are  placed  un- 
der? 

Mr.  PoKD.  No,  sir;  no  more  than  the  American  roads  generally  are 
under.  We  never  bave  suggested  any  different  legislation  for  the  Cana- 
dian roads  than  for  the  American  roads. 

Keference  lias  been  made  to  the  Vanderbilt  roads.  The  Michigan 
Central  is  a  Vanderbilt  road.  T  have  heard  this  subject  discussed  many 
tinu  s  by  the  Vanderbilt  ])eople,  by  the  presidents  of  the  various  Van- 
derbilt roads.  The  presidents  of  the  so-called  Vanderbilt  roads  hohl 
monthly  meetings  in  the  Grand  Central  depot  at  New  York,  when  all 
questions  affecting  the  roads  are  discussed.  I  have  attended  many  of 
those  meetings,  and  1  have  never  yet  heard  a  suggestion  from  the  i)res- 
ident  of  any  of  the  Vanderbilt  roads  that  there  should  be  any  legisla- 
tion which  would  be  more  severe  on  the  Canadian  roads  than  on  the 
American  roads.  Under  the  act  as  it  now  stands  it  is  very  difficult  to 
get  effective  jurisdiction  over  the  Grand  Trunk  road. 

The  Chairman.  You  think  the  American  roads  are  at  a  disadvantage 
as  things  now  are  on  account  of  the  interstate  commerce  act? 

Mr.  Pond.  Y^es,  sir. 

The  Chairman.  You  have  studied  this  question  some  time.  Can 
you  tell  us  in  what  tvay  the  interstate  commerce  act  hampers  or  incon- 
veniences American  roads  in  competition  with  Canadian  roads'? 

Mr.  Pond.  The  American  roads  are  required  to  i)ublish  their  tarilfs 
to  all  points  and  to  tile  copies  with  the  Interstate  Commerce  Conunis- 
siou.  They  are  forbidden  to  increase  the  rates  except  upon  ten  days' 
public  notice,  or  to  reduce  them  except  upon  three  days'  public  notice, 
and  they  are  required  under  heavy  penalties  to  adhere  to  these  taritfs. 
The  Canadian  roads,  as  I  have  already  suggested,  may,  by  various 
shifts  and  devices,  evade  that  provision.  It  is  difficult  to  detect  the 
evasion,  aiul  more  difficult  to  reach  it  if  the  evasion  is  detecte<l — that 
is,  if  the  evasion  is  in  Canada,  as  it  may  be,  and  we  suppose  it  to  be,  if 
there  is  any  evasion,  and  we  believe  there  are  such  evasions — while  the 
American  roads  are  within  reach  of  process  at  all  times. 

The  Chairman.  Your  remedy  is  a  license? 

Mr.  Pond.  Yes,  sir;  a  license  is  my  remedy. 

The  Chairman.  Dow  would  it  do  to  apply  licenses  to  all  roads,  Amer- 
ican as  well  as  Canadian  ? 

Mr,  Pond.  I  see  no  objection  to  it.  These  Canadian  roads  should 
obtain  licenses  through  the  Interstate  Commerce  Commission. 

The  Chairman.  That  subject  was  discussed  by  the  committee  before 
the  law  was  formulated,  and  it  was  a  question  in  our  minds  then 
whether  that  was  not  one  of  the  means  of  securing  a  proper  observance 
of  the  law ;  but  it  seemed  to  be  thought  at  that  time  that  it  might  be  a 
little  troublesome  and  cumbersome  to  require  licenses  to  be  given  to 
every  road  in  the  country,  so  we  did  not  adopt  it. 

Mr.  Pond.  There  is  a  "provision  now  that  traffic  going  through  Can- 
ada, if  it  is  not  carried  in  compliance  with  the  law,  shall  be  made  subje(!t 
to  duty,  but  it  is  impossible  to  detect  its  not  being  carried  so  in  time  to 
enforce  the  i)aymeut  of  the  duty. 

There  is  another  provision  in  the  sixth  section  authorizing  an  injunc- 
tion restraining  the  company  from  taking  traffic,  but  it  is  very  difficult 
to  enforce  that.     So  far  as  f  can  see  it  is  not  practicable  to  enforce  it. 

DIFFICULTIES   IN   SECURING   JURISDICTION. 

I  said  it  was  very  diflicult  to  get  jurisdiction  over  the  parties.  I 
handed   to  the   Interstate  Commerce   Commission   at  Chicago  some 


634  TRANSPORTATION    INTERESTS    OP 

papers  a  month  or  six  weeks  ago  with  the  suggestion  that  they  seemed 
to  call  for  investigation.  They  were  papers  that  I  supi)Osed  proved 
that  the  Grand  Trunk  was  violating  the  act.  I  was  notified  a  few  days 
since  tliat  these  papers  had  been  sent  by  the  Oominission  to  the  United 
States  district  attorney  of  this  district.  Thedistrict  attorney  advised  me 
that  he  had  been  notified,  and  asked  me  to  call  and  sec  him.  We  looked 
over  the  ground  and  we  found  that  there  was  no  one  against  whom  a 
complaint  could  be  njade  for  the  violation  in  that  case  and  against  whom 
there  would  be  process  except  the  local  agent  at  Port  Huron,  who  was 
doubtless  an  innocent  party.  Of  course  when  the  grand  jury  is  in  ses- 
sion indictments  may  be  found  and  the  parties  may  be  reached,  i)er- 
haps  may  be  caught  within  the  jurisdiction,  or  perhaps  brought  into 
our  jurisdiction. 

THE  GRAND  TRUNK  COAL  CASE. 

Senator  Htscock.  I  want  to  ask  you  a  question  on  the  subject  you 
touched  a  while  ago,  and  that  was  this  decision  in  reference  to  the  coal 
traffic.  I  understand  what  you  claimed  was  this,  that  the  Canadian 
roads  take  tolls  over  their  United  States  roads  — over  the  roads  which 
they  own  and  control  in  the  United  States? 

Mr.  Pond.  In  this  particular  case  they  did  not  own  or  control  the 
road,  but  they  joined  in  a  tarifit.  They  published  a  general  tariff  under 
the  sixth  section  of  the  act. 

Senator  Hiscock.  They  did  not  control  the  road,  but  published  a 
joint  tariff,  and  then  they  gave  a  rebate  to  the  shipper. 

Mr.  Pond.  Gave  a  rebate  to  the  shipper. 

Senator  HiscocK.  To  the  consignee  or  to  the  consignor? 

Mr.  Pond.  1  supposed  the  consignee  and  the  consignor  were  the  same. 

Senator  Hiscock.  That  makes  no  ditference,  but  what  you  complain 
about  is  this:  that  where  they  do  that  with  relorence  to  international 
trade  they  are  able  to  discriminate  in  favor  of  one  United  States  road 
as  against  another  United  States  road?    That  is  what  you  claim. 

Mr.  Pond.  No  ;  I  do  not  claim  that. 

Senator  Hiscock.  That  is  the  only  thing  you  can  complain  of,  is  it 
nof? 

Mr.  Pond.  Not  at  all.  It  is  not  the  discrimination  in  favor  of  one 
road  in  the  United  States, as  against  another. 

Senator  Hiscock.  But  if  the  United  States  roads  have  an  even  com- 
petition, or  just  competition,  in  carrying  cojil,  or  any  other  freight,  to 
the  Canadian  line,  why  should  the  United  States  roads  find  fault  with 
what  is  done  on  the  other  side "? 

Mr.  Pond.  For  various  reasons.  In  the  first  place,  there  might  be  a 
discrimination  in  favor  of  certain  purchasers  in  the  United  States  if  not 
in  favor  of  certain  roads  transporting  in  Canada. 

Senator  Hiscock.  That  does  not  affect  the  roads  unless  it  has  the 
effect  of  discriminating  in  favor  of  certain  routes. 

The  Chairman.  Is  not  this  true  in  the  coal  case ;  that  the  published 
rate  between  a  point  in  the  United  States  and  a  point  in  Canada  for 
the  shipment  of  coal  was  so  and  so  and  that  road  pretended  to  be  car- 
rying coal  at  that  rate  between  it  and  another  road  that  published  the 
same  rate  for  the  carriage  between  those  points?  Now,  that  road  paid 
a  secret  rebate  which  made  the  rate  actually  paid  less  than  the  pub- 
lished rate,  and  the  Grand  Trunk  claimed  that  it  had  a  right  to  do  that. 

Senator  Hiscock.  I  can  understand  this,  that  there  ought  not  to  be 
such  an  arrangement  and  such  rules  and  regulations  as  would  prevent 


THE    UNITED    STATES    AND    CANADA.  535 

an  open  and  an  even  competition  between  American  routes  to  the  Cana- 
dian line ;  but  1  can  not  nee  what  we  have  to  do  with,  or  what  reason 
we  have  for  interfering  with,  the  traffic  when  it  crosses  the  Canadian 
line,  because  then  it  is  a  question  as  between  the  Canadian  road. 

Mr.  Pond.  If  the  Canadian  roads  can  take  business  that  comes  from 
the  United  States  out  of  this  country  and  pay  rebates  on  it  in  Canada, 
it  can  turn  the  great  vohune  of  export  business  through  Canada.  It 
can  take  the  export  business  to  Montreal. 

Senator  IIiscocK.  No. 

Mr.  Pond.  Why  not  ? 

Senator  HiscocK.     Because  it  does  not  touch  export  business. 

Mr.  Pond.  Oh,  yes.     I  only  gave  the  coal  case  as  an  ilhistration. 

Senator  HiscocK.  I  can  see  an  injustice  in  permitting  them  to  allow 
rebates  on  Canadian  business — on  Canadian  treights — where  it  is  exi)ort 
trade ;  but  I  can  not  see  any  injustice  in  their  allowing  a  rebate  on  goods 
consumed  in  Canada,  unless  their  American  connection  gets  some  bene- 
fit from  it,  can  you  ? 

Mr.  Pond.  I  think  I  can. 

Senator  IIiscock.  1  would  like  to  have  you  point  it  out.  T^Tow,  I 
never  could  see  any  injustice  in  tliat  Buffalo  case. 

Mr.  Pond.  I  do  not  undertake  to  say  that  in  tlie  Buffalo  case  there 
was  any  injustice,  and  1  will  not  undertake  to  say  whether  or  not  the 
principle  involved  was  one  that  applied  in  other  cases. 

Senator  Hisgock.  That  principle  would  only  extend  to  trade  between 
here  and  Canada,  and  not  the  export  trade. 

Mr.  Pond.  Why  not"? 

Senator  EIiscock.  The  principle  would  not. 

Mr.  Pond.  Oh,  yes. 

Senator  Hiscock.  The  Commission  was  not  called  upon  to  decide  in 
reference  to  export  trade. 

Mr.  Pond.  They  could  possibly  have  decided  that  question  without 
doing  that. 

Senator  Hiscock.  Certainly.  Now,  we  will  go  back  to  the  other 
question.     Can  you,  yourself,  see  any  injustice  in  tliat  matter! 

Mr.  Pond.  I  see  this  injustice.  How  much  of  the  business  and  tvafiio 
from  the  United  States  into  Canada  is  traftic  that  originates  with  Amer- 
ican shippers  in  which  they  are  interested  in  the  shipnu'nt  to  the  Cana- 
dian point?  The  traffic  is  to  Canadian  points  from  American  points, 
and  unless  the  law  applies  in  such  cases  there  may  be  discrimination 
as  between  American  shippers,  and  in  the  giving  of  rebates  to  the 
larger  shippers  that  are  not  given  to  the  small  ship[)ers.  The  Grand 
Trunk  admitted  in  that  case  that  it  paid  this  rebate  to  large  shippers. 

Senator  Hiscock.  So  that  would  be  a  question  as  between  our  pro- 
ducers and  not  as  between  our  railroads  ? 

Mr.  Pond.  That  would  be  a  question  as  between  our  producers  and 
not  a  question  as  between  our  railroads;  but  this  interstate  commerce 
law  was  primarily  for  the  benefit  of  producers. 

Seiuitor  Hiscock.  Therefore  you  say  this,  that  where  the  Canadian 
road  is  permitted  to  allow  rebates  to  the  producers,  giving  them  rates 
below  the  published  rates,  and  to  discriminate  in  favor  of  one  Ameri- 
can producer  as  against  another,  that  that  works  injury  to  the  small 
American  producers,  and  it  ought  not  to  be  tolerated  ? 

Mr.  Pond.  Yes,  and  again  the  same  ])nnciple  works  the  other  way. 
We  i)urchase  in  Canada  for  consumers  in  the  United  States.  Large 
purchases  are  made  there.  Now,  can  it  be  that  under  this  act  the  Cana- 
dian railroads  may  discriminate  up  to  the  line  in  the  United  States  be- 


536  TRANSPORTATION  INTERESTS  OF 

tween  shippers  in  Canada  to  points  in  the  United  States  ?  If  that  be  so, 
would  not  there  be  some  injustice? 

Senator  Hiscock.  The  effect  there  would  be  as  a  matter  of  course  to 
give  an  undue  advantage  to  large  purchasers  on  this  side,  because  this 
discrimination  in  rates  makes  a  lower  price  for  the  goods. 

Mr.  Pond.  In  the  coal  case  I  said  that  the  tariff  was  a  joint  tariff 
with  American  railroads,  but  the  same  thing  might  be  done  by  the 
Grand  Trunk  among  the  roads  it  controls  in  the  United  States,  and  that 
would  affect  the  other  roads  in  the  United  States.  It  might  be  done  in 
connection  with  the  Chicago  and  (xrand  Tiuuk,  and  the  Chicago  and 
Milwaukee,  and  thus  reach  the  entire  traffic  of  the  Northwest.  If  the 
law  ])ermits  such  a  transaction  as  the  one  involved  in  the  coal  case  it 
wouhl  admit  of  similar  transactions  in  other  trafitic,  and  we  assume  that 
such  transactions  are  taking  place  all  the  time. 

Senator  iliscocK.  And  you  say  if  that  be  tolerated  the  effect  would 
be  to  divert  the  export  trade  from  the  United  States'? 

Mr.  Pond.  Yes,  sir;  to  the  extent  of  the  capacity  of  the  steamers  that 
could  be  obtained  to  run  from  Montreal  abroad,  and  in  the  same  way 
to  divert  the  import  tratle. 

The  Chairman.  You  have  a  line  of  steamers  of  your  own,  have  you 
not? 

Mr.  Pond.  We  have  no  steamers. 

The  Chairman.  You  know  nothing  about  the  water  shipment,  there- 
fore? 

Mr.  Pond.  I  know  something  about  the  water  shipment. 

The  Chairman.  Do  you  know  anything  about  discriminations  in  the 
matter  of  transportation  through  the  Canadian  canals? 

Mr.  Pond.  No,  sir;  1  do  not,  except  what  I  have  seen  in  the  public 
prints. 


STATEMENT  OF  WILLIAM  G.  BROWNLEE. 

Mr.  William  G.  Brownlee,  a  lumber  manufacturer  of  Detroit, 
appeared. 

The  Chairman.  Do  you  reside  here,  Mr.  Brownlee  ? 

Mr.  Brownlee.  Yes,  sir. 

The  Chairman.  What  is  your  business? 

Mr.  Brownlee.  Manufacturing  lumber  principally'  and  exporting  it. 

The  Chairman.  You  heard  the  reading  of  the  resolution  under 
which  we  are  acting,  and  have  an  idea  of  what  we  are  endeavoring  to 
ascertain,  I  suppose  ? 

Mr.  Brownlee.  I  was  not  in  when  the  resolution  was  read,  but  I 
have  a  general  idea  of  the  line  of  inquiry. 

The  Chairman.  If  you  have  any  facts  to  submit  or  any  opinion  to 
express  on  the  general  subject,  you  may  proceed  to  do  so. 

THE  question  OF  REBATES  FROM  THE  GRAND  TRUNK. 

Mr.  Brownlee.  I  have  listened  to  Mr.  Pond's  statement  in  regard 
to  discriminations  on  the  part  of  the  Grand  Trnnk.  I  have  been  a 
shi[)per  over  the  Grand  Trunk  and  other  roads  for  a  great  many  years, 
certainly  for  twenty  years,  and  I  have  never  received  a  cent  from  the 
Grand  Trunk  Kailroad  in  the  way  of  rebates,  and  quite  recently  we  have 
been  exporting  by  the  Grand  Trunk  Kailroad. 


THE    UNITED    STATES    AND    CANADA.  537 

The  Chaiuman.  From  wLere? 

Mr.  Brownlee.  From  Detroit. 

The  Chairman.  To  where "? 

Mr.  Brownlee.  Via  New  York  to  Glasgow. 

The  Michigan  Ceutral  was  very  much  troubled  because  our  mill  was 
on  their  line  and  we  shipped  by  the  Grand  Trunk.  I  Irequentl.v  as- 
sured the  Michigan  Central  people,  v/ho  used  us  nicely,  that  1  would 
always  give  them  the  preference  at  the  same  ])rice,  and  they  did  not 
understand  why  we  shipi)ed  by  the  Grand  Trunk,  Our  reason  for  so 
doing  was  because  we  got  abetter  rate  by  the  Grand  Trunk  Kailroiul.  A 
few  years  ago  the  New  York  Central  had  an  export  agent,  Mr.  Mcll- 
henney,  who  quoted  high  rates,  and  I  warned  the  people  here  that  he 
was  dishonest  and  he  was  dividing  up.  He  was  the  agent  here  for  all 
these  exi)ort  lines  from  New  York.  After  they  had  lost  money  they  be- 
lieved what  I  said  of  him,  and  I  believe  to-day  the  reason  the  Michigan 
Central  has  not  got  its  proportion  of  the  export  trade  is  because  tlieir 
agents  are  inefficient  Or  dishonest.  I  believe  T  am  the  largest  exporter 
from  this  city.  The  Michigan  Central  charges  $0  to  shift  a  car  a  few 
yards  on  to  the  Grand  Trunk  line.  If  they  had  as  honest  agents  as  the 
agents  of  the  Grand  Trunk  1  would  give  them  all  my  export  business. 
That  is  the  only  way  they  can  get  it.  It  seems  strange  that  since  the 
passage  of  the  interstate  commerce  act  they  fail  toshow  a  single  instance 
where  the  Grand  Trunk  paid  an  American  shipper  a  single  cent  of  re- 
bate. 

The  Chairman.  You  say  you  ship  over  the  Grand  Trunk  altogether  ? 

Mr.  Brownlee.  I  have,  this  summer,  simply  because  we  are  given  a 
better  ocean  rate.  The  freight  goes  from  Detroit  over  what  is  called  the 
Great  Western,  which  is  a  division  of  the  Grand  Trunk,  and  then  by 
the  Erie  and  West  Shore  to  New  York  and  thence  by  the  steam-ship  line 
with  which  they  can  make  the  best  rate.  We  ask  them  for  a  rate  on  so 
many  cars  right  through.  The  rate  to  New  York  is  19i  centson  our  lum- 
ber, and  the  only  ditierence  is  in  the  ocean  rate.  The  inland  rate  is  pre- 
cisely the  same  by  all  the  roads. 

Senator  HiscocK.  That  is  just  what  is  complained  of,  that  there  is 
some  arrangeuient  between  the  Grand  Trunk  and  the  steamship  line 
by  which  the  Grand  Trunk  gets  a  rebate  on  ocean  rates. 

Mr.  Brownlee.  They  warn  us  and  write  us.  We  can  give  you  the 
written  rates. 

Senator  HiscoCK.  That  is  one  of  the  very  grounds  of  complaint,  and 
you  are  the  first  witness  who  has  expressed  himself  on  the  (juestion. 
The  manager  of  the  Grand  Trunk  denied  it.  Be  said  he  knew  of  noth- 
ing of  the  kind,  and  yet  the  allegation  was  made  to  us  that  it  was  sup- 
posed that  some  arrangement  was  in  force  between  the  Grand  Trunk 
and  the  foreign  steam-ship  lines  by  which  the  latter  made  some  rebate 
to  them,  or  else  that  some  proportion  of  the  laiul  rate  was  given,  so  that 
they  could  make  lower  rates  to  you  to  ports  across  the  ocean,  and  that 
is  where  it  was  claimed  the  cheat  was. 

Mr.  Brownlee.  That  may  be.  Why  I  si)eak  of  the  agent  in  New 
York  is  because  in  one  instance  I  proved  that  he  quoted  us  a  higher 
rate  than  the  steamer  received.     He  pocketed  the  steal  himself. 

The  Chairman.  That  individual  steal  f 

Mr.  Brownlee.  Yes;  but  the  railroad  ought  to  have  discharged  him. 
I  called  their  attention  to  his  dishonesty  years  before.  1  have  no  means 
of  knowing  whether  the  steam-ship  companies  deal  more  liberally  with 
the  Grand  Trunk  than  with  other  roads. 

Senator  Hiscock.  The  American  roads  do  not  claim  that  they  deal 


638  TRANSPORTATION    INTERESTS    OF 

more  liberally  with  them,  but  what  they  assumed  was  tliis,  tlint  the 
Grand  Trunk  line  gave  to  the  steam-sliip  line  a  certain  proportion  of 
the  rate.  In  other  words,  that  there  was  some  arrangement  between 
the  steam-ship  company  and  the  Canadian  trunk  lines  by  which  the 
steam-ship  comjiany  could  afford  to  give  the  freight  over  the  Canadian 
line  a  lower  rate  than  they  could  ireight  coming  over  the  American 
through  line. 

Mr.  Brownlee.  The  American  lines  and  the  Grand  Trunk  ship  by 
the  same  steam-ship  lines.  We  have  shipped  by  the  way  of  Montreal 
sometimes,  but  not  this  season.  The  ocean  rate  from  Montreal  is  about 
the  same  as  from  New  York,  and  the  inland  rate  a  little  less  to  Montreal 
than  to  Kew  York,  and  I  think  that  the  Michigan  Central  and  the  Lake 
Shore,  and  all  these  roads  ought  to  get  just  as  good  ocean  rates  as  any- 
body else. 

Senator  Hiscock.  They  can  unless  there  is  an  allowance  made  by 
one  trunk  line  to  the  steamship  line,  which  would  be  cheating,  of  course, 
enabling  them  to  make  you  lower  rates  than  tlie  othewrailroads. 

Mr.  Brownlee.  It  seems  improbable,  inasmuch  as  they  send  me 
these  letters  without  any  secrecy,  which  I  should  not  think  they  would 
do  if  anything  of  that  kind  w^as  being  done. 

Senator  Hiscock.  But  is  it  not  remarkable  that  the  steam-Ship  line 
can  give  you  a  lower  ocean  rate  for  your  freight  going  over  the  Grand 
Trunk  than  they  can  for  your  freight  going  over  the  Vanderbilt  system '! 

Mr.  Brownlee.  I  do  not  know  th|it  it  is.  I  have  no  means  of  know- 
ing what  is  done  in  New  York,  but  I  frequently  fix  my  ocean  rate  with 
a  broker  in  New  York.  I  can  generally  get  the  ocean  rate  in  New 
York  for  less  money  than  I  can  get  from  any  of  the  railroads. 

The  Chairman.  Make  your  own  terms  1 

Mr.  Brownlee.  Yes,  sir ;  it  makes  a  good  deal  of  difference  who 
applies  for  the  rates  and  to  whom  he  applies.  I  think  it  is  all  in  the 
efficiency  of  the  agent.  I  know  that  these  Grand  Trunk  peoi)le  make 
a  bigger  effort  for  the  export  trade  than  any  of  the  other  roads.  They 
send  their  men  to  our  office  and  do  everything  they  can  to  drum  up  the 
trade  and  inquire  if  we  have  anything  going,  aiid  ask  an  op[)ortunity 
to  bid  on  it,  and  so  on.  I  do  not  think  the  Canadian  roads  are  discrimi- 
nating, as  far  as  I  know.  They  are  not  giving  any  rebates  to  theshii)- 
per. 

The  Chairman.  You  say  you  never  received  any  rebates  in  all  your 
business  transactions  ? 

Mr.  Brownlee.  No,  sir. 

The  Chairman.  Never  had  any  secret  rates  ? 

Mr.  Brownlee.  No,  sir;  nor  any  ialse  billing. 

The  Chairman.  Have  you  ever  had  any  drawbacks? 

Mr.  Brownlee.  No,  sir. 

The  Chairman.  You  spoke  of  the  Grand  Trunk  agents  coming  to  yoa 
and  asking  you  to  let  them  bid  on  your  freights  ;  how  is  that"? 

Mr.  Brownlee.  All  roads  do  that.  It  is  the  ocean  rate  that  they 
bid  on.     The  sea-board  rate  is  fixed. 

The  Chairman.  And  the  ocean  rate  varies? 

Mr.  Brownlee.  Yes;  varies  from  15  shillings  sterling  a  ton  up  to  22 
shillings  and  6  pence. 

The  Chairman.  Depending  on  what? 

Mr.  Brownlee.  On  the  amount  of  freight  and  the  tonnage.  When 
freight  is  dull  they  carry  it  for  less,  and  when  there  is  plenty  of  (rcight 
offering  the  rates  are  stiff. 

Tiie  Chairman.  Is  there  no  understanding  between  the  steam  ship 
lines  as  to  the  rates  at  which  they  carry  "i 


THE    UNITED    STATES    AND    CANADA.  539 

Mr.  Brownlee.  Not  that  I  kDOw  of.  We  ship  by  the  Anchor  Line 
because  they  laud  on  the  right  side  of  the  river  in  Glasgow,  on  the  side 
our  goods  go. 

EXPORT  RATES  OVER  THE  GRAND  TRUNK  AND  AMERICAN  LINES. 

The  Chairman.  About  how  much  do  you  find  is  the  difference  be- 
tween shipping  over  the  Grand  Trunk  and  the  American  roads? 

Mr.  Brownlee.  I  once  saved  $1,25  per  thousand  feet,  board  measure, 
on  the  rate  abroad.  The  Grand  Trunk  made  that  rate  for  me.  The 
Wabash  makes  a  rate  for  me  sometimes.  They  make  rates  in  the  same 
way.  The  agent  of  the  Wabash  and  the  West  Shore  line  makes  it  from 
Wabash  open  and  then  the  ocean  rate  is  added,  showing  how  much  the 
through  rate  is. 

The  Chairman.  In  your  shipments  there  is  a  specific  rate  fixed  for 
the  inland  transportation,  is  there? 

Mr.  Brownlee.  Yes,  sir. 

The  Chairman.  And  that  is  published  ? 

Mr.  Brownlee.  Yes,  sir. 

The  Chairman.  Is  the  inland  rate  on  all  the  roads  alike? 

Mr.  Brownlee.  Yes,  sir ;  the  only  variation  is  in  the  ocean  rate. 

The  Chairman.  And  you  get  an  advantage  of  .f  1.25  per  1,000  feet  by 
shipping  over  the  Grand  Trunk  ? 

Mr.  Brownlee.  Sometimes  w^get  that  much;  sometimes  consider- 
ably less. 

The  Chairman.  Do  you  ever  get  any  advantage  by  shipping  over  the 
other  lines  ? 

Mr.  Brownlee.  Yes,  sir ;  we  have  had  lower  rates  over  the  Mich- 
igan Central  and  we  then  gave  our  freight  to  that  line.  I  gave  them 
some  freight  some  time  ago  where  the  rates  were  exactly  the  same. 
■  We  prefer  to  ship  by  the  Michigan  Central  because  we  are  located  on 
the  Michigan  Central  road  and  we  are  on  very  friendly  terms  with  them 
and  we  want  to  ])atronize  them.  The  trouble  is  that  they  want  a  new 
man  in  New  York. 

Senator  Hiscock.  You  think  it  is  due  more  to  the  energy  and  ac- 
tivity and  interest  on  the  part  of  the  agents  in  New  York  of  these  dif- 
ferent lines  that  procure  ocean  rates  than  anything  else  ? 

Mr.  Brownlee.  I  am  satisfied  that  that  is  the  only  difference.  When 
you  have  a  man  who  stands  up  at  Forty-second  street  and  telephones 
down  to  the  wharf  to  know  what  the  steam-ship  will  take  five  or  ten 
car-loads  for,  it  is  very  different  from  a  person  going  down  and  saying, 
"  You  can  get  this  freight  if  you  give  us  as  low  rate  as  anybody  else." 
In  a  case  like  that  where  several  lines  are  competing  for  it  the  result  is 
very  different. 

The  Chairman.  What  is  the  amount  of  your  business  ? 

Mr.  Brownlee.  We  ship  probably,  for  export,  120  or  125  cars  a  year. 
Our  principal  business,  of  course,  is  in  the  United  States.  We  pay  the 
'J^ichigan  Central  folks  more  than  anybody  else.  They  bring  us  all  our 
logs  and  all  that  sort  of  freight,  and  do  our  business  at  a  satisfactory 
rate.  They  accused  me  of  discriminating  in  lavor  of  the  Grand  Trunk, 
but  I  have  stated  to  them  about  as  I  have  stated  to  you. 

I  think  these  Canadian  roads  are  of  the  first  importance  to  the  city  of 
Detroit  and  to  Michigan  and  the  Northwest.  They  have  the  shortest 
route.  The  INIichigan  Central  has  one  of  the  levelest  and  shortest  roads 
])robably  of  the  lot.  If  you  were  to  discriminate  against  these  Canadian 
roads  and  comi)el  our  freight  to  go  around  by  the  Lake  Shore  to  But- 


540  TRANSPORTATION   INTERESTS    OF 

falo,  which  is  100  miles  further,  it  would  have  the  effect  of  raising  the 
rates.  The  Canadian  roads  are  not  only  shorter  but  more  level  and  can 
haul  freight  cheaper  than  the  roads  like  the  South  Shore.  I  should  be 
very  sorry  to  see  any  discrimination  against  the  Canadian  roads. 

The  Chairman.  Or  discrimination  in  their  favor  either! 

Mr.  "Brownlee.  Or  discrimination  for  them  either.  I  want  perfectly 
fair  play. 

The  Chairman.  And  you  are  willing  to  have  them  placed  under  the 
same  regulations  as  the  American  roads,  if  it  can  be  done  f 

Mr.  Brownlee.  Most  assuredly,  if  it  can  be  done, 

STATEMENT  OF  DAVID  EDWARDS. 

Mr.  David  Edwards,  assistant  general  manager  of  the  Flint  and 
Pere  Marquette  Railroad,  appeared. 

The  Chairman.  What  is  your  name,  sir*? 

Mr.  Edwards.  David  Edwards. 

The  Chairman.  Where  do  you  reside  ? 

Mr.  Edwards.  East  Saginaw,  Mich.  I  am  assistant  gene«ral  man- 
ager of  the  Flint  and  Pere  Marquette  Railroad. 

The  Chairman.  Where  does  that  run  ! 

Mr.  Edwards.  From  Monroe,  on  Lake  Erie,  to  Ludington  and  Man- 
istee, on  Lake  Michigan  ;  to  Bay  City,  on  Lake  Huron,  to  Port  Huron  ; 
on  the  St.  Clair  River,  and  up  to  Port  Austin,  on  Lake  Huron. 

The  Chairman.  Do  you  not  run  to  Toledo? 

Mr.  Edwards.  Yes,  sir ;  but  we  do  not  own  that  line.  We  operate 
there  on  a  traffic  arrangement. 

The  Chairman.  What  have  you  to  say  about  this  subject? 

Mr.  Edwards.  1  have  a  good  deal  more  to  say  than  I  will  say.  I  will 
confine  myself  more  particularly  to  the  relations  of  our  railroads. 

Canadian  transportation  lines  operating  in  the  United  States  affect 
the  commercial  interests  of  the  United  States  favorably,  in  my  judg- 
ment. 

Speaking  especially  of  the  railways  running  through  Canada,  so  far 
as  their  relations  with  the  railroads  in  Michigan  and  the  shippers  of 
Michigan  are  concerned,  it  would  be  most  disastrous  to  the  railways 
and  the  commercial  interests  of  the  State  of  Michigan,  especially  to  tlie 
northern  portion  of  the  State,  should  the  Congress  of  the  United  States 
enact  any  law  that  would  prevent  the  Michigan  Central  and  Grand 
Trunk  systems  from  doing  business  in  the  United  States  (bearing  in 
mind  that  when  I  speak  of  the  Michigan  Central  Railroad  1  have  re- 
ference only  to  that  portion  of  their  line  owned  between  Detroit  and 
St.  Clair  Rivers  and  the  Magara  frontier)  on  precisely  the  same  basis 
as  American  roads,  and  so  far  as  my  knowledge  goes,  the  Canadian 
systems  are  willing  to  be  governed  by  the  same  Uiws  of  transportation 
as  are  prescribed  for  the  government  of  all  interstate  railroads. 

I  claim  that  traffic  originating  in  the  United  States  is  not  unnatu- 
rally diverted  from  the  American  lines  by  the  Canadian  lines.  The 
traffic  from  northern  Michigan  destined  to  the  Eastern  States  finds  a 
more  natural  outlet  via  the  Canadian  lines  than  any  other.  The  purely 
American  lines  via  the  south  shore  of  Lake  Erie  secure  a  fair  share  of 
the  traffic,  and  it  would  be  a  great  hardshij)  ujwn  the  shippers  located 
on  the  lin(  s  of  the  railways  in  northern  Michigan  were  they  compelled 
to  forward  all  their  goods  an<l  |)roducts  via  purely  American  lines.  Such 
a  proposition  would  inevitably  curtail  the  transportation  fa(;ilities  by 


THE    UNITED    STATES    AND    CANADA.  541 

the  loss  of  the  equipmeut  and  the  facilities  furnished  by  the  competi- 
tive Canadian  roads  or  lines. 

At  present  the  company  I  represent,  for  the  benefit  of, its  system,  and 
the  manufacturers  on  its  line,  and  the  manufacturers  of  tbe  great  North- 
west, whose  property  seeks  an  outlet  via  Milwaukee  and  Ludington 
over  our  railroad,  are  doing  a  very  satisfiictory  interchauge  of  traffic 
with  all  tbe  Canadian  Hues  leading  east  from  the  Detroit  and  St.  Clair 
rivers,  because  we  are  enabled  to  give  such  shippers  and  manufacturers 
the  benefit  and  choice  of  all  tbe  fast  freigbt  lines  running  east  via  tbe 
Michigan  Central  and  the  Grand  Trunk  systems,  as  well  as  via  all  tbe 
fast  freight  lines  running  east  over  the  purely  American  railroads. 

The  Flint  and  Pere  Marquette  Railroad  Cou)pany,  tbe  company  I 
represent,  has  lately  acquired  a  railroad  system  of  2is  miles,  which  is 
a  natural  contributor  to  the  Canadian  lines  so  far  as  its  eastern  and 
sea-board  traffic  is  concerned,  its  eastern  terminus  being  Port  Ilurou, 
on  the  River  St.  Clair.  It  not  only  is  a  natural  contributor  to  the 
Canadian  routes,  so  far  as  traffic  originating  on  its  Hue  i)roi)er  is  con- 
cerned, but  that  portion  of  tbe  acquired  railroad  (tbe  Port  Ilurou  and 
Northwestern  Railway),  running  from  East  Saginaw  to  Port  Ilurou, 
Mich.,  forms  part  of  a  tbrou;j;h  sbort  line  route  from  the  great  Kortb- 
west.  The  distance  from  Milwaukee  to  New  York  via  tbis  route  being 
but  928  miles 

The  Chairman.  From  what  point  I 

Mr.  Edwards.  From  Milwaukee.  We  consider  Milwaukee  our  west- 
ern terminus,  and  through  bills  ai^  issued  from  Milwaukee. 

The  Chairman.  Proceed  with  your  statement. 

Mr.  Edwards.  Tbe  distance  from  Milwaukee  to  New  York  via  this 
route  is  but  928  miles  (or  from  Miuuea])olis  to  New  Y^ork  1,273  miles),  and 
if  the  Flint  and  Pere  Marquette  Railroad  Comi)any  should  adopt  Mani- 
towoc as  the  port  at  which  to  receive  the  northwestern  traffic,  the  dis- 
tance will  be  lessened  30  miles. 

Were  we  compelled  to  forward  our  traffic  via  purely  American  railroads 
to  the  sea-board,  our  shortest  distance  from  Milwaukee  to  New  Y'ork 
would  be  1,079  miles.  Much  of  our  east-bound  traffic  is  forwarded  via 
the  Lake  Sbore  and  Michigan  Soutbern,  the  Pennsylvania  Comi);iny,  and 
Baltimore  and  Ohio  Railroad,  but  to  be  compelled  to  forward  ail  via.  tbe 
south  shore  lines,  would  be  very  unjust  to  tbe  company  I  represent,  as 
well  as  depriving  shippersof  tbe  choice  of  routes  at  equal  rates  for  trans- 
portation. I  say  unjust  to  the  Flint  and  Pere  Marquette  Railroad  Com- 
pany, because  they  would  necessarily  have  to  baul  tbe  property  received 
at  Milwaukee,  coming  from  tbe  Nortbwest,  83  miles  further  for  tbe  same 
earnings  practically,  and  haul  property  originating  at  points  on  tbe 
line  of  its  Port  Huron  and  Northwestern  Railway  Division  from  100  to 
200  miles  greater  distance. 

Any  action  on  the  part  of  our  National  Congress  which  will  i)robihit 
the  Canadian  system  of  railways  doing  business  in  the  United  States  on 
the  same  basis  as  our  American  lines  (having  special  reference  to  tbe 
railways  connecting  with  our  Michigan  njilroads,  as  tbe  subject,  so  far 
as  it  relates  to  other  i)ortions  of  tbe  United  States  has  been  very 
fully  discussed  by  those  immediately  interested,  and  need  not  Ikd 
gone  over)  would  materially  atfect  the  passenger  traffic  of  our  State. 
At  present  the  larger  i)ercentage  of  the  passengers  tran.si)orted  to  and 
from  the  east,  destined  to  and  starting  fiom  [)oints  north  and  \vest  of 
the  line  of  the  Michigan  Central  Railroad,  make  tbe  journeys  via  the 
railroads  passing  through  Canada,  for  the  reason  that  they  are  the 
shortest  routes,  and  furnish  good  facilities,  all  at  reasonable  rates. 


542  TEANSPORTATION  INTERESTS  OF 

I  intended  pfoiiig  a  little  further  into  statistics  as  far  as  iiortliern 
Michigan  is  concerned,  but  I  do  not  think  it  is  essential  here.  A  good 
deal  more  could  be  said,  but  there  is  not  enough  time. 

The  Flint  and  Pere  Marquette  Company  are  doing  quite  an  extensive 
east-l)ound  business.     We  have  four  steamers  on  Lake  Michigan. 

The  Chairman.  Do  you  own  the  steamers"? 

Mr.  Edwards.  Yes,  sir.  I  might  say  that  HO  i)er  cent  of  our  east- 
bound  business  from  the  Northwest,  passing  over  our  road,  and  that 
originating  on  the  road,  passes  over  the  Canadian  lines,  that  is,  the 
Grand  Trunk  system  and  the  Michigan  Central. 

The  Chairman.  What  proportion  of  it  goes  by  those  'Steamers  from 
Milwaukee? 

Mr.  Edwards.  I  have  not  the  figures.  I  can  give  you  the  tonnage 
we  handle  across  the  lake  for  the  Canadian  lines.  It  amounts  to  be- 
tween 50,000  and  00,000  tons  a  year. 

The  Chairman.  Do  you  publish  your  rates  from  Milwaukee  to  what- 
ever eastern  point  the  goods  are  billed  ? 

Mr.  Edwards.  Yes,  sir.  The  rates  from  Milwaukee  are  the  same  as 
from  Chicago. 

The  Chairman.  Do  you  regard  your  stean^ships  as  much  under  the 
interstate  commerce  act  as  the  railroad  f 

Mr.  Edwards.  Yes,  sir  ;  all  our  tariffs  irom  Milwaukee  are  filed  with 
the  Commission. 

The  Chairman.  Probably  a  little  more  than  half  of  your  business 
going  east  goes  over  the  Grand  Trunk,  I  su])pose. 

Mr.  Edwards.  That  is,  goes  over  the  Canadian  lines,  the  Michigan 
Central  and  the  Grand  Trunk — by  last  freight  lines  over  different  roads. 
More  than  50  per  cent  of  the  Northwestern  business  goes  over  the  Ca- 
nadian lines,  and  on  east-bound  business,  lumber,  and  everything  of 
that  kind,  originating  on  the  road,  of  the  total  contribution  of  our  roail 
to  the  Eastern  cities,  between  50  and  GO  percent,  passes  over  the  Cana- 
dian lines. 

The  Chairman.  Do  you  have  any  export  business  1 

Mr.  Edwards.  Yes,  sir. 

EXPORT   RATES   OVER  DIFFERENT   LINES. 

The  Chairman.  You  heard  the  statement  of  Mr.  Brownlee  a  short 
while  ago  as  to  the  advantage  that  he  seemed  to  get  by  shipping  over 
the  Grand  Trunk.     What  is  your  ex[)erience  on  that  score? 

Mr.  Edwards.  We  have  no  advantages.  Tliere  may  be  an  advan- 
tage by  shipping  over  that  line.  There  may  be  an  advantage  one  day 
by  one  line  and  another  day  by  another  line.  The  export  rates  are 
quoted  in  the  Northwest  by  the  agents  representing  the  fast  lines. 
Through  shipments  from  the  Northwest,  taking  Milwaukee  as  the  start- 
ing i)oint,  are  solicited  and  contracted  for  l)y  the  agents  of  the  fast  lines, 
and  they  have  their  correspondents  in  New  York,  and  get  rates  through 
the  manager  of  the  freight  lines.  The  exjiort  trallic,  as  a  rule,  is  cim 
tracted  for  by  these  fast  lines.  It  wouhl  be  an  exceptional  thing  tor 
our  agent  in  Milwaukee  to  quote  an  export  rate. 

An  agent  representing  the  Erie Pailroad  today  may  quote  a  lower 
rate  than  the  New  York  Central.  To-morrow  the  New  York  Central 
agent  may  be  able  to  quote  or  secnie  a  lesser  rate  between  New  York 
and  the  Ibreign  port  lor  good  reasons,  and  i;onsequently  can  make  a 
lower  rate  than  the  Erie,  and  then  the  New  York  Central  will  take  the 
freight.    That  is  not  evidence  that  the  rate  is  made  by  the  railroad 


THE    UNITED    STATES    AND    CANADA.  543 

companies ;  I  tlonot  believe  that  is  so.  I  tliiiik  rates  are  iu  a  very  good 
condition,  and  have  been  for  the  last  few  years. 

The  Chairman.  You  think  there  is  no  advantage  to  be  had  by  ship- 
ping over  the  Grand  Trunk  ? 

Mr.  Edwards.  I  do  not  think  there  is.  There  may  be  something  in 
what  Mr.  Brovvulee  has  said  as  to  the  anxiety  of  the  agents  of  the  Grand 
Trunk  to  secure  freight.  There  is  a  good  deal  in  that.  An  agent  wlio 
will  go  to  the  steamship  office  in  person  and  secure  the  rate  is  very 
likely  to  secure  a  better  rate  than  the  man  who  calls  the  steam-sliip 
agent  up  on  the  telephone.  You  can  look  a  man  in  the  eye  and  get  a 
little  better  rate  than  you  can  through  the  telephone. 

REGrULATION   OF   CANADIAN   RAILROADS. 

The  Chairman.  As  a  railroad  man,  would  you  liave  any  objection  to 
placing  the  Canadian  railroads  under  the  same  regulatiou  as  the  Ameri- 
can roads  are  under? 

Mr.  Edwards.  No,  sir;  not  the  slightest. 

The  Chairman.  Do  you  think  that  ought  to  be  done? 

Mr.  Edwards.  Yes,  sir. 

The  Chairman.  Do  you  think  that  such  action  would  injure  any- 
body ? 

Mr.  Edwards.  No,  sir ;  T  do  not. 

The  Chairman.  Do  you  think  it  would  injure  the  commerce  of  De- 
troit ? 

Mr.  Edwards.  I  can  not  appreciate  why  it  should. 

The  Chairman.  You  do  not  see  why  it  should  injure  the  commerce 
of  Detroit? 

Mr.  Edwards.  No,  sir. 

Senator  Hiscock.  You  have  a  good  deal  of  trade  with  Canada? 

Mr.  Edwards.  AVe  have  some ;  not  a  great  deal.  Some  of  our  ex- 
port business  goes  by  Portland. 

Senator  Hiscock.  I  mean  goods  ex])orted  from  Canadian  i)orts,  or  of 
goods  that  are  consumed  in  Canada. 

Mr.  Edwards.  At  certain  seasons  we  carry  considerable  [)rovisions 
into  Canada. 

Senator  Hiscock.  Now,  then,  do  you  know  whether  on  that  freight 
which  is  export  freight,  or  that  which  is  consumed  in  Canada,  there  is 
any  allowance  made  to  the  consignee  or  the  consignor  from  the  pub- 
'lished  rates  of  Canndian  freight? 

Mr.  Edwards.  I  do  not  know  of  a  single  instance. 

Senator  Hiscock.  If  that  were  done  you  would  regard  it  as  unjust, 
would  you  not? 

Mr.  Edwards.  Certainly. 

Senator  Hiscock.  It  would  be  unjust  to  the  American  lines,  and  it 
would  also  be  unjust  to  the  Americau  producers. 

Mr.  Edwards.  Yes,  sir. 

Senator  Hiscock.  And,  on  the  other  hand,  if  on  freight  coming  from 
Canada  into  the  United  Slates  there  was  that  discrimination  in  favor 
of  certain  parties,  it  would  be  just  as  unjust  as  to  have  that  discrimina- 
tion between  the  producers  and  consumers  in  the  different  States? 

Mr.  Edwards.  Yes,  sir. 

Senator  Hiscock.  If  that  could  be  regulated,  do  you  thiidv  it  ought 
to  be? 

Mr.  Edwards.  Yes,  sir. 

Senator  Hiscock.  I  think  you  and  I  agree  pretty  well. 


544  TKANSPORTATICN    INTERESTS    OP 

THE  PAYMENT   OF   REBATES. 

The  Chairman.  Is  there  any  arrangement  by  which  a  Canadian — a 
man  living  across  the  line — can  get  a  rebate,  and  by  which  he  can  avoid 
being  detected  in  so  doing  where  Americans  would  be  detected  if  they 
did  the  same  thing?  Can  any  of  you  go  on  and  disregard  the  law,  pay 
rebates,  or  make  secret  rebates  without  being  caught  at  it? 

Mr.  Edwards.  Not  on  this  side  of  the  frontier. 

The  Chairman.  How  about  the  other  side? 

Mr.  Edwards.  That  depends.  If  the  man  in  Canada  can  be  put 
on  his  honor  I  have  no  doubt  it  could  be  done.  It  is  the  same  way 
here.  It  is  a  question  of  honor.  If  you  say  to  him,  "Here,  I  will  pay 
you  5  cents  rebate,  and  you  say  nothing  about  it,"  you  have  to  dei)end 
on  his  honesty.  I  would  not  dare,  and  I  do  not  think  the  railroad  com- 
panies and  their  representatives  to-day  would  dare,  to  make  such  a 
proposition.  I  think  they  are  afraid  to  do  anything  of  that  kind.  They 
are  getting  out  of  the  habit  of  doing  it. 

The  Chairman.  It  is  getting  to  be  a  pretty  serious  thing  to  violate 
the  law  in  that  way  ? 

Mr.  Edwards.  Yes,  sir ;  it  is. 

The  Chairman.  You  did  a  good  deal  of  it  before  the  law  was  passed, 
I  suppose. 

Mr.  Edwards.  Yes,  sir,  a  good  deal ;  and  possibly  I  did  my  share 
of  it. 

The  Chairman.  I  do  not  care  to  put  you  on  the  stand  as  to  that 
matter. 

Mr.  Edwards.  I  am  willing  to  admit  my  share.  We  all  had  our 
hands  in  it. 

The  Chairman.  Is  it  not  true  that  the  manner  of  doing  business  by 
railroad  men,  consequent  upon  the  passage  and  enforcement  of  the  in- 
terstate commerce  act,  has  been  largely  improved? 

Mr.  Edwards.  I  think  so;  at  least  in  respect  to  maintaining  rates. 

The  Chairman.  And  as  to  honest,  open-handed  dealing  ? 

Mr.  Edwards.  I  think  so.  The  act  has  also  had  a  good  effect  on  the 
8hii)pers.  If  a  shi[)per  comes  into  my  office  now  and  asks  for  a  rebate 
or  something  of  that  kind,  I  say  to  him,  "  You  do  not  want  to  go  to 
jail  with  me  "I  " 

The  Chairman.  So  you  both  conclude  to  leave  it  alone? 

Mr.  Edwards.  Yes,  sir. 


STATEMENT  OF  WILLIAM  J.  SPICER. 

Mr.  William  John  Spioer,  general  manager  of  the  Detroit,  Grand 
Haven  and  Milwaukee  Eailroad  Company,  appeared. 

The  Chairman.  Where  do  you  reside,  Mr.  Spicer? 

Mr.  Spicer.  In  Detroit. 

Tiie  Chairman.  What  is  your  business? 

Mr.  Spicer.  I  am  general  manager  of  the  Detroit,  Grand  Haven  and 
Milwaukee  Company,  general  manager  of  the  Chicago  and  Grand  Trunk 
llailroad  Company,  and  vice-president  and  general  manager  of  the  Mus- 
kegon, Saginaw  and  Toledo  line. 

The  Chairman.  I  would  tliank  you  to  proceed  to  state  what  you  have 
to  say  on  the  subject-matter  of  this  inquiry. 

Mr.  Spicer.  I  do  not  know  that  I  have  very  much  to  say.    1  thought 


THE    UNITED    STATES    AND    CANADA.  545 

when  I  came  here  this  raorning  that  the  trouble  was  with  nferenee  to 
stopping-  the  transportation  of'traffic  through  Cauatia,  but  1  am  happy 
to  say  that  is  not  the  case. 

DENIAL  OF  CHARGES  AGAINST  THE  GRAND  TRUNK. 

What  I  would  like  to  do,  though,  is  to  deny  some  of  the  statements 
made  by  my  friend,  Mr.  Poud.  I  was  not  here  when  be  commenced  his 
statement,  but  I  give  an  unquaUtied  denial  of  what  1  heard  him  state 
towards  the  close  of  his  remarks. 

The  Chairman.  As  to  what? 

Mr.  Spicer.  As  to  charges  against  the  Grand  Trunk.  He  makes 
general  statements  which  I  am  satistied  he  can  not  prove.  I  refer  to 
his  charges  to  the  effect  that  the  Chicago  and  Grand  Trunk  and  the 
Grand  Trunk  proper  hav^e  been  parties  to  paying  rebates  on  through 
shipments. 

Senator  HiscoCK.  He  did  not  charge  that. 

Mr.  Spicer.  He  charged  general  crookedness.' 

Senator  Hiscock.  No,  what  he  did  was  this,  he  charged  that  you 
made  rebates  on  goods  taken  in  Canada.     Do  you  deny  that  ? 

Mr.  Spicer.  So  far  as  concerns  the  shipment  of  the  coal  to  which 
he  referred  that  matter  has  been  tried  before  the  Interstate  Commerce 
Commission  and  a  decision  has  been  reached.  There  is  no  doubt  that 
a  concession  was  made  to  a  shipper  on  coal  to  some  place  in  Canada  on 
the  ground  that  he  was  a  large  shipper  and  providtd  a  special  coal-yard 
and  gave  ])articular  dispatch  to  the  unloading  of  the  cars.  That  is  why 
the  concession  was  made,  and  it  was  not  considered  at  the  time  to  be  a 
violation  of  law. 

Senator  Hiscock.  Has  there  been  any  such  concession  as  that  since  ? 

Mr.  Spicer.  i^  o,  sir ;  I  think  it  was  stopped  as  soon  as  the  decision 
of  the  Commission  was  made  known. 

The  Chairman.  Then  what  you  say  is,  that,  so  far  as  you  know,  you 
do  not  believe  these  violations  of  the  act  and  these  discriminations  have 
been  going  on  ? 

Mr.  Spicer.  I  do  not. 

The  Chairman,  You  could  not  say  positively  whether  this  is  true  or 
not  in  some  other  locality  ? 

Mr.  Spicer.  I  do  not  believe  it  is.  I  think  that  has  been  prohibited 
by  Mr.  Hickson,  the  general  manager  of  the  road. 

Senator  Harris.  Is  your  position  such  that  if  discriminations  were 
going  on  you  would  be  likely  to  know  it? 

Mr.  Spicer.  Yes,  sir. 

The  Chairman.  Have  you  anything  to  do  with  the  rates  over  your 
road  ? 

Mr.  Spicer.  The  rates  are  brought  to  my  notice.  We  have  a  traflSc 
manager  in  Chicago  who  regulates  the  rates  under  the  Central  Traffic 
Association. 

The  Chairman.  What  is  the  amount  of  tonnage  that  comes  over 
your  road  from  Chicago? 

Mr.  Spicer.  Those  statistics  I  expect  to  have  ready  for  you  when 
you  reach  Chicago.    I  could  not  give  you  the  data  here. 

The  Chairman.  Y^ou  will  furnish  them  hereafter  ? 

Mr.  Spicer.  I  will  furnish  them  when  you  reach  Chicago. 

The  Chairman.  What  proportion  of  the  business  of  this  city  and 
locality  does  your  road  transact  ? 

Mr.  Spicer.  Do  you  speak  of  the  Grand  Trunk  ? 

6543 35 


546  TRANSPORTATION  INTERESTS  OF 

The  Chairman.  Yes. 

Mr.  Spiceb.  I  am  not  prepared  to  answer  that. 

The  Chairman.  You  heard  a  gentleman  state  here  that  there  wa» 
no  objection  to  the  roads  on  both  sides  of  the  line  being  placed  on  an 
exact  equality.    Have  you  any  objection  to  that? 

THE   GRAND   TRUNK  AND   THE   INTERSTATE  LAW. 

Mr.  Spicer.  I  am  quite  sure  that  oUr  desire  is  to  observe  the  inter- 
state commerce  law  in  every  particular.  We  have  no  desire  to  evade 
it. 

The  Chairman.  How  far  do  you  regard  the  interstate  commerce  act 
as  extending  with  reference  to  business  going  into  and  coming  out  of 
Canada? 

Mr.  Spicer.  I  understand  that  it  extends  to  all  business  going 
through  Canada  froui  one  United  States  point  to  another. 

The  Chairman.  And  not  on  traffic  from  the  United  States  to  Canada 
or  from  Canada  into  the  United  States  ? 

Mr.  Spicer.  I  think  it  applies  to  that  business.  I  should  so  inter- 
pret it  and  I  believe  it  is  so  interpreted  by  our  people  of  the  Grand 
Trunk. 

The  Chairman.  Does  that  in  any  way  operate  in  favor  of  your  roads 
or  against  them  ? 

Mr.  Spicer.  I  do  not  think  it  is  against  the  road.  I  think  it  leads 
to  a  maintenance  of  rates,  a  steadiness  of  rates,  which  is  very  desirable. 
The  tariffs  are  published,  and  I  think  generally  observed. 

The  Chairman.  Do  you  know  whether  the  rates  through  to  Boston 
are  less  or  greater  now  than  before  the  interstate  commerce  act  took 
effect  ? 

Mr.  Spicer.  I  think  the  through  rates  are  steadier  now  than  before 
the  law  was  enacted. 

The  Chairman.  How  about  the  local  rates  ? 

Mr.  Spicer.  Our  local  rates  in  Michigan  are  very  low. 

The  Chairman.  Why? 

Mr.  Spicer.  Because  of  the  long  and  short  haul  clause. 

The  Chairman.  If  the  interstate  commerce  act  has  had  any  effect  at 
all  it  has  been  to  leave  the  through  rates  about  as  they  were  before  and 
to  lower  the  local  rates  ? 

Mr.  Spicer.  Undoubtedly,  sir. 

The  (Chairman.  So  that  the  masses  of  the  people  in  the  country  com- 
munities get  the  advantage  of  it  ? 

Mr.  Spicer.  Yes. 

THE  GRAND  TRUNK  TRAFFIC  OUT  OF  CHICAGO. 

The  Chairman.  What  is  the  percentage  of  traffic  out  of  Chicago 
that  the  Grand  trunk  takes? 

Mr.  Spicer.  The  last  few  weeks  it  has  averaged  from  IS  to  23  or  24 
per  cent. 

The  Chairman.  What  was  it  before  that  ? 

Mr.  Spicer.  It  has  fluctuated  a  good  deal.  Sometimes  it  has  run  as 
high  as  30  or  40  per  cent.  At  one  time  I  think  we  ran  up  to  about  (>0 
per  cent.  That  was,  I  may  say,  owing  to  a  strike  in  Chicago  when  we 
controlled  our  men  and  were  able  to  carry  the  freight,  and  consequently 
got  it. 

The  Chairman.  At  that  time  the  percentage  went  up  very  high  ? 


THE  UNITED  STATES  AND  CANADA.  547 

Mr.  Spicer.  Yes,  sir ;  went  up  pretty  high.  But  we  have  facilities 
in  Chicago  that  perhaps  other  roads  have  not,  and  that  may  be  the  rea- 
son why  we  secure  a  large  proportion  of  the  grain,  for  instance.  We 
have  our  hopper  scale  weighing,  which  is  very  satisfactory  to  the  ship- 
pers, and  which  some  other  roads  have  not. 

Senator  Harris.  How  do  you  account  for  that  increase  in  the  ton- 
nage eastbouud  that  lasted  a  month  or  so,  running  up  to  39  or  40  per 
cent,  of  the  whole  *? 

Mr.  Spicer.  I  do  not  know,  unless  our  shipments  went  to  Xew 
England  points,  and  we  reach  those  points  more  readily  than  others. 
We  have  our  friends  in  Chicago  who  give  us  business,  perhaps,  that 
other  roads  will  not  get.  Our  agents  are  pretty  active  in  soliciting 
freight,  and  go  around  and  make  friends  among  the  shippers.  The 
shippers  like  to  be  waited  upon.  We  like  to  serve  the  public,  and  our 
agents  are  energetic  in  looking  after  business. 

Senator  Harris.  Are  the  local  rates  lower  than  the  special  rates 
that  were  given  to  large  shippers  before  the  law  took  effect? 

Mr.  Spicer.  They  are  much  lower  than  they  ever  were. 

Senator  Harris.  Your  road  does  a  large  share  of  the  dressed-beef 
business,  does  it  uof? 

Mr.  Spicer.  You  are  speaking  of  the  Chicago  and  Grand  Trunk  out 
of  Chicago  ? 

Senator  Harris.  Yes.    Do  you  do  the  larger  share  of  it  ? 

Mr.  Spicer.  No,  I  do  not  think  we  do.  1  think  we  do  about  24  per 
cent,  of  it. 

Senator  Harris.  You  pay  no  drawbacks  ? 

Mr.  Spicer.  None  whatever,  sir. 

Senator  Harris.  Are  you  doing  it  under  special  contracts  made 
some  years  ago  I 

Mr.  Spicer.  No,  sir ;  we  do  it  according  to  the  tariffs  established  by 
the  Chicago  committee  of  the  Central  Traffic  Association.  They  regulate 
rates. 

Senator  Harris.  I  suppose  you  can  furnish  this  information  that 
has  been  called  for  ? 

Mr.  Spicer.  Yes,  sir ;  that  will  be  ready  when  you  go  to  Chicago. 

THROUGH  AND  LOCAL  RATES. 

Mr.  Edwards.  Mr.  Chairman,  if  I  may  be  permitted  to  do  so,  I 
would  like  to  ask  Mr.  Spicer  a  few  questions. 

The  Chairman.  You  can  do  so. 

Mr.  Edwards.  You  testified  that  the  through  rates  had  not  changed  in 
the  period  since  the  operation  of  the  interstate  commerce  law,  but  that 
the  local  rates  have  been  reduced  very  materially. 

Mr.  Spicer.  Yes. 

Mr.  Edwards.  Will  you  please  state*  why  the  local  rates  have  been 
reduced?  Is  it  owing' to  the  fact  that  they  were  too  high  prior  to 
the  application  of  the  interstate  commerce  act,  or  owing  to  the  long  and 
short  haul  clause  ? 

Mr.  Spicer.  I  have  said  that  it  was  owing  to  the  long  and  short 
haul  clause.  The  rates  were  never  loo  high  and  are  much  too  low 
now — ruinously  low. 

Mr.  Edwards.  You  must  scale  your  rates  down. 

Mr.  Spicer.  Yes,  sir;  in  conformity  with  the  short  and  long  haul 
clause. 


548  TRANSPORTATION  INTERESTS  OF 

The  Chairman.  Oq  the  average,  your  road  is  doing  about  as  well 
now  as  before  the  law  was  euacted  ? 

Mr.  Spicer.  No,  sir;  not  locally;  we  are  doing  much  worse. 

The  Chairman.  I  mean  with  respect  to  gross  earnings. 

Mr.  Spicer.  No,  sir ;  very  much  lower.  The  Detroit  and  Milwaukee 
earnings  have  been  very  much  lower  on  account  of  the  local  business 
having  to  be  done  at  such  reduced  rates. 

At  4  o'clock  p.  m.  the  committee  adjourned  until  to-morrow  at  10 
o'clock  a.  m. 


Detroit,  Mich.,  July  12, 1889. 
The  committee  met  at  10  o'clock  a.  m.,  pursuant  to  adjournment.     ^ 

STATEMENT  OF  HENRY  W.  SEYMOUR. 

Mr.  Henry  W.  Seymour,  a  representative  of  the  Chamber  of  Com- 
merce of  Sault  Ste.  Marie,  appeared. 

The  Chairman.  What  is  your  name? 

Mr.  Seymour.  Henry  W.  Seymour. 

The  Chairman.  Where  do  you  reside? 

Mr.  Seymour.  Sault  Ste.  Marie. 

The  Chairman.  What  is  your  business  ? 

Mr.  Seymour.  I  am  not  in  any  special  business.  I  have  business 
interests.     I  have  been  in  the  lumber  business. 

The  Chairman.  You  have  been  listening  somewhat  to  the  statements 
of  the  different  gentlemen  who  have  appeared  before  the  committee, 
and  know  the  purj)ort  of  the  resolution  under  which  the  committee  is 
acting.  Will  you  please  give  us  any  facts  you  may  possess  and  any 
views  you  may  desire  to  express  on  the  subject? 

Mr.  Seymour.  Mr.  Chairman  and  gentlemen  of  the  committee,  I  am 
here  to-day  in  connection  with  two  other  gentlemen  as  representatives 
of  the  Chamber  of  Commerce  of  Sault  Ste.  Marie.  Resolutions  in  regard 
to  this  matter  have  been  forwarded  to  your  committee,  and  I  will  read 
them  at  this  point : 

Whereas,  it  is  believed  by  this  chamber  that  it  is  unjust  to  that  portion  of  the 
United  States  liiiown  as  the  "  Great  Northwest,"  that  any  legislation  tending  to  re- 
strict transportation  between  the  seaboard  and  the  Northwest,  or  between  the  North- 
west and  the  seaboard  ;  therefore  be  it 

Eesolved,  That  the  Chamber  of  Commerce  of  the  city  of  Sault  Ste.  Marie,  Mich., 
most  earnestly  protest  against  any  legislation  on  the  part  of  the  United  States  that 
shall  tend  in  any  manner  to  discriminate  in  favor  of  any  line  of  transportation,  or  to 
deprive  any  citizen  of  free,  unrestricted  transportation  of  western  products  over  the 
great  central  line  of  transportation  from  the  Northwest  to  the  East  or  from  the  East 
to  the  Northwest,  over  any  and  all  lines  of  transportation,  be  the  same  Canadian  or 
American  lines,  and  that  a  copy  of  this  resolution  be  transmitted  to  Senator  Cullom 
for  presentation  to  the  committee  now  engaged  in  considering  the  transportation 
question. 

I,  C.  D.  Dowling,  secretary  of  the  Chamber  of  Commerce  of  Sault  Ste.  Marie^  Mich., 
hereby  certify  that  the  above  is  a  true  copy  of  the  resolution  adopted  by  the  cham- 
ber May  2, 1889. 

[SEAL.]  f  C.  D.  Dowling, 

Secretary. 

SAULT   STE.  MARIE'S  RAILROAD   CONNECTIONS. 

We  are  specially  interested  in  this  question.  Within  twelve  or  eight- 
een months  at  the  most  two  lines  of  railway  have  been  built  from  the 


THE    UNITED    STATES    AND    CANADA.  549 

West,  one  from  Minneapolis  and  tb6  other  from  Dulnth,  conver^fiug  at 
Sault  St.  Marie  and  crossing  the  international  bridfifeinto  Canada. 

The  Chairman.  Give  the  length  of  each  of  those  lines. 

Mr.  Seymour.  From  Dnluth  to  Sanlt  St.  Marie  is  about  400  miles, 
and  from  Minneapolis  about  500  miles.  Those  lines  connect  with  the 
Northern  Pacific  and  with  the  great  "West.  Connecting  with  the  inter- 
national bridge  on  the  Canadian  side,  has  recently  been  constructed  a 
branch  of  the  Canadian  Pacific,  connecting  with  the  main  line  at  Sud- 
bury Junction. 

The  Chairman.  How  long  is  that  branch  road  ? 

Mr.  Seymour.  The  length  of  that  line  to  the  main  line  must  be  in  the 
neighborhood  of  200  miles.  At  Sudbury  Junction  it  connects  with  the 
main  line,  which  runs  around  Lake  Superior.  About  July  1,  that  road 
commenced  running  through  passenger  trains  between  Boston  and  the 
West. 

Senator  Eeagan.  The  1st  of  July  of  this  year? 

Mr.  Seymour.  Yes,  sir;  there  are  no  statistics  showing  the  volume 
of  business  upon  the  railway,  but  being,  as  might  be  said,  an  air-line 
with  Puget  Sound,  Tacoma,  Portland,  etc.,  it  is  easy  to  believe  that  it 
would  naturally  receive  a  large  portion  of  the  business  from  its  being  a 
shorter  line  to  the  East.  There  are  connected  with  that  road  some  ob- 
stacles— the  cold  climate  in  winter,  and  the  greater  cost  of  running  trains 
through  that  colder  climate ;  and  it  seems  to  us  that  any  restriction  put 
upon  transportation  between  Canada  and  the  States  would  operate 
very  strongly  not  only  against  us  locally,  but  against  the  entire  North- 
west. 

I  would  say  that  our  city  has  grown  very  rapidly  recently  on  account 
of  the  rail  connections  made  there. 

The  Chairman.  What  is  the  population  of  your  city  now  ? 

Mr.  Sey'MOUR.  About  12,000, 1  think.  We  are  now  Ijuilding  a  water- 
power  canal  of  about  300  feet  width  to  utilize  the  water  of  Lake  Supe- 
rior for  milling  and  manufacturing  purposes,  under  the  impression  that 
the  rail  transportation  interests,  would  not  be  disturbed.  We  expect  to 
be  able  to  mill  flour  there  and  send  it  through  the  Canadian  connec- 
tions to  the  New  England  States  and  distribute  it  through  the  Eastern 
States,  and  also  send  some  to  Europe.  We  have  regarded  this  ques- 
tion of  the  transportation  interests  with  foreign  countries,  or  with  Can- 
ada rather,  as  international,  and  therefore  we  have  considered  that  no 
legislation  should  be  had,  but  if  any  injury  in  any  way  is  inflicted  upon 
any  class  of  our  people  that  it  should  be  remedied  rather  by  treaty  'reg- 
ulation or  by  treaty  between  the  two  powers,  by  which  both  would  have 
a  hearing,  and  a  mutual  adjustment  of  all  things  could  be  had  and  no 
injury  done.  That  has  been  the  view  which  we  have  taken  of  this  ques- 
tion, and  in  taking  that  view  we  formulated  the  resolutions  which  I 
have  read,  opposing  restrictions  upon  transportation  interests  between 
this  country  and  Canada. 

A  new  CANADIAN  CANAL. 

If  restrictions  were  placed  upon  the  Canadian  roads  it  would  perhaps 
drive  the  Canadians  to  increase  the  facilities  of  the  Wetland  Canal  and 
the  canal  through  the  St.  Lawrence,  and  tend  to  drive  business  largely 
in  that  direction.  Since  the  talk  of  retaliation  commenced  I  think  the 
Canadians  have  begun  the  construction  of  a  canal  on  the  other  side  of 
the  river  opposite  the  United  States,  the  St.  Mary's  Falls  Canal,  so  as  to 
have  their  own  means  of  transit  between  Lake  Superior  and  Georgian 
Bay  and  Lake  H  uron.    The  contract  for  that  canal  has  been  made. 


560  TKANSPORTATION  INTERESTS  OF 

Tlie  Chairman.  Where  is  that  eanal  to  be  located  1 
Mr.  Seymour.  At  Saiilt  Ste.  JNIarie,  on  the  other  side  of  the  river, 
runiiiiijj^  throiioh  Canadian  territory.     It  is  a' short  canal. 

As  no  rail  statistics  can  now  be  had,  on  account  of  the  bat  recent 
construction  of  the  road,  I  will  refer  to  the  canal  statistics,  showing  the 
growth  of  the  Northwest  and  the  increase  of  business. 

TONNAGE   PASSING   THROUGH   ST.   MARY'S   FALLS   CANAL. 

In  1855  the  St.  Mary's  Falls  Canal  was  opened  to  business,  and  the 
registered  tonnage  passing  through  that  canal  during  the  year  from 
the  northwest  and  the  east  was  100,290. 

Senator  Harris.  Wlien  was  that? 

INIr.  Seymour.  In  1855,  the  first  year  of  the  opening  of  the  St.  Mary's 
Falls  Canal.  In  188JL  a  new  lock,  which  was  constructed  by  the  United 
States,  was  completed,  but  it  was  not  opened  until  September  of  that 
year.  I  will  therefore  give  the  amount  of  tonnage  passirig  through 
in  1882,  after  the  new  lock  was  constiucted. 

In  1882  the  registered  tonnage  ])assing  through  that  canal  was 
2,408,088.  The  actual  freight  was  2,02!),52I  tons — the  actual  freight  as 
distinguished  from  the  registered  freight. 

A  new  lock  is  now  bning  constructed  to  meet  the  greater  wants  of  navi- 
gation. Freight  was  cheapened  through  that  route  by  the  construction 
of  the  new  lock,  because  it  admitted  vessels  drawing  10  feet  of  water, 
while  the  first  canal  allowed  vessels  drawing  only  about  12  feet.  Now, 
owing  to  the  increase  of  business  the  carriers  are  made  so  huge  that 
they  are  dragging  upon  the  miter-sills  of  the  locks,  and  a  regulation  as 
to  the  loading  of  vessels  is  made,  so  that  they  will  not  be  loaded  too 
deeply  and  thus  catch  upon  the  miter-sills  of  the  lock,  delaying  the 
passage  of  the  vessels. 

I  have  not,  nor  has  it  yet  been  given,  the  actual  registered  tonnage 
for  the  calendar  year  1888.  I  have  thus  far  given  the  freight  and  reg- 
istered tonnage  for  the  calendai'  years.  I  have  the  freight  and  regis- 
tered tonnage  for  the  fiscal  year  ending  June  30, 1889. 

The  registered  tonnage  for  that  period  was  0,213.494;  the  actual 
freight  passing  through  was  0,932,203 — nearly  seven  millions  of  tons — 
showing  that  the  i)ercentage  of  growth  is  upon  each  year's  business, 
not  ui)on  a  previous  year;  but  I  think  the  lowest  increase  since  1882 
was  13  per  cent.,  and  it  has  run  up  as  high  as  40  per  cent.,  and  still  the 
business  of  the  succeeding  }  ear  increases  over  that.  That  shows  the 
business  interests  of  the  North  weir^t.  I  think  Duluth  is  now  the  largest 
wheat  shipper  of  any  port  in  the  United  States. 

The  Chairman.  The  business  interests  as  indicated  by  commerce 
upon  the  water? 

Mr.  Seymour.  Yes,  sir;  which  then  was  the  only  method  of  ti'ans- 
portation  to  the  East.  I  think  this  should  hav^e  some  bearing  upon  the 
question  of  the  increase  and  tlie  possible  growth  of  railway  transporta- 
tion through  that  section,  as  it  is  the  shorter  line,  and  as  the  Eastern 
States  can  be  readily  reached  by  it. 

regulation   op   the   CANADIAN   ROADS. 

Any  restrictions  which  the  Congress  of  the  United  States  might  put 
upon  this  business  without  consulting  the  interests,  and  wishes  [)erhaps, 
of  the  Canadian  people,  and  fixing  sOme  equitable  rule,  would  perhaps 


THE    UNITED    STATES    AND    CANADA.  551 

result  in  retaliatory  measures,  ot  in  such  a  feeling  of  hostility  as  would 
injure  the  interests  of  the  consumers  aucl  producers  of  this  country. 

I  suppose  the  interstate  commerce  law  was  formulated  for  the  benefit 
of  the  consumers  and  producers,  and  while  under  any  law  perhaps 
some  injury  might  be  inflicted  upon  certain  classes  of  people,  as  there 
are  always  exceptions  to  the  rule,  yet  the  greater  interests  should  gov- 
ern, and  the  large  interests  of  the  consumers  and  producers  of  the 
Northwest  should  not  be  aiiected  injuriously  by  any  legislative  regula- 
tion or  by  any  laws  which  would  simply  benefit  some  railroad  or  some 
interior  interests.  I  have  therefore  thought  that  the  proper  method 
to  regukite  these  transportation  interests  was  by  treaty,  by  some  con- 
ference between  the  two  countries. 

It  would  be  very  disastrous  to  the  Northwest  and  to  the  men  going 
into  that  newer  portion  of  the  country,  which  is  the  wheat-produping 
section  of  the  United  States,  the  grain-producing  section  largely,  who 
have  the  advantages  of  low  rates  and  natural  routes,  and  as  much  com- 
petition as  possible,  if  any  restrictions  were  placed  upon  the  Canadian 
roads,  and  great  care  should  be  taken  to  avoid  placing  any  restrictions 
upon  them  which  would  tend  to  injure  the  people  of  the  Northwest. 

This  question,  therefore,  becomes  a  national  one;  it  affects  the  north- 
ern portion  of  this  country  ni.ore  than  the  southern  part,  because  the 
carriers  come  into  the  noitheni  section  from  Buffalo,  or  a  little  below, 
and  then  take  the  grain  to  the  sea-board. 

Tlie  Chairman.  How  far  is  Sault  Ste.  Marie  from  Minneapolis? 

Mr.  Seymouii.  About  500  miles. 

The  Chairman.  What  means  of  outlet  to  the  east  have  you  aside 
from  the  Canadian  Pacific  and  its  connections  there  ? 

Mr.  Seymour.  We  have  only  water  communication,  except  as  we 
«ou]d  go  across  the  Straits  of  Mackinaw,  which  connects  Lake  Michi- 
gan and  Lake  Huron,  and  is  about  7.  miles  wide  at  the  narrowest  point, 
I  think — r6  or  7  miles  wiile.  On  account  of  this  crossing  cheap  freights 
can  not  be  had  to  the  eastward. 

The  Chairman.  What  is  the  length  of  the  canal  you  have  referred 
to"? 

Mr.  Sey'MOIJR.  I  think  it  is  1  mile. 

The  Chairman.  What  progress  has.been  made  on  the  Canadian  ship- 
canal  north  of  you  ? 

Mr.  Seymour.  The  work  was  commenced  this  spring,  and  it  is  now 
being  dredged  out. 

The  Chairman.  What  will  be  its  length  1 

Mr.  Seymour.  I  suppose  about  the  same  distance  as  our  canal — a 
mile. 

The  Chairman.  What  is  the  purpose  of  the  building  of  the  Canadian 
canal  ? 

Mr.  Seymour.  To  allow  the  passage  of  Canadian  vessels  from  Cana- 
dian ports  or  any  ])orts  around  the  rapids  of  St.  Mary. 

The  Chairman.  For  the  puri)ose,  mainly,  of  having  a  canal  of  their 
own  on  Canadian  soil  and  within  their  jurisdiction  ? 

Mr.  Seymour.  Yes,  sir.  To  show  you  one  effect,  I  think  some  Brit- 
ish or  Canadian  soldiers  were  sent  to  Manitoba  at  one  time,  and  per- 
mission was  refused  for  their  passage  through  the  canal,  as  1  under- 
stood, and  so  they  were  landed  at  the  Canadian  Sault  and  sent  around 
above  the  rapids  on  Canadian  vessels  again  and  taken  to  Manitoba. 

The  Chairman.  Does  it  not  seem  apparent  to  your  mind  that  the 
British  Government  or  the  Canadian  Government  is  determined  upon  a 


552  TRANSPORTATION  INTERESTS  OF 

policy  that  will  malve  its  transportation  interests  entirely  free  of  any- 
United  States  interference'? 

Mr.  Seymour.  1  suppoi^  that  they  wonkl  like  to  be  independent  in 
case  of  any  controversy  between  the  two  countries. 

The  Chairman.  Arethey  not  deterniineil  upon  building  up  Canada, 
and  doing  it  without  reference  to  the  United  States,  except  to  make 
themselves  entirely  independent  as  a  separate  government  ? 

Mr.  Seymour.  I  suppose  each  country  is  endeavoring  to  advance  its 
own  interests  and  give  its  citizens  all  possible  transportation  within  its 
own  borders. 

The  Chairman.  How  long  have  you  lived  at  Sault  Ste.  Marie? 

Mr.  Seymour.  Since  1872. 

The  Chairman.  In  your  judgment,  was  not  the  construction  of  the 
Canadian  Pacific  entered  upon  largely  with  reference  to  tying  the  Cana- 
dian (xovernment  together  and  for  military  j)urposes,  more  than  for  any- 
thing else,  in  the  beginning  ? 

Mr.  Seymour.  I  suppose  it  was  built  with  theideaof  connecting  the 
interests  of  the  Dominion,  so  that  ^lanitoba  should  not  feel  that  she  was 
isolated  from  the  other  portion  of  the  Dominion. 

Perhaps  it  does  not  affect  the  question  very  materially,  but  I  desire 
to  say  that  I  think  it  was  about  ninety  years  ago  when  the  Northwestern 
Fur  Company,  the  predecessor  of  the  Hudson  Bay  Company,  built  a 
canal  on  the  Canadian  side,  with  a  lock  39  feet  long  and  8  feet  wide,  and 
an  8- foot  lift. 

The  Chairman.  How  far  was  that  canal  built  above  where  the  Cana- 
dian Government  intends  to  build  the  canal  we  have  spoken  of? 

Mr.  Seymour.  About  the  same  place.  I  simply  mentioned  the  fact 
of  that  canal  being  built  by  the  Northwestern  Fur  Company  as  a  his- 
torical fact. 

The  Chairman.  The  traffic  of  the  Canadian  Pacific  at  present,  so  far 
as  it  comes  from  below  Detroit,  has  to  come  through  our  canal? 

Mr.  Seymour.  Yes,  sir.  In  relation  to  that  I  would  say  that  I  think 
by  a  treaty  arrangement  the  United  States  and  Canada  allowed  the 
same  privileges  to  the  citizens  of  the  other  country  as  they  gave  to 
their  own  citizens.  When  this  canal  was  transferred  to  the  United 
States  by  the  State  of  Michigan,  it  was  upon  the  condition  that  it  should 
be  free  and  open  to  all,  and  of  course  Canadian  vessels  went  through  free. 

The  Canadian  laws,  so  far  as  Canadian  canals  are  concerned,  are  dif- 
ferent. There  is  a  freight  charge  for  passing  through  the  Welland 
Canal,  and  I  think  an  injustice  was  done  American  vessels  in  that  re- 
spect. 

The  Chairman.  How  was  an  injustice  done  American  vessels'? 

Mr.  Seymour.  By  giving  a  rebate  of  90  per  cent,  to  those  vessels  un- 
loading at  Canadian  ports.  I  understand,  however,  that  has  been  taken 
off,  and  Canadian  vessels  have  to  pay  the  full  amount. 

The  Chairman.  Are  you  familiar  with  the  shipping  interests  ? 

Mr.  Seymour.  No,  sir;  not  largely. 

The  Chairman.  Do  you  understand  that  there  is  any  discrimination 
against  American  shipping  which  does  not  go  down  their  canals  to 
Montreal? 

Mr.  Seymour.  I  could  state  positively  as  to  that.  I  understood  that 
the  discrimination  was  done  away  with,  and  that  they  charge  the  ves- 
sels of  both  countries  the  same  rate,  and  that  no  rebate  is  given. 

The  Chairman.  No  rebate  given  to  the  vessels  of  either  country  ? 

Mr.  Seymour.  No,  sir. 

The  Chairman.  Do  you  think  that  Canada  would  have  any  right  to 


THE  UNITED  STATES  AND  CANADA.  553 

find  fault  with  the  American  Government  if  the  latter  saw  proper  to  " 
exact  such  regulations  of  the  carriers  of  American  products  in  Canada 
as  it  exacts  of  the  American  railroads  ? 

Mr.  Seymour.  Well,  I  think  first  we  should  consider  its  effect  upon 
the  American  producer  and  consumer. 

The  Chairman.  Of  course. 

Mr.  Seymour.  If  the  present  condition  of  affairs  operates  to  favor  us, 
we  should  be  careful  as  to  what  restrictions  we  place  upon  the  Canadian 
roads.  However,  I  think  we  ought  to  do  that  which  is  to  the  interest 
of  our  own  people, 

The  Chairman.  You  believe  in  our  taking  care  of  our  own  people  ! 

Mr.  Seymour.  Yes,  sir. 

The  Chairman.  But  do  you  think  that  Canada  would  have  any  rea- 
son to  complain  if  we  insisted  upon  the  same  restrictions  and  regula- 
tions being  placed  upftn  their  roads,  if  they  do  business  in  the  United 
States,  as  we  place  upon  our  own  roads,  in  order  that  the  American 
roads  may  be  at  no  disadvantage  in  competition  with  the  Canadian 
roads  f 

Mr.  Sey'mour.  I  suj)pose  we  should  consider  the  interests  of  the  pro- 
ducer and  consumer  first. 

The  CHAIR3IAN.  We  are  considering  that;  but  I  ask  jou  the  ques- 
tion whether  there  is  any  reason  why  the  same  conditions  should  not 
be  i)laced  upon  the  roads  of  both  countries  if  Canadian  roads  are  al- 
lowed to  do  business  in  this  country  ? 

Mr.  SEYMOUR.  I  did  not  know  that  any  particular  restrictions  had 
been  placed  upon  the  American  roads. 

The  Chairman.  They  are  regulated  under  the  interstate  commerce 
act.     You  know  that,  I  sui^pose. 

Mr.  Seymour.  Yes,  sir.  But  that,  I  suppose,  was  intended  to  regu- 
late commerce  as  between  the  States. 

The  Chairman.  You  understand,  1  take  it,  that  Congress  has  the 
right  to  regulate  commerce  between  the  States  and  between  this  country 
and  foreign  nations. 

Mr.  Srymour.  Yes,  sir. 

The  Chairman,  ^ow,  if  the  American  Government  sees  proper  to 
regulate  its  own  roads,  and  the  Canadian  roads  are  not  regulated  with 
respect  to  American  business,  the  American  roads  may  thereby  be  put 
to  a  disadvantage  in  competition  with  the  Canadian  roads.  Do  you 
see  any  reason,  therefore,  why  the  Canadian  Government  should  com- 
plain if  their  roads  should  be  placed  upon  exactly  the  same  level  as  the 
American  roads  with  respect  to  the  business  they  do  in  the  United 
States  ? 

Mr.  Seymour.  To  go  back  a  little,  I  think  that  the  American  roads 
are  in  a  measure  in  the  hands  of  foreigners.  The  bonds  are  largely 
held  by  foreigners,  as  is  also  a  large  portion  of  the  stocii.  So  our  inter- 
ests are  to  a  certain  extent,  as  I  said  before,  the  same.  1  think  that 
Congress  should  not  pass  upon  this  international  question,  but  that  it 
should  be  regulated  by  treaty ;  that  Congress  should  be  loath  to  touch 
any  question  that  affects  the  interests  of  the  one  nation  and  the  other. 
If  anything  is  to  be  done  it  should  be  brought  about  by  treaty,  so  that 
both  interests  would  be  protected. 

The  Chairman.  You  are  not  concerned  specially  about  anything  ex- 
cept what  affects  your  own  people,  are  you  I  If  anything  were  done  by 
the  American  Congress  that  should  protect  the  American  peoi)le  and  at 
the  same  time  place  the  Canadian  roads  on  the  same  level  as  the  Amer- 
ican roads,  you  would  not  object  to  that,  would  you  ? 


554  TKANSPORTATION  INTERESTS  OF 

Mr.  Seymour.  No,  sir;  but  I  have  always  taken  the  view  that  Con- 
gress slionld  uot  legislate  ou  that  subject.  I  have  always  been  uuder 
the  impressiou  that  it  should  be  remedied  by  treaty. 

The  Chairman.  What  does  it  matter  whether  it  be  doue  by  Con- 
gress or  by  treaty,  so  loug  as  the  American  people  are  takeu  care  of? 

Mr.  Seymour.  I  thiuk  it  would  be  better  if  it  were  doue  by  confer- 
ence, and  then  there  woold  be  a  better  feeling  manifested  wheu.both  par- 
ties were  heard  in  conference. 

Senator  Eeagan.  If  States  grant  charters  to  aid  Canadian  corpora- 
tions and  allow  them  the  benefit  of  our  commerce  and  at  the  same  time 
give  them  advantages  that  are  destructive  of  the  interests  of  American 
roads,  do  you  think  that  Congress  could  apply  a  remedy? 

Mr.  Seymour.  I  do  not  know  of  any  State  in  the  Union  which  has 
granted  a  charter  particularly  to  foreigners  as  foreigners;  but  simply 
granted  the  charter  for  the  benefit  of  our  own  pecrj^le.  Particular  roads 
were  organized  under  state  laws  and  under  general  laws  and  a  portion 
of  the  stock  was  taken  by  foreigners,  and  our  people  have  been  very 
anxious  to  build  railroads  with  the  aid  of  English  capital.  When  the 
construction  of  an  American  road  has  been  ])roposed  the  promoters 
have  generally  gone  to  England  to  see  if  they  could  not  get  the  money 
to  build  it. 

Senator  Reagan.  Are  you  able  to  state  whether  the  Canadian  people 
or  the  people  of  the  United  Statfes  own  the  larger  portion  of  the  stock 
of  the  roads  from  St.  Paul  to  Sault  Ste.  Marie  and  from  Duluth  to  Sault 
Ste.  Marie? 

Mr.  Sey'MOUR.  I  am  not  able  to  state  from  actual  knowledge  how 
that  is. 

Senator  Reagan.  The  two  roads  which  run  betvveeu  the  points  men- 
tioned belong  practically  to  the  Canadian  Pacific,  do  they  not? 

Mr.  Seymour.  I  understand  the  Canadian  Pacific  has  an  interest  in 
them,  and  perhaps  controls  them,  although  I  think  Hon.  James  McMil- 
lan, a  United  States  Senator,  is  president  of  the  Duluth  and  South 
Shore  Railroad  Company.  A  portion  of  the  road  was  built  into  Mar- 
quette as  an  American  road  and  received  a  grant  of  swamp  lauds,  but 
1  have  no  doubt  they  got  capital  from  abroad  for  continuing  the  build- 
ing of  the  road.  1  understand  that  Mr.  Washburn,  also  a  United  States 
Senator,  is  president  of  the  other  road  running  into  Duluth,  showing 
that  the  road  is  under  the  management  of  Americans  while  the  capital 
in  it  may  be  largely  foreign. 

The  Chairman.  I  thiuk  Mr.  Van  Home  stated  that  the  same  con- 
trol obtains  over  those  two  roads  as  over  the  Canadian  Pacific. 

Mr.  Sey'MOUR.  Yes,  sir. 

Senator  Harris.  When  the  chairman  asked  you  awhile  ago  whether 
you  did  uot  think'  it  would  be  proper  to  subject  the  Canadian  roads 
which  do  business  in  this  country  in  competition  with  the  American 
roads  to  the  same  regulations  to  which  the  American  roads  are  sub- 
jected, your  answer,  if  1  understood  you,  was,  that  you  did  uot  think 
it  would  be  i)roper.  for  Congress  to  take  any  action  upon  that  subject, 
and  that  if  it  were  touched  at  all  it  should  be  regulated  by  treaty. 
Now,  suppose  we  assume  your  attitude,  and  this  Government  were  nego- 
tiating with  the  Canadian  authorities  on  this  question,  do  you  not  thiuk 
every  consideration  of  justice  and  equity  would  require  this  Govern- 
ment to  insist  upon  subjecting  these  Canadian  roads  which  do  business 
in  competition  with  the  American  roads  to  ]>recisely  the  same  regula- 
tions as  the  American  roads  are  subject  to? 

Mr.  Seymour.  All  roads  operating  in  the  United  States  in  which 


THE    UNITED    STATES    ANL    CANADA.  555 

Canadians  are  interested  or  which  are  under  Canadian  control  were 
built  and  constructed,  I  suppose,  under  State  charters,  and  are  liable 
to  the  interstate  commerce  law,  so  far  as  they  exist  or  have  been  con- 
structed or  are  run  within  the  United  States.  When  you  leave  the 
border,  then,  of  course,  they  are  built  under  Canadian*^  charters,  and 
when  you  leave  the  border  the  question  ceases  to  a  certain  extent  to  be 
an  interstate  question,  and  becomes  an  international  question.     So  that 

I  would  make  a  distinction  between  the  interstate  and  international 
traffic  or  carriers.  Of  course  all  roads  within  the  United  States  are 
subject  to  the  interstate  commerce  law,  but  when  you  get  into  Canada 
then  they  are  Canadian  roads  and  subject  to  Canadian  laws,  and  the 
question  would  be  more  easily  and  better  reached  by  treaty,  i  should 
think. 

Senator  HARRIS.  But  supi)ose  you  are  to-day  the  agent  of  the  United 
States  to  treat  with  Canada  upon  this  precise  question,  would  yon  in- 
sist upon  subjecting  the  Canadian  roads  doing  bnsiness  in  comj)etition 
with  our  roads  to  the  same  regulations  as  our  roads  are  subject  to,  or 
would  you  insist  upon  giving  Canadian  roads  advantages  over  our  own 
roads  *? 

Mr.  Seymour.  If  the  question  came  to  me  in  that  way,  then  1  would 
endeavor  to  see  to  it  that  American  interests  did  not  snfi\'r,  because 
there  would  be  a  place  where  all  these  questions  would  come  up  and 
be  remedied.  Certainly  as  Canada  hats  interests  connected  with  us  in 
this  country  it  is  to  her  interest  to  have  this  question  settk^d  amicably 
between  the  two  countries,  and  I  think  in  a  ])roper  tribunnl  American 
interests  would  not  suiter,  while  the  subject  would  be  better  reached. 

Senator  Harris.  But  if  by  treaty  or  otherwise  you  give  advantages 
to  the  Canadian  loads  operating  in  competition  with  our  roads,  which 
put  our  roads  at  a  disadvantage  in  that  comi)etition,  would  you  not  de- 
cide that  American  interests  should  not  suffer  by  any  such  condition 
of  affairs'? 

Mr.  Seymour.  That  is  what  I  say ;  I  should  see  that  American  in- 
terests were  protected. 

Senator  Harris.  If  that  be  true,  tl»^n,as  the  representative  of  this 
Government  in  negotiating  upon  that  question,  you  would  insist  on  the 
Canadian  roads  doing  business  in  competition  with  our  roads  being 
subject  to  precisely  the  same  regulations  as  our  roads  are  subject  to. 

Mr.  Seymour.  1  should  endeavor  certainly  to  see  that  justice  was 
done  to  our  people,  but  I  should  not  want  to  settle  that  ipiestion  there. 

Senator  Hiscock.  Let  us  meet  the  question  fairly  and  not  have  any 
dodging  in  any  way  by  general  remarks,  i  will  ask  you  this  question, 
are  you  in  favor  ot  legislation  by  Congress  which  discriminates  against 
American  roads  and  in  favor  of  Canadian  roads  ? 

Mr.  Seymour.  I  am  not  in  favor  of  any  additional  legislation. 

Senator  HiscocK.  I  am  not  asking  you  that  question.  Whether  the 
present  legislation  has  that  effect  or  not,  are  you  in  favor  6f  any  Con- 
gressional laws  that  discriminate  in  favor  of  Canadian  roads  as  against 
Americaft  roads  f     That  is  a  very  easy  question  to  answer. 

Mr.  .•  EYMOUR.  I  suppose  you  mem  additional  legislation  ! 

Senator  Hiscock.  I  do  not  limit  it  to  additional  legislation.  I  take 
the  law  as  it  stands,  or  as  it  may  be  made.  1  ask  the  question  squarely, 
not  in  reference  to  legislation  to  be  had,  but  in  reference  to  the  law.  Are 
you  in  favor  of  a  Federal  law  which  discriminates  in  favor  of  Canadian 
roads  and  againsl  our  own  roads  "^     As  an  abstract  question,  I  ask  you 

II  you  are  in  favor  of  a  Federal  law  that  discriminates  in  favor  of  Cana- 
dian roads  as  against  American  roads  ? 


556  TRANSPOliTATION    INTERESTS    OF 

Mr.  Seymour.  I  am  not  in  favor  of  a  Federal  law  that  discriminates 
in  favor  of  any  nationality  or  people  as  against  our  own ;  but  I  should 
not  be  in  favor  of  any  legislation  by  our  own  people  as  a  body  which 
would  not  benefit  the  producer  and  consumer. 

Senator  HiscocK.  1  do  not  suppose  any  one  is  ;  but  if  it  is  true  that 
there  is  to-day  Congressional  or  national  legislation  the  effect  of  which 
is  to  discriminate  against  the  American  trunk  lines  and  to  be  absolutely 
in  favor  of  the  Canadian  trunk  lines,  are  you  in  favor  of  that  condition 
continuing? 

Mr.  Seymour.  I  did  not  know  that  any  large  class  had  made  any 
complaint  against  the  interstate  commerce  law. 

Senator  HiscoCK.  I  am  not  asking  you  whether  they  comiilain  or 
not.  I  am  not  discussing  that  question,  but  I  simply  ask  you  whether 
this  unfavorable  condition  should  remain  ? 

Mr.  Seymour.  I  should  not  want  to  do  a  greaterevil  for  the  purpose 
of  accomplishing  a  lesser  good. 

Senator  Hiscock.  I  ask  whether,  if  there  is  Federal  legislation  which 
in  effect  discriminates  against  our  roads — I  am  not  saying  there  is ;  I  do 
not  allege  there  is;  that  is  another  question — but  I  say,  assuming  there 
is  a  Federal  law  which  discriminates  against  our  own  roads  and  in  favor 
of  Canadian  roads,  are  you  in  favor  of  its  remaining  unrepealed  ?  That 
is  a  very  plain  proposition. 

Mr.  Seymour.  It  is  a  very  broad  question. 

Senator  Hiscock.  I  beg  your  i^ardon  ;  it  is  not  a  broad  question. 

Mr.  Seymour.  1  do  not  know  that  any  law  could  be  passed.  I  can 
say  this,  that  I  should  not  favor  any  legislation  which  would 

Senator  Hiscock.  That  is  not  answering  my  question.  1  am  not  dis- 
cussing the  question  of  the  conditions.  I  would  simply  like  to  have 
your  opinion  as  an  American  citizen. 

Mr.  Seymour.  1  simply  desire  to  state  this,  that  I  do  not  think  the 
interstate  commerce  law  ought  to  be  amended  so  as  to  affect  that  ques- 
tion. 

Senator  Hiscock.  I  would  like  you  to  give  me  simply  your  opinion 
on  the  question  I  have  asked  youf  and  if  you  do  not  wish  to  do  so  you 
need  not. 

Mr.  Seymour.  I  am  not  in  favor  of  amending  the  law  or  changing  it. 

Senator  Hiscock.  That  is  not  the  point  I  am  after. 

Mr.  SEY3I0UR.'  I  am  looking  at  the  roads  as  they  affect  the  people 
to-day. 

Senator  Hiscock.  Why  not  let  me  have  your  opinion  as  a  statesman 
upon  the  question  I  put  to  you? 

Mr.  Seymour.  I  would  not  want  to  jeopardize  a  million  interests. 
If  it  would  cause  gri^-ater  evil  than  good,  then  I  would  not  legislate. 

Senator  Hiscock.  I  want  your  opinion  on  the  one  question  I  asked 
you. 

Mr.  Seymour.  I  think  that  so  far  as  concerns  the  people  of  the  North- 
west and  the  people  I  represent  they  do  not  desire  any  change  of  legis- 
lation. ■ 

Senator  Hiscock.  Will  you  answer  mj'  question  directly?  If  not,  I 
am  content  to  leave  the  matter  as  it  is. 

Mr.  Seymour.  I  thought  I  had  answered  your  question.  Senator,  by 
stating  that  1  did  not  think  the  ])resent  law  needed  any  amendment,  but  if 
there  be  any  evils  they  should  be  amended  by  conference  between  the 
two  Governments. 

Mr.  Hiscock.  There  is  a  more  summary  way  of  treating  the  subject. 
If  our  railroads  are  laboring  under  an  oppressive  law  and  a  law  which 
operates  in  favor  of  Canadian  roads  in  competition  with  them,  they  can 


THE    UNITED    STATES   AND    CANADA.  557 

be  relieved  of  it  in  two  ways  and  promptly.  Our  roads  may  be  relieved 
either  by  putting  the  Canadian  roads  on  the  same  basis  as  our  own 
roads  or  by  repealing  the  law.  Now  the  question  I  ask  you  is  wlu-ther 
you  are  in  favor  of  absolute  equality  between  the  two  systems,  so  far  as 
the  law  is  concerned,  or  if  you  are  in  favor  of  discrimination  in  favor 
of  Canada? 

Mr.  Seymour.  I  am  not  in  favor  of  any  discrimination  in  the  inter- 
est of  Canada;  and  I  am  not  in  favor  of  amending  the  law. 

Senator  HiscocK.  If  it  is  true  in  point  of  fVict,  I  am  not  going  to 
discuss  whether  it  is  or  not— that  is  another  question— that  the  Ameri- 
can roads  are  laboring  under  a  heavy  burden  and  an  onerous  restriction 
and  the  Canadian  roads  are  not — and  bear  in  mind  I  am  not  discussing 
the  question  whether  that  is  true  or  not,  but  assuming  it— do  you  -tell 
me  you  are  not  in  favor  of  changing  it  ? 

Mr.  Seymour.  I  do  not  like  to  answer  any  supposititious  question, 
but  only  confine  myself,  as  your  questions  confine  me,  to  the  law  as  it 
exists.  In  regard  to  the  present  law,  I  say  our  people  are  not  in  favor 
of  amending  it  in  any  way,  and  if  any  remedy  be  necessary  that  the 
change  be  made  by  treaty  or  conference. 

Senator  fiiscocK.  That  is  another  question  to  be  proved  by  facts.  I 
do  not  know  whether  it  has  been  proved  or  will  be  proved,  but  if  it  be 
true  the  question  I  would  like  you  to  pass  upon  is  whether,  if  the  Con- 
gress of  the  United  States  should  find  as  a  fact  that  there  were  dis- 
criminations in  favor  of  the  one  system  of  roads  as  against  the  other, 
you  are  in  favor  of  equalizing  it  or  not. 

Mr.  Seymour.  I  would  rather  not  answer  as  to  supposititious  ques- 
tions. 

Senator  HiscocK.  You  have  no  answer  to  make  to  the  questioDS 
put?     • 

JNIr.  Seymour.  I  thought  I  had  answered  them. 

The  Chairman.  As  you  do  not  seem  disposed  to  answer  these  ques- 
tions I  suppose  we  had  better  touch  upon  another  point. 

Mr.  Seymour.  I  thought  I  had  answered  as  far  as  I  could. 

The  Chairman.  I  will  ask  you  about  the  bridge  at  the  Sault.  Who 
owns  it  ? 

Mr.  Seymour.  It  is  owned  by  a  bridge  company,  I  think.  I  do  not  now 
know  who  is  the  president.  1  think  Mr.  McMillan  has  an  interest  in 
it.  As  I  understand,  it  is  owned  by  difltereut  interests  connected  with 
different  roads. 

The  Chairnan.  What  road  or  combination  controls  it? 

Mr.  Seymour.  I  could  not  say,  but  I  should  think  Mr.  Newberry, 
who  was  instrumental  in  pushing  the  law  through  Congress,  would  have 
some  interest  in  it,  and  I  think  Detroit  interests  are  behind  it. 

The  Chairman.  Does  the  Canadian  Pacific,  in  conjunction  with  these 
two  lines,  one  running  to  Minneapolis  and  the  other  to  Duluth,  control 
the  bridge  ? 

Mr.  SEY3I0UR.  Of  course  it  is  a  United  States  bridge,  and  the  law 
itself  provides  that  the  charges  shall  be  reasonable  and  so  forth. 

The  Chairman.  Are  there  any  further  suggestions  you  would  like  to 
make  ?  • 

Mr.  Seymour.  I  do  not  want  to  be  put  on  the  record  as  stating  that 
I  am  opposed  to  Am.erican  interests,  for  I  think  that  American  inter- 
ests should  be  protected.  I  do  not  think,  however;  that  American  in- 
terests are  injured  in  the  present  situation,  and  I  think  that  the  inter- 
ests of  the  producer  and  consumer  should  be  at  the  bottom  of  all 
legislation  that  affects  transportation  interests  in  this  country. 


658  TRANSPORTATION  INTERESTS  OP 

STATEMENT  OF  RANDALL  G.  BUTLER. 

Mr.  Randall  G.  Butler,  division  freight  agent  of  the  Wabash 
Western  Eailway,  appeared. 

The  Chairman.  Where  do  you  reside,  Mr.  Butler? 

Mr.  Butler.  In  Detroit. 

The  Chairman.  What  are  your  business  engagements  ? 

Mr.  Butler.  I  am  division  freight  agent  of  the  Wabash  Western 
Kail  way. 

The  Chairman.  As  a  railroad  man  representing  the  Wabash,  or,  for 
that  matter,  any  other  interests  that  you  may  represent,  what  have  you 
to  say  in  reference  to  the  question  under  discussion  f 

Mr.  Butler.  I  do  not  know  that  I  have  any  special  opinions  beyond 
the  fact  that  I  sliould  dislike  very  much  to  see  any  restrictions  placed 
upon  commerce  throiigh  Canada  that  would  prove  an  injury  to  the  lines 
in  Michigan  or  the  lines  working  through  Michigan.  I  am  heartily  in 
favor  of  such  restrictions  being  put  on  the  Canadian  lines  as  will  place 
them  on  a  plane  of  absolute  equality  with  their  American  competitors, 
if  that  regulation  does  not  already  exist. 

The  Chairman.  If  it  does  not  exist  you  are  in  favor  of  whatever  may 
bring  about  that  condition? 

Mr.  Butler.  Yes. 

The  Chairman.  What  is  your  judgment  as  to  whether  there  is  any 
disadvantage  to  American  roads  under  the  existing  law  and  conditions 
in  competition  with  Canadian  lines'? 

Mr.  Butler.  The  Canadian  lines  have  not,  to  my  knowledge,  taken 
advantage  of  any  restrictions  which  have  been  placed  upon  the  Aiuer- 
ican  lines.  I  am  very  frank  to  say  that,  in  my  judgment,  if  I  were  in 
charge  of  Canadian  lines  doiug  ousiuess  wholly  across  the  Dominion 
territory,  and  I  so  desired,  I  could  find  a  way,  i)erhaps,  to  deprive  the 
American  lines,  owing  to  the  restriction  under  which  they  are  placed, 
of  a  very  large  amount  of  traffic  without  fear  of  the  same  punishment 
that  would  be  inflicted  on  American  lines  if  they  did  the  same  thing. 

Senator  IIisoock.  You  say  you  could  find  a  way  to  do  certain  things, 
but  as  a  matter  of  fact  yon  would  not  do  that,  would  you  ? 

Mr.  Butler.  I  do  not  know.  I  have  never  viewed  it  from  a  Cana- 
dian .stand  point. 

The  Chairman.  What  are  your  Wabash  connections  at  Detroit  ? 

Mr.  Butler.  The  Grand  Trunk  almost  exclusively. 

The  Chairman.  Connecting  where"? 

Mr.  Butler.  At  Detroit  through  river  ferry. 

The  Chairman.  You  carry  goods  from  here  and  from  Chicago 
through  to  Eastern  ports'? 

Mr.  Butler.  Yes,  sir,  very  largely  from  Chicago. 

The  Chairman.  For  export  ? 

Mr.  Butler.  Yes,  sir,  very  largely. 

The  Chairman.  Is  there  any  difference  in  your  transportation  charges 
between  goods  shi[)ped  for  consumption  in  the  United  States  and  goods 
shipf)*d  for  export  ? 

Mr.  Butler.  Not  that  I  am  aware  of. 

The  Chairman.  Who  owns  the  line  from  Port  Huron  to  Chicago? 

Mr.  Butler.  The  corporation,  I  think,  is  known  as  the  Chicago  and 
Giand  Trunk. 

The  Chairman.  But  it  really  belongs  to  the  Grand  Trunk  proper, 
does  it  not  ? 


THE  UNITED  STATES  AND  CANADA.  55& 

Mr.  Butler.  I  have  no  positive  knowledge  that  it  does,  but  I  so 
understand  it. 
The  Chairman.  You  are  not  traffic  agent  on  that  particular  line  f 
Mr.  Butler.  No,  sir. 

THE  GRAND  TRUNK  AND  THE  INTERSTATE  LAW. 

The  Chairman.  Have  you  ever  observed  any  conditions  in  dealing 
with  the  traffic  of  the  country  that  indicated  to  your  mind  tliat  the 
Canadian  roads — the  Grand  Trunk  from  here^  for  instance — violated  the 
interstate  commerce  act? 

Mr.  Butler,  I  have  not. 

The  Chairman.  Do  they  profess  to  observe  the  act  with  respect  to 
shipments  from  all  points  in  the  Uuited  States? 

Mr.  Butler.  They  have  always  professed,  in  all  the  negotiations  I 
have  had  with  them,  to  observe  strictly  the  provisions  of  the  interstate 
commerce  law. 

The  Chairman.  The  substance,  then,  of  what  you  desire  to  say  is, 
that  if  the  American  lines  are  now  at  a  disadvantage  owing  to  Ameri- 
can regulations  as  between  themselves  and  the  Canadian  lines,  the 
Canadian  lines  ought  to  be  put  upon  the  same  level. 

Mr.  Butler.  Decidedly  so. 

The  Chairman.  The  same  restrictions  and  regulations  should  be 
placed  upon  them  as  exists  with  reference  to  the  American  linos,  you 
think? 

Mr.  Butler.  I  think  so. 

THE   INTERSTATE-COMMERCE   LAW. 

The  Chairman.  Do  you  find  any  embarrassment  in  operating  the 
Wabash  line  on  account  of  the  interstate  commerce  act? 

Mr.  Butler.  I  do  not. 

The  Chairman.  Do  you  think  what  is  commonly  known  as  the  long 
and  short  haul  clause  operates  to  the  disadvantage  of  the  railroad  ? 

Mr.  Butler.  Well,  I  am  not  exactly  in  a  i)Osition  to  speak  of  that, 
because  I  am  not  as  thoroughly  familiar  with  the  result  which  may  be 
experienced  in  our  earnings  as  the  management  wouhl  be. 

The  Chairman.  Who  is  the  managing  power  of  the  road  now  ? 

Mr.  Butler.  You  mean  who  holds  the  title  of  general  manager  ? 

The  Chairman.  Who  controls  and  owns  the  road?  It  has  just  gone 
out  of  the  hands  of  the  receiver,  has  it  not? 

Mr.  Butler.  It  is  rather  a  mixed  up  affair.  The  purchasing  commit- 
tee are  controlling  the  lines  east  of  the  Mississippi  Kiver  at  tlie  present 
time,  and  they  have  appointed  the  Wabash  Western  Railway  Company, 
which  is  a  corporation  west  of  the  Mississippi,  as  their  agent  to  operate 
the  line  west  of  the  river. 

The  Chairman.  So  that  it  is  being  operated  now  as  one  line. 

Mr.  Butler.  Yes,  sir. 

Senator  Harris.  How  long  have  you  been  engaged  in  the  railroad 
business  ? 

Mr.  Butler.  About  eighteen  years. 

Senator  Harris.  Have  the  through  rates  increased  or  diminished 
since  the  interstate  commerce  act  went  into  operation  I 

Mr.  Butler.  I  think  they  are  practically  about  the  same  as  they 
were. 


560  TRANSPORTATION  INTERESTS  OP 

Senator  Harris.  WLat  effect  has  it  liad  upon  rates  on  the  short 
haul — the  local  freight  ? 

Mr.  Butler.  They  have  been  diminished. 

Senator  Harris.  Largely  or  to  a  small  extent  f 

Mr.  Butler.  In  some  pases  largely. 

Senator  Reagan.  Are  you  advised  as  to  whether  there  has  been  any 
considerable  increase  in  tonnage  over  the  Canadian  roads  within  the 
last  twelve  months  ? 

Mr.  Butler.  Yes,  sir.  Judging  from  the  tonnage  reports  published 
or  furnished  by  the  Central  Traffic  Association  I  should  say  there  had 
been. 

Senator  Reagan.  Will  you  please  state  your  opinion  as  to  the  in- 
crease of  tonnage  over  the  Canadian  roads  since  the  passage  of  the 
interstate  commerce  law  as  compared  with  the  increase  of  tonnage  on 
the  roads  south  of  the  lakes  ? 

Mr.  Butler.  My  recollection  is  that  prior  to  the  time  the  law  be- 
came effective  the  percentage  of  the  Canadian  roads  of  east-bound  busi- 
ness tonnage  from  Chicago  probably  ran  in  the  neighborhood  of  20  per 
cent.,  and  lately  there  have  been  several  instances  where  it  has  been 
very  much  larger  than  that. 

Senator  Reagan.  Can  you  state  how  large  ? 

Mr.  Butler.  I  have  noticed  in  the  papers  of  its  having  reached  over 
35  per  cent. ;  perhaps  40  per  cent. 

Senator  Reagan.  To  what  do  you  attribute  that  gain  ? 

Mr.  Butler.  I  would  not  like  to  make  any  guess  as  to  it. 

Senator  Reagan.  I  did  not  know  but  that  your  knowledge  of  the 
business  as  a  railroad-man  might  give  you  some  reasonable  basis  of  ex- 
planation of  that  increase. 

Mr.  Butler.  If  I  had  an  opinion  I  could  not  probably  substantiate 
it  to  the  satisfaction  of  this  committee  or  any  one  else. 

Senator  Hiscock.  I  really  wish  you  would  give  us  your  opinion. 

Mr.  Butler.  1  have  no  opinion,  as  a  matter  of  fact. 

Senator  Harris.  It  would  seem  to  me  you  would  have  some  opinion. 
As  you  say,  you  may  not  be  able  to  satisfy  the  committee,  but  the  com- 
mittee would  be  glad  to  have  such  an  opinion  as  you  have  formed  from 
jour  stand-point. 

Mr.  Butler.  I  will  qualify  that  answer  a  little.  Senator,  by  saying 
that  I  have  not  a  definite  opinion  as  to  the  methods  which  have  been 
employed  to  increase  the  east-bound  tonnage  on  the  Grand  Trunk.  I 
have  heard  various  theories  advanced  by  railroad  people,  and  have  also 
heard  the  officials  of  the  Grand  Trunk  assign  some  reasons  for  it.  As 
I  said  before,  they  are  comi^lying  absolutely  with  the  provisions  of  the 
interstate  commerce  act. 

Senator  Harris.  I  will  not  press  the  question.  I  would  simply  like 
to  have  the  opinion  of  gentlemen  whose  experience  and  connection 
with  the  matter  familiarize  them  with  it. 

The  Chairman.  Your  business  from  Detroit  is  nearly  altogether  on 
the  Grand  Trunk? 

Mr.  Butler.  The  relations  of  our  Detroit  line  have  been  almost  ex- 
clusively with  the  Grand  Trunk. 

The  Chairman.  How  many  miles  has  the  Wabash  in  Michigan  ? 

Mr.  Butler.  About  86  miles. 

The  Chairman.  You  have  a  Toledo  connection,  have  you  not? 

Mr.  Butler.   Ves,  sir. 

The  Chairman.  Have  you  a  Toledo  connection  direct  from  Detroit? 

Mr.  Butler.  No,  sir;  we  have  no  Toledo  connection  from  Detroit. 


THE    UNITED    STATES    AND    CANADA.  561 

ADDITIONAL  STATEMENT  OF  W.  H.  SEYMOUR. 

Mr.  Seymour.  I  should  like  to  say  a  word  in  relation  to  a  question 
asked  me.  If  a  definite  statement  is  desired — I  thought  I  had  stated 
my  views  fully,  but  you  do  not  seem  to  so  consider  it — in  answer  to 
the  question  asked,  whether  I  favored  any  legislation  which  aids  the 
Canadian  roads  in  competition  with  the  American  roads,  I  should  an- 
swer no,  but  then  I  should  state  my  views  as  before  given. 

Senator  Harris.  If  existing  laws  give  the  Canadian  roads  an  ad- 
vantage over  the  American  competing  roads,  would  you  favor  modify- 
ing the  law  so  as  to  put  them  on  a  platform  of  equality  ? 

Mr.  Seymour.  I  do  not  think  there  should  be  any  change  in  the 
American  law.  If  there  is  any  injury  to  American  interests — the 
American  roads — then  I  think  it  should  be  remedied  in  some  way,  but 
so  as  not  to  injure  in  a  greater  way  and  to  a  larger  extent  American 
interests. 

I  simply  desire  to  answer  the  question  squarely. 

STATEMENT  OF  S.  G.  COOK. 

Mr.  S.  G.  Cook,  a  lumber  dealer,  of  Minneapolis,  appeared. 

The  Chairman.  Where  do  you  reside,  Mr.  Cook  ? 

Mr.  Cook.  In  Minneapolis. 

The  Chairman.  What  is  your  business  ? 

Mr.  Cook.  I  am  in  the  lumber  business. 

The  Chairman.  You  have  been  listening  to  this  discussion  and  the 
hearing.  What  have  you  to  say  touching  the  subject  under  investiga- 
tion ? 

Mr.  Cook.  I  came  here  with  no  expectation  of  giving  any  testimony 
on  this  subject,  but  Mr.  Bowen  asked  me  to  say  something  in  regard  to 
the  influence  of  the  "  Soo"  route  in  our  section. 

The  Chairman.  Proceed  with  any  statement  you  desire  to  make. 

Mr.  Cook.  The  "  Soo  "  route  is  only  a  recent  thing. 

The  Chairman.  You  are  not  dependent  upon  the  "  Soo"  road  ? 

Mr.  Cook.  No,  sir ;  we  have  six  or  seven  roads. 

The  Chairman.  What  proportion  of  the  business  of  your  city  east- 
bound  is  done  over  the  "  Soo  "  road  ? 

Mr.  Cook.  I  should  jiresume  that  of  the  flour  business  it  might  be 
15  or  20  per  cent.  I  am  not  fully  informed  as  to  the  statistics  and 
would  not  like  to  say  exactly.  From  looking  over  the  papers  from 
week  to  week  I  should  think  that  would  be  a  fair  estimate. 

The  Chairman.  From  15  to  20  per  cent.,  did  you  say  ? 

Mr.  Cook.  Yes,  sir. 

The  Chairman.  Would  you  have  suflicient  means  of  transportation 
east  without  the  "  Soo  "  road  ? 

Mr.  Cook,  I  think  we  would.  I  think,  however,  that  it  is  an  advan- 
tage to  us  to  have  it. 

The  Chairman.  How  is  it  an  advantage?  It  is  simply  another  road 
to  be  kept  up,  is  it  not  ? 

Mr.  Cook.  By  the  use  of  it  we  strike  a  different  territory,  especially 
on  foreign  shipments. 

The  Chairman.  What  do  you  mean  by  "  strike  a  different  territory  "  t 

Mr.  Cook.  We  strike  a  shorter  route  to  Montreal.    Our  people  de- 
sire that  the  line  should  be  maintained. 
6643 36 


562  TRANSPORTATION    INTERESTS    OF 

The  Chairman.  Do  you  get  a  cheaper  rate  to  New  York  oii  the 
"  Soo  "  road  than  you  do  ou  the  Northwestern,  or  the  Milwaukee  and 
St.  Paul,  or  the  Burlington  I 

Mr.  Cook.  I  think  the  "  Soo"  line  has  been  the  means  of  reducing 
rates  in  many  instances. 

The  Chairman.  How  ? 

Mr.  Cook.  By  making  lower  rates. 

The  Chairman.  Do  they  publish  lower  rates  ? 

Mr.  Cook.  Yes,  sir. 

The  Chairman.  Does  the  "  Soo  "  road  publish  its  rates  from  Minne- 
apolis or  St.  Paul  to  New  York  or  Boston  ? 

Mr.  Cook.  I  understand  they  do. 

The  Chairman.  And  when  they  are  published  they  are  sometimes 
lower  than  the  rates  on  the  American  lines;  is  that  so? 

Mr.  Cook.  I  think  it  is. 

The  Chairman.  You  do  not  know  that  they  secretly  carry  out  a  dif- 
ferent rate  from  that  published  *? 

Mr.  Cook.  I  never  heard  that  they  did. 

The  Chairman.  You  are  engaged  in  the  lumber  business,  I  believe? 

Mr.  Cook.  Yes,  sir. 

The  Chairman.  Are  you  in  the  habit  of  shipping  much  lumber  over 
the  "  Soo  "  road  ? 

Mr.  Cook.  Very  little.  We  are  located  on  the  Northwestern  road, 
aiul  when  we  ship  east  we  ship  over  the  Northwestern  to  Chicago. 

The  Chairman.  So  that  the  "  Soo  "  road  is  practically  of  no  personal 
benefit  to  you. 

Mr.  Cook.  Very  little.  Sometimes  we  ship  a  little  out  on  that  road 
from  Minneapolis. 

The  Chairman.  Is  it  not  a  fact  that  Minneapolis  and  St.  Paul  are 
furnished  with  rather  more  roads  now  than  they  need? 

Mr.  Cook.  I  think  it  is. 

The  Chairman.  Where  half  a  dozen  roads  are  built  and  have  to  be 
kept  up  and  two  roads  will  do  the  business,  it  results  in  higher  charges 
than  if  there  were  fewer  roads,  or  just  the  number  required  to  do  the 
business,  does  it  not  ? 

Mr.  Cook.  1  think  half  the  roads  could  do  the  business,  probably. 

The  Chairman.  So  that  there  was  no  necessity  for  building  that 
road  except  to  get  a  shorter  line? 

Mr.  Cook.  Th^re  are  some  who  think  the  road  is  not  an  advantage  to 
us,  but  the  majority  of  the  people  think  it  is. 

The  Chairman.  I  believe  the  distance  from  Minneapolis  to  the  Sault 
has  been  given. 

Mr.  Cook.  Yes,  sir ;  Mr.  Seymour  stated  it.  It  is  between  480  and 
500  miles. 

The  Chairman.  How  far  is  it  from  your  city  to  Duluth  ? 

Mr.  Cook.  Somewhere  in  the  neighborhood  of  150  miles. 

The  Chairman.  Is  there  a  road  between  Minneapolis  and  Duluth  ? 

Mr.  Cook.  Yes,  sir.  There  are  two  or  three  roads  runniug  between 
Minneapolis  and  Duluth. 

The  Chairman.  What  are  they  ? 

Mr.  Cook.  The  St.  Paul  and  Duluth  and  the  Omaha  have  lines  to 
Duluth. 

The  Chairman.  "The  Omaha" — is  that  the  proper  name  of  the  road? 

Mr.  Cook.  No,  sir;  its  proper  name  is  the  Chicago,  St.  Paul,  Min- 
neapolis and  Omaha.  That  was  built  by  St.  Paul  people  and  origi- 
nally was  the  Duluth  road,  I  think.  There  is  also  the  Eastern  Minne- 
sota, which  is  a  branch  of  the  Hill  road. 


THE    UNITED    STATES   AND    CANADA.  563 

The  Chairman.  Does  that  touch  Minneapolis  f 

Mr.  Cook.  Yes,  sir. 

The  Chairman.  And  runs  to  Duluth? 

Mr.  Cook.  Yes,  sir. 

The  Chairman.  So  that  there  are  three  or  four  roads  to  Duhith  from 
your  town  ? 

Mr.  Cook.  Yes,  sir. 

The  Chairman.  I  suppose  a  large  amount  of  your  flour  and  grain 
and  lumber  coming  east  goes  to  Duluth  first  and  then  by  steamers  ? 

Mr.  Cook.  A  large  amount  of  flour  goes  that  way. 

The  Chairman.  What  do  you  know  about  the  shipment  of  flour  from 
St.  Paul  and  Minneapolis — Minneapolis  especially,  as  most  of  tbe  flour 
is  manufactured  there? 

Mr.  Cook.  I  am  not  an  authority  on  that. 

Senator  Reagan.  Do  you  know  the  distance  from  St.  Paul  to  New 
York  bj'  the  shortest  line  south  of  the  lakes  ? 

Mr.  Cook.  That  is  this  way.     [Indicating  on  map.] 

Senator  Reagan.  Not  this  way  [indicating],  but  south  of  the  lakes. 

Mr.  Cook.  From  St.  Paul  to  New  York  by  the  "Soo"  route  is  a  little 
longer  line,  1  think.  I  do  not  know  the  exact  distance,  but  I  think  it 
is  a  little  longer  than  by  the  American  lines. 

Senator  Reagan.  And  how  to  Boston? 

Mr.  Cook.  From  St.  Paul  to  Boston  by  the  "Soo"  route  is  about  150 
miles  shorter  than  by  the  American  roads. 

Mr.  Edwards.  Mr.  Chairman,  if  I  may  be  permitted  to  do  so,  I  would 
like  to  ask  Mr.  Cook  a  few  questions  in  regard  to  distances. 

The  Chairman.  You  can  do  so. 

Mr.  Edwards.  Mr.  Cook  stated  that  the  advantage  to  the  Minne- 
apolis people  in  having  the  Soo  line  in  connection  with  the  Canadiau 
Pacific  to  the  sea-port  was  in  its  being  the  shorter  line.  I  woukl  like 
to  ask  him  what  the  distance  is  from  Minneai^olis  to  Montreal,  New 
York,  and  Boston. 

Mr.  Cook.  I  could  not  give  you  the  distance,  but  via  the  " Soo"  line 
it  is  shorter  to  Montreal. 

Mr.  Edwards.  Do  you  know  that  it  is  shorter  to  New  York  ? 

Mr.  Cook.  I  do  not  know  that  it  is. 

Mr.  Edwards.  You  stated  that  the  "Soo"  line  was  shorter  than  the 
American  lines  to  Boston  ;  can  you  state  how  much  shorter  ? 

Mr.  Cook.  About  150  miles. 

Mr.  Edwards.  Can  you  give  the  mileage  of  the  "Soo"  line  from  Min- 
neapolis to  Montreal,  New  York,  and  Boston  ? 

Mr.  Cook.  No,  I  can  not. 

The  Chairman.  Can  you  give  the  distances,  Mr.  Edwards,  so  that  they 
can  go  into  the  record  ? 

Mr.  Edwards.  Yes,  sir.  From  Minneapolis  to  Montreal  is  1,118 
miles;  to  New  York  1,436  miles;  to  Boston  1,423. 

The  Chairman,  By  what  road  ? 

Mr.  Edwards.  The  distances  I  have  given  are  via  the  "  Soo  "  line  and 
the  Canadian  Pacific,  and  were  obtained  from  information  i)ublished 
by  Minneapolis  interests  at  the  time  the  road  was  being  constructed. 

Now,  the  distance  by  the  all-rail  shortest  route  from  Minneapolis  to 
New  York,  via  Chicago  and  the  Pennsylvania  Railroad,  is  1,332  miles. 

The  Chairman.  Can  you  give  the  distance  to  Boston  ? 

Mr.  Edwards.  No,  sir. 

The  Chairman.  Can  you  give  the  distance  from  Milwaukee  to  Mon- 
treal? 


564  TRANSPORTATION  INTERESTS  OF 

Mr.  Edwards.  The  distance  from  Milwaukee  to  Montreal,  crossing 
the  lake,  is  1,171  miles;  to  Boston  1,365;  to  New  York  1,272,  or  over 
150  miles  further  to  New  York  by  the  "  Soo  "  line  than  by  other  lines. 

Mr.  Cook.  Not  further  to  Boston,  though. 

Mr.  Edwards.  It  is  further  to  Boston  by  the  "  Soo  "  line  than  by  any 
other  line,  even  by  purely  all  American  lines. 

The  Chairman.  Is  there  any  other  gentleman  who  would  like  to  be 
heard  ?    I  ask  this  because  there  will  be  no  afternoon  session  to- day. 

ADDITIONAL  STATEMENT  OF  ASHLEY  POND. 

Mr.  Pond.  Mr.  Chairman,  may  I  be  permitted  to  say  a  word  f 
The  Chairman.  Certainly ;  we  will  be  glad  to  hear  you. 

THE  question   OF  REQUIRING  LICENSES. 

Mr.  Pond.  I  was  asked  yesterday  if  there  was  any  objection  to  re- 
quiring the  American  lines  to  obtain  licenses  from  the  Interstate  Com- 
merce Commission.  I  stated  that  I  could  see  no  objection  to  it.  The- 
oretically there  is  no  objection ;  but  practically  it  seems  to  me  that  such 
a  system  would  be  very  cumbersome,  and  there  would  be  no  remedy  even 
under  a  license  system  except  through  the  courts. 

Now,  the  American  lines  are  within  reach  of  the  courts  at  all  times ; 
the  Canadian  lines  are  not.  The  only  effectual  remedy  as  to  the  Cana- 
dian roads,  it  seems  to  me,  must  be  by  the  action  of  the  Commission  and 
not  by  the  courts.  Under  the  license  system  the  Commission  could  af- 
ford an  immediate  remedy.  To  go  into  the  courts  would  be  a  long  pro- 
cess. If  you  proceed  criminally  you  must  satisfy  the  jury  beyond  a 
reasonable  doubt  by  evidence  of  a  violation  of  the  law  before  you  can 
convict.  The  only  other  way  is  by  an  injunction.  That  is  not  an  ef- 
fectual remedy  because,  as  I  stated  yesterday,  of  the  difficulty  in  getting 
jurisdiction.  But  if  the  power  is  lodged  with  the  Interstate  Commerce 
Commission  it  can  investigate  the  matter,  and  if  it  is  satisfied  that  the 
law  has  been  violated  it  can  revoke  the  license  and  stop  the  inter- 
change of  cars,  stop  the  passage  of  through  cars  by  the  action  of  the 
customs  department. 

Senator  HiscocK.  What  you  mean  is  this:  That  all  the  American 
roads  are  subject  to  the  same  prosecution  under  the  law  without  a 
license  that  they  would  be  with  a  license. 

Mr.  Pond.  Yes,  sir. 

Senator  HiscocK.  Do  you  mean  that  the  American  roads  and  the 
officers  of  the  American  roads  are  under  the  jurisdiction  of  the  courts 
at  all  times  and  can  be  punished  by  the  criminal  courts,  but  as  to  the 
Canadian  roads  there  is  no  jurisdiction  for  any  offense  against  the  in- 
terstate commerce  law? 

Mr.  Pond.  The  American  roads  can  be  reached  very  effectually  by 
bills  in  equity  and  by  injunctions. 

The  Chairman.  Would  you  give  the  Interstate  Commerce  Com- 
mission absolute  power  to  revoke  the  license  without  any  sort  of  appeal 
or  right  to  the  railroad  to  go  into  court  and  determine  whether  it  was  a 
just  act  on  the  part  of  the  Commission  f 

Mr.  Pond.  I  think  it  would  be  safe  to  give  the  Commission  that  power. 
I  do  not  know  why  the  Commission  could  not  act  as  justly  as  the  court 
in  that  respect.  To  that  extent  it  would  be  a  court  of  equity.  There 
is  no  reason  why  an  appeal  should  lie,  unless  to  the  Supreme  Court  of 


THE   UNITED   STATES   AND   CANADA.  565 

the  United  States;  certainly  not  to  any  circuit  court.  As  the  hiw  now 
stands  the  Commission  has  no  power.  When  a  complaint  is  brought  be- 
fore it  the  Commission  can  simply  say  that  the  complaint  is  well  founded, 
bnt  it  can  do  nothing. 

The  Chairman.  It  can  turn  over  the  proceedings  or  whatever  evi- 
dence it  has  to  the  district  attorneys. 

Mr.  Pond.  Yes,  sir.  The  act  provides  that  the  finding  of  fact  by  the 
Commission  shall  be  prima  facie  evidence,  but  it  would  not  be  prima 
facie  evidence  in  a  criminal  prosecution. 

Senator  Hiscock.  Would  it  not  be  rather  summary  to  trust  any 
commission  composed  of  gentlemen  who  need  not  necessarily  be  law- 
yers or  judges,  and  who  are  selected,  of  course,  with  reference  to  their 
looking  after  the  interests  of  different  sections  of  the  country  ?  Do 
you  not  think  it  would  be  rather  a  summary  proceeding  to  give  such  a 
commission  power  to  close  all  the  international  trade  between  this 
countrv'  and  Canada  without  a  review  by  the  courts  ? 

Mr.  Pond.  I  said  that  there  was  no  objection  to  a  review. 

Senator  Hiscock.  The  question  is,  if  we  allow  any  five  men  to  sus- 
pend commercial  relations  between  this  country  and  a  foreign  nation, 
woukl  not  that  power  need  be  very  carefully  guarded  ? 

Mr.  Pond.  There  is  no  doubt  but  that  provision  should  be  made  for 
review,  but  the  proceeding  should  be  somewhat  summary.  Certainly 
there  ought  not  to  be  a  provision  for  review  and  then  for  an  appeal, 
so  that  a  proceeding  of  that  kind  should  be  suspended  indefinitely. 

Senator  Hiscock.  Now,  let  me  ask  you  this  question  which  occurs 
to  me  just  at  this  moment,  and  which  I  submit  to  you  as  a  lawyer:  Of 
course  Congress  has  the  power  to  regulate  foreign  commerce  and  do- 
mestic commerce ;  but  do  you  think  that  Congress  could  abdicate  the 
power  to  a  commission  to  practically  prohibit  the  commerce  between 
our  country  and  a  foreign  nation "? 

Mr.  Pond.  No,  I  do  not;  but  I  do  not  think  under  a  license  system 
properly  adjusted  it  would  abdicate  that  power.  The  system  ai)plies  to 
the  roads  severally,  and  you  simply  give  power  to  the  Commission  to  say 
that  a  certain  carrier  shall  not  engage  in  that  business. 

Senator  Hiscock.  In  other  words,  it  is  not  a  mattter  between  the 
two  nations,  but  between  the  nation  and  the  carrier. 

Mr.  Pond.  The  corporation  and  the  country.  I  do  not  see  that  there 
is  any  trouble  in  that  direction. 

ADDITIONAL  STATEMENT  OF  ALONZO  C.  EAYMOND. 

The  Chairman.  I  understand  that  Mr.  Raymond  desires  to  submit 
some  remarks  supplemental  to  his  former  statement. 

Mr.  Raymond.  As  explanations  seem  to  be  in  order  I  would  like  to 
make  one.  Senator  Hiscock  asked  me  yesterday  if  I  knew  any  rail- 
road men  who  were  in  favor  of  cutting  off  any  Canadian  railroad  line, 
and  he  proceeded  upon  the  hypothesis  that  I  was  fighting  a  phantom. 
I  will  say  to  Senator  Hiscock  that  I  will  agree  to  furnish  him  one  hun- 
dred editorials  of  leading  newspapers  in  the  United  States  advocating 
tha4;  thing. 

Senator  Hiscock.  That  might  be  true. 

Mr.  Raymond.  They  represent  public  sentiment. 

Mr.  Pond.  I  thought  they  were  all  working  the  other  way,  so  far  as 
my  observation  has  gone. 

Mr.  Raymond.    It  is  very  likely  that  all  railroad  interests  work 


566  TRANSPORTATION   INTERESTS   OF 

quietly  to  accomplish  desired  cuds.  If  Mr.  Depew  or  Mr.  Roberts  in 
representing  any  leading  railroad  interest  wanted  to  do  the  very  thing 
that  Senator  HiscoCK  said  was  a  phantom,  it  is  not  likely  that  they 
would  publicly  advertise  that  that  is  what  they  wanted.  They  would 
be  just  as  likely  to  take  the  other  course,  and  the  influences  would  be 
working  to  accomplish  their  purpose  just  the  same. 

Senator  HiscocK.  The  difit'erence  between  you  and  me  in  respect  to 
your  last  remark  is  this :  that  I  have  always  been  accustomed  to  takjc 
peoi)le  as  they  talk  rather  than  to  infer  that  men  meant  the  contrary  of 
what  they  said.  I  believe  in  the  sincerity  of  people  and  I  have  always 
acted  upon  that  principle.  I  know  there  is  this  about  it,  that  there  is 
quite  a  non-intercourse  sentiment,  and  I  think  very  likely  you  can  find  a 
hundred  newspapers  that  are  distributed  among  70,000,000  people,  and 
the  proprietors  of  and  writers  on  a  hundred  newspapers,  like  General 
Wilson,  of  Delaware,  who  squarely  insist  that  the  true  way  to  annex 
Canada  to  this  country  is  by  non-intercourse.  I  have  not,  however, 
even  heard  it  suggested  by  any  reasonable  railroad  manager  that  that 
thing  should  be  done. 

Mr.  Raymond.  I  am  very  glad  to  hear  that,  and  I  hope  it  is  not  in 
the  mind  of  any  railroad  manager. 

Senator  Hiscock.  You  said  something  yesterday  in  reference  to  why 
this  investigation  took  place,  or  something  of  that  kind. 

Mr.  Raymond.  I  think  not. 

Senator  Hiscock.  Some  one  did,  and  I  think  I  am  justified  in  saying 
that  there  certainly  was  not  the  slightest  railroad  influence  at  the  bot- 
tom of  it.  It  was  simply  prompted  by  a  desire  to  i)erfect  the  interstate 
commerce  law,  and  to  study  the  question.  The  purpose  is  to  i^erfect 
legislation  on  the  subject. 

Mr.  Raymond.  I  simply  rose  to  make  an  explanation.  I  do  not  want 
to  have  it  inferred  that  in  making  my  explanation  I  charge  any  one  or 
any  American  railroad  interest  directly ;  but  I  have  been  studying  this 
subject  somewhat  through  the  newspapers,  and  I  know  that  there  are 
large  numbers  of  newspapers  in  this  country  that  are  harping  on  this 
proposition  day  after  day.  The  Kew  York  Sun  for  one  has  been  doing 
it  constantly  for  two  years. 

Senator  IIiscocK.  I  think  Mr,  Dana  would  tell  you  that  he  favored 
the  course  you  allude  to  because  he  thinks  it  the  better  method  of  an- 
nexing Canada. 

Mr.  Raymond.  This  influence  that  is  working  through  the  news- 
papers, advocating  the  cutting  off  of  Canadian  lines,  certainly  does  not 
come  from  the  masses  of  the  people  who  are  benefited  bj'  the  competition 
of  the  Canadian  roads,  and  must  necessarily  come  in  some  way  from  the 
competing  interests. 

The  Chairman.  As  no  one  else  seems  desirous  of  being  heard,  the 
committee  will  adjourn  to  meet  in  Chicago  to  morrow. 

At  12  o'clock  m.  the  committee  adjourned  to  meet  in  Chicago  to-mor- 
row at  10  o'clock  a.  m. 


Chicago,  III.,  July  13,  1889. 
The  committee  met  at  10  o'clock  a.  m.,  pursuant  to  adjournment. 
The  Chairman.  The  resolution  under  which  we  are  conducting  this 
inquiry  will  be  read  by  the  clerk. 
The  resolution 'was  read. 


THE    UNITED    STATES    AND    CANADA.  567 

STATEMENT   OF  J.   M.   HANNAFORD. 

Mr.  J.  M.  HANNAFORD,  traffic  manager  of  the  Northern  Pacific  Eail- 
road  Company,  appeared. 

The  Chairman.  I  suppose,  Mr.  Hannaford,  you  have  received  a  copy 

of  the  resolution  just  read. 

Mr.  Hannaford.  Yes^  sir. 

The  Chairman.  Where  do  you  reside? 

Mr.  Hannaford.  St.  Paul,  Minnesota. 

The  Chairman.     What  is  your  business  engagement? 

Mr.  Hannaford.  I  am  traffic  manager  of  the  Northern  Pacific. 

The  Chairman.  How  long  have  you  occupied  that  position? 

Mr.  Hannaford.  Since  it  was  created. 

The  Chairman.  Several  years  ? 

Mr.  Hannaford.  Yes,  sir.  I  can  not  give  you  the  exact  date.  I 
fiave  been  with  the  company,  in  the  traffic  department,  since  May,  1872. 

The  Chairman.  You  probably  have  some  definite  views  that  you 
desire  to  give  to  the  committee,  and,  if  so,  please  proceed  to  give  them 
in  your  own  way. 

Mr.  Hannaford.  I  have  made  no  preparation.  I  received  a  tele- 
gram from  Mr.  Oakes,  in  reply  to  one  that  you  sent  to  him  on  the  Otb. 
He  was  in  the  East  and  stated  that  he  could  not  be  here  himself,  and 
asked  me  to  be  present.  I  received  a  circular  transmitted  by  mail  to 
me  only  yesterday  afternoon,  so  I  did  not  know  what  the  scope  of  the 
committee's  questions  would  be. 

The  Chairman.  What  is  the  volume  of  business  east  and  west  over 
the  Northern  Pacific  ilailroad? 

Mr.  Hannaford.  The  tonnage? 

The  Chairman.  Yes. 

Mr.  Hannaford.  I  could  not  give  that.  It  is  on  file  with  the  Inter- 
state Commerce  Commission  for  last  year.  Onr  annual  report  (covered 
the  whole  of  it.  It  consists  of  general  merchandise  west-bound,  and 
hops,  wool,  grain,  and  salmon,  canned  fish  largely. 

The  Chairman.  Has  the  business  of  the  Northern  Pacific  been  in- 
creasing or  diminishing? 

Mr.  Hannaford.  It  has  been  increasing  for  the  last  two  or  three 
years. 

The  Chairman.  About  what  per  cent.,  from  year  to  year,  if  you  have 
any  definite  knowledge  on  the  subject? 

Mr.  Hannaford.  The  general  business  of  the  company  has  more 
than  doubled  within  the  last  two  or  three  years. 

The  Chairman.  Has  the  gross  amount  of  money  made  doubled  also? 

Mr.  Hannaford.  The  gross  amount  has.  I  made  the  statement 
from  the  earnings  rather  than  from  the  tonnage. 

The  Chairman.  Made  that  statement  to  the  Commission,  you  mean? 

Mr.  Hannaford.  Yes,  sir. 

The  Chairman.  You  do  not  remember  what  that  statement  is  in  fig- 
ures, do  you? 

Mr.  Hannaford.  I  have  not  those  figures. 

The  Chairman.  Have  you  a  report  at  your  command  in  the  city  ? 

Mr.  Hannaford.  I  think  I  could  find  one  in  our  ofiice;  the  annual 
report  for  last  year. 

The  Chairman.  Do  you  know  anything  about  the  Canadian  Pacific 
Railroad  ? 

Mr.  Hannaford.  Yes,  sir ;  a  great  deal. 


568  TRANSPORTATION  INTERESTS  OP 

The  Chairman.  Do  you  have  any  foreign  trade  ? 

Mr.  Hannaford.  We  have  very  little  Asiatic  trade;  what  we  have 
is  tea,  largely. 

The  Chairman.  You  say  very  little. 

Mr.  Hannaford.  I  will  give  you  the  history  of  it. 

Three  years  ago  we  went  into  the  Asiatic  business,  first  chartering 
sailers,  and  made  very  little  success  of  it.  Last  year  we  had  fine  sail- 
ers and  brought  about  12,000,000  pounds  of  tea  to  this  country.  This 
year  we  have  one  ship  afloat,  one  ship  loaded,  which  ought  to  sail  to- 
day or  to-morrow,  and  one  under  charter  which  we  have  not  commenced 
to  load. 

The  Chairman.  Commenced  to  load  where  1 

Mr.  Hannaford.  Yokohama,  Japan. 

The  Chairman.  And  to  where  do  you  carry  the  tea? 

Mr.  Hannaford.  St.  Paul,  Minneapolis,  Chicago,  New  York,  Mon- 
treal, Toronto,  and  all  the  interior  cities. 

The  Chairman.  Is  it  consigned  to  anybody  ? 

Mr.  Hannaford.  Largely  to  order.  I  think  all  the  tea  is  handled 
that  way. 

The  Chairman.  What  do  you  mean  by  that? 

Mr.  Hannaford.  Bills  of  lading  are  issued  to  the  owners  of  the  tea, 
and  the  tea  is  not  sold  by  them  until  after  it  arrives  and  the  bills  of  lad- 
ing are  drawn  upon.  It  is  a  cash  transaction  as  far  as  the  merchants 
are  concerned.  The  bills  are  drawn  on,  and  as  the  merchant  sells  the 
tea  he  indorses  over  the  bill  of  lading. 

The  Chairman.  That  is,  a  New  York  or  Boston  merchant,  or  wher- 
ever he  might  be? 

Mr.  Hannaford.  Wherever  he  might  be. 

The  Chairman.  Do  you  get  much  foreign  trade  that  does  not  come 
in  your  own  ships  ? 

Mr.  Hannaford.  None  whatever. 

The  Chairman.  Why  not  ? 

Mr.  Hannaford.  There  are  no  ships  coming  to  our  western  termini 
except  those  we  bring  there  ourselves. 

The  Chairman.  Does  each  one  of  these  transcontinental  lines  have 
its  own  ship  line  ? 

Mr.  Hannaford.  Either  their  own  or  under  their  control. 

The  Chairman.  Does  either  of  them  get  anything  that  does  not  come 
over  on  their  own  vessels  ? 

Mr.  Hannaford.  I  think  not.  A  solitary  sailer  now  and  then  will 
make  a  charter,  but  we  have  never  had  one. 

The  Chairman.  Do  you  get  your  share  of  the  trade  that  conies  to 
Portland,  Oregon,  and  !San  Francisco,  and  those  ports,  as  between  yours 
and  the  other  transcontinental  lines  ? 

Mr.  Hannaford.  I  should  say  no ;  possibly  the  other  lines  would 
say  yes.  Our  arrangements  with  the  Canadian  Pacific  are  such  that 
we  are  practically  shut  out  of  San  Francisco. 

The  Chairman.  Why  do  you  say  your  arrangements  ? 

the  transcontinental  association. 

Mr.  Hannaford.  I  suppose  you  are  familiar  with  the  Transconti- 
nental Association  ? 

The  Chairman.  Yes. 

Mr.  Hannaford.  All  the  transcontinental  lines  are  members.  That 
association  was  formed  for  the  maintenance  of  rates.     The  lines  are  so 


THE  UNITED  STATES  AND  CANADA.  569 

largely  separated,  there  being  the  Southern  Pacific  on  the  extreme 
south  and  the  Canadian  Pacific  on  the  extreme  north,  that  it  is  neces- 
sary for  any  one  line  to  know  what  the  other  is  doing,  and  to  have  all 
those  lines  in  the  same  rate  association.  It  was  a  pool  before  the  pas- 
sage of  the  interstate  commerce  law,  but  afterward  was  reformed  into 
a  rate  association.  Before  it  was  formed  the  Canadian  Pacific,  who  were 
not  members  of  that  association,  made  such  rates  as  they  saw  fit,  and 
it  was  almost  impossible,  the  volume  of  traflfic  being  very  small  from 
Puget  Sound  points,  for  us  to  get  anything  scarcely. 

THE  CANADIAN  PACIFIC  DIFFERENTIALS. 

When  this  association  was  formed  we  invited  the  Canadian  Pacific  to 
become  members  of  it,  so  that  we  could  know  what  rates  they  were 
making,  and  as  one  of  the  conditions  of  their  becoming  members  they 
demanded  a  differential  rate ;  in  other  words,  that  they  might  be  per- 
mitted to  make  rates  from  San  Francisco  that  were  less  than  those  made 
by  any  of  the  other  lines. 

The  Chairman.  On  what  ground? 

Mr.  Hannaford.  Well,  on  the  ground  that  they  could  not  get  the 
business  at  even  figures,  I  suppose.  It  was  a  sort  of  stand-and-deliver 
policy.  They  would  not  come  in  unless  we  allowed  them  those  ditter- 
entials.  Finally  it  was  conceded  that  on  business  between  San  Fran- 
cisco and  Chicago  the  Canadian  Pacific  might  make  a  differential  of  25 
cents  on  first  class  down  to  7  cents  on  class  E,  the  lowest  class.  De- 
troit, Toledo,  and  common  points,  from  30  cents  down  to  7  cents ;  Pitts- 
burgh, Buffalo,  and  common  points,  32  cents  down  to  7  cents ;  and  New 
York,  Boston,  Philadelphia,  Baltimore,  and  common  points,  40  cents 
down  to  7^  cents. 

As  to  the  fairness  of  these  differentials  you  can  form  your  own  conclu- 
sions when  I  say  we  have  to  submit  to  them  when  our  distance  from  St. 
Paul  to  San  Francisco,  via  Tacoma  and  the  ocean,  is  15  miles  greater 
than  theirs,  via  the  same  route,  Victoria,  Vancouver,  and  the  ocean. 
Yet  we  have  to  allow  them  these  differentials  over  us,  and  they  make 
the  same  rates  to  Puget  Sound  ports.  That  allows  us  a  fair  competition 
in  our  western  terminals,  and  in  San  Francisco  of  course  our  showing  is 
nothing,  comparatively  speaking.  Perhaps  we  may  get  1  per  cent,  of 
the  entire  east-bound  San  Francisco  business.  We  had  to  concede 
these  differentials  simply  for  peace. 

The  Chairman.  What  would  have  been  thQ  result  if  you  had  not  ? 

Mr.  Hannaford.  Well,  they  would  have  made  such  rates  as  they 
saw  fit.  We  would  have  been  compelled  to  make  tariffs  in  accordance 
with  the  law,  and  we  could  not  have  kept  up  with  them — could  not  have 
got  any  business.  Take  hops ;  that  is  quite  a  large  article  in  our  east- 
bound  carrying  trade.  They  are  all  raised  within  50  miles  of  Seattle, 
and  for  the  shipment  of  a  thousand  bales  of  hops  there  we  had  to  make 
a  tariff".  We  had  to  issue  it  and  file  it  in  Washington,  giving  ten  days 
notice  if  it  was  an  increase,  and  if  a  reduction  three  days  before  it  took 
effect  in  Seattle.  In  the  meantime,  being  free  from  anything  of  that 
kind,  the  Canadian  Pacific  would  step  in  and  change  the  rate.  The 
transmission  of  that  information  from  Washington  Territory  to  my  of- 
fice in  St.  Paul,  and  the  preparation  to  meet  it,  was  something  that  we 
could  not  handle.  Therefore,  we  concluded  that  we  had  better  buy  up 
the  Canadian  Pacific  to  maintain  the  rates,  and  to  know  where  they 
were  on  that  business,  which  is  worth  more  to  us  than  what  we  could 
rightfully  expect  to  get  from  San  Francisco.     It  was  simply  a  trade. 


570  TRANSPORTATION  INTERESTS  OF 

The  Chairman.  You  felt  that  you  were  in  their  hands? 

Mr.  Hannaford.  To  a  certain  extent;  yes,  sir.  Take  it  on  the  pas- 
senger business.  As  you  know,  the  large  volume  of  west  bound  traffic 
is  emigration,  seeking  homes  in  Washington  Territory.  At  the  present 
time  probably  the  largest  emigration  in  the  United  States  is  to  Wash- 
ington Territory  and  Oregon.  One  of  the  conditions  of  this  agree- 
ment was  that  they  should  have  a  $5  differential  on  emigrant  tickets. 
In  other  words,  the  rate  from  St.  Paul  to  Seattle,  Wash.,  or  from 
St.  Paul  to  San  Francisco,  or  from  St.  Paul  to  any  point  on  the  Pacific 
coast,  is  $35  via  the  American  line.  That  is  the  rate  either  by  our  line, 
or  Sioux  City,  or  Union  Pacific,  or  down  over  the  Atchison,  but  via  the 
Canadian  Pacific  it  is  $30.  Their  rate  is  $30;  yet  their  distance  from  St. 
Paul  to  Vancouver,  which  istheir  western  land  terminus,  is  1,940  miles. 

The  Chairman.  From  where? 

Mr.  Hannaford.  From  St.  Paul,  the  initial  point.  From  St.  Paul 
to  Tacoma,  via  our  own  line,  is  1,035  miles.  There  is  but  5  miles  dif- 
ference. To  go  to  any  point  on  Puget  Sound  they  liave  to  go  by  steamer 
over  either  road.  From  Tacoma  by  steamer  to  Port  Townsend  the  dis- 
tance is  practically  the  same;  yet  they  take  $5  less  rate  than  we  do. 

The  Chairman.  They  get  these  passengers  in  the  United  States,  do 
they  not? 

Mr.  Hannaford.  Very  largely  ;  yes,  sir. 

The  Chairman.  And  take  them  to  another  point  in  the  United  States  ? 

Mr.  Hannaford.  And  take  them  to  another  point  in  the  United 
States.  They  take  them  in  connection  with  the  St.  Paul,  Minneapolis 
and  Manitoba  Line,  running  from  St.  Paul  to  the  boundary  line,  then 
by  the  Canadian  Pacific  from  the  boundary  line  to  Victoria,  to  Van- 
couver, and  then  by  steamer  from  Vancouver  down  to  Tacoma,  and 
then  passengers  going  to  Portland  go  from  Tacoma  to  Portland  by  our 
line.     We  had  to  make  them  a  concession  there. 

The  Chairman.  And  carry  them  over  your  own  road  part  of  the  way, 
too. 

Mr.  Hannaford.  Carry  them  140  miles  over  our  own  road.  They 
will  take  a  passenger  at  St.  Paul,  Minn.,  and  lay  him  down  at  Portland, 
Oregon,  between  which  points  we  have  a  direct  all-rail  line  on  this 
roundabout  line  for  $5  less  than  we  can  take  him. 

Senator  Reagan.  What  is  the  difference  in  the  length  of  the  two 
lines  to  Portland  ? 

Mr.  Hannaford.  Our  line  to  Portland  is  1,913  miles.  The  other  line 
to  Portland,  by  these  different  water  and  rail  routes,  is  2,286  miles. 

Senator  Reagan.  And  you  give  them  a  differential  of  $5  ? 

Mr.  Hannaford.  Yes,  sir. 

The  Chairman.  How  long  has  this  agreement  been  in  force? 

Mr.  Hannaford.  It  was  rewritten  on  February  1, 1888.  That  is  the 
one  we  are  working  under  now.  Some  modifications  were  made.  Prior 
to  that  we  had  rather  an  unsettled  state  of  affairs  among  the  American 
roads,  and  we  reorganized  at  that  time  and  took  in  the  Canadian  Pacific. 
The  agreement  is  on  file  at  Washington. 

The  Chairman.  Is  that  a  public  document? 

Mr.  Hannaford.  No,  sir ;  not  really,  but  a  document  we  filed  with 
the  Interstate  Commerce  Commission. 

The  Chairman.  I  should  think  it  was  a  public  document,  if  you  were 
required  to  file  it. 

Mr.  Hannaford.  It  might  be  considered  a  public  document. 

The  Chairman.  You  say  that  before  that  agreement  was  made  there 
was  confusion  among  the  American  roads  ? 


THE    UNITED    STATES    AND    CANADA.  671 

Mr.  Hannaford.  Yes,  sir  ;  that  was  owiug  to  tLe  coinpletioTi  of  the 
Canadiau  Pacific  largely.  They  opened  up  the  line  there  and  were  iu 
DO  association  with  any  of  us,  and  we  had  no  association  of  our  own, 
and  each  line  started  out  to  get  what  business  it  could. 

The  Chairman.  Do  you  think  you  make  more  money  by  this  arrange- 
ment by  which  the  Canadian  Pacific  is  taken  into  the  ring  than  you 
would  without  if? 

Mr.  Hannaford.  There  is  no  question  about  it,  unless  they  could  be 
controlled  some  way. 

The  Chairman.  How  controlled  ?  Required  to  do  just  what  you  had 
to  do  under  the  law  ? 

Mr.  Hannaford.  Yes,  sir ;  I  am  not  a  believer  myself  in  differential 
rates.  I  think  the  territory  should  be  divided,  where  ditterential  rates 
are  necessary,  to  let  any  one  iu.  We  have  a  line  from  Canada  in  con- 
nection with  other  lines — the  Duluth  and  Manitoba  extension  of  our 
road  to  Winnipeg.  We  are  a  roundabout  long  line  from  Montreal  to 
Winnipeg,  for  instance,  and  yet  our  neighbors  will  not  allow  us  a  differ- 
ential. 

The  Chairman.  Can  you  not  cut  under  them  and  make  them  do  it 
like  they  did  with  you  ? 

Mr.  Hannaford.  Not  very  well.  We  have  had  too  much  regard  for 
the  construction  our  attorneys  put  on  the  interstate  commerce  act  to 
fool  around  it  very  much. 

The  Chairman.  Well,  with  business  you  are  doing  outside  of  the 
United  States "? 

Mr.  Hannaford.  We  are  not  doing  business  outside  of  the  United 
States,  because  we  do  not  own  those  lines.  We  have  to  handle  it  by 
lines  coming  into  Chicago,  and  it  makes  a  combination  of  locals,  or  else 
an  entire  disregard  of  the  law.  That  is  the  only  ground  we  make  it  on, 
and  we  might  find  ourselves  iu  a  position  to  make  the  less  rate  from 
Montreal  to  Winnipeg  than  from  Chicago  to  St.  Vincent,  both  stations 
being  in  the  United  States,  but  our  attorney  thought  it  was  not  advis- 
able to  do  that. 

The  Chairman.  I  spoke  of  it  because  I  thought  you  referred  to  busi- 
ness entirely  outside  of  the  United  States  in  competition  with  the  Cana- 
dian roads. 

Mr.  Hannaford.  No,  sir;  we  can  take  care  of  ourselves  under  the 
same  laws  that  they  are  under. 

CANADIAN  competition  AND  THE  INTERSTATE  LAW. 

The  Chairman.  You  think  that  in  obeying  the  interstate  commerce 
law  you  are  at  a  disadvantage  in  competition  with  the  Canadiau  roads ! 

Mr.  Hannaford.  Yes,  sir;  in  a  great  many  ways. 

The  Chairman.  In  just  what  way  ? 

Mr.  Hannaford.  Well,  particularly  in  the  fact  that  we  can  not  move 
nearly  as  quickly  as  they  can. 

The  Chairman.  You  can  not  change  your  base  so  readily. 

Mr.  Hannaford.  We  can  not  send  an  agent  out  in  the  field  with  in- 
struction to  get  a  certain  amount  of  business  at  the  going  rate,  because 
he  may  violate  several  clauses  of  the  interstate  commerce  act  in  trying 
to  do  so,  while  his  neighbor  on  the  north,  the  Canadian  Pacific  man, 
will  not  be  bothered  with  them  at  all.  Now,  take  the  hop  business. 
Last  year  there  were  probably  15,000  bales  of  hops  from  Seattle  that 
went  to  London.  Nobody  could  tell  at  what  rate  they  went.  We  did  not 
carry  them.     They  could  loca'  them  by  those  little  outside  steamers  up 


572  TRANSPORTATION  INTERESTS  OF 

to  Vancouver,  and  the  moment  they  reached  there  they  were  entirely 
within  the  British  domain  until  they  reached  destination. 

The  Chairman.  Wherever  the  hops  would  be  gathered  in  Washing- 
ton Territory  would  they  be  billed  through  to  London  or  up  to  Van- 
couver'? 

Mr.  Hannaford.  They  simply  would  be  lightered  up  to  Vancouver. 

The  Chairman.  And  then  billed  to  London? 

Mr.  Hannaford.  And  then  billed  to  London.  We  could  not  find  them. 
We  could  not  tell  what  the  rates  were.  We  changed  our  tariff  several 
times  during  the  season,  reduced  rates,  but  never  had  them  low  enough 
to  get  that  business. 

The  Chairman.  Perhaps  you  did  not  make  your  tariff,  low  enough  in 
any  respect  to  compete  with  the  Canadian  line. 

Mr.  Hannaford.  Possibly.  We  made  the  rate  as  low  as  $1.25  from 
the  Pacific  coast  to  the  Atlantic  seaboard,  and  put  all  our  intermediate 
business  on  the  same  basis. 

The  Chairman.  One  dollar  and  twenty-five  cents  a  hundred. 

Mr.  Hannaford.  Yes;  it  seemed  like  quoting  a  pretty  low  rate. 

The  Chairman.  You  say  that  you  put  all  your  intermediate  points 
on  the  same  basis.     Did  that  embarrass  you  in  any  way  ? 

Mr.  Hannaford.  Well,  we  could  have  got  more.  It  embarrassed 
us  to  the  extent  that  we  put  interior  points  in  Wisconsin  in  direct  com- 
petition with  the  Canadian  Pacific  road — points  that  they  could  not 
reach.  We  had  to  make  that  rate  to  the  Atlantic  seaboard,  and  we  did 
not  make  it  against  the  ocean  because  hops  never  have  gone  around 
the  Horn.  I  do  not  think  they  would  stand  the  trip.  We  made  it 
against  the  all-rail  route  and  we  put  our  intermediate  business  on  the 
same  basis. 

The  Chairman.  Has  not  the  Commission  been  holding  that,  in  com- 
petition with  other  routes  at  the  water  points,  the  long  and  short  haul 
clause,  as  it  is  called,  should  be  disregarded? 

Mr.  Hannaford.  They  have  been  very  liberal  in  their  construction, 
but  I  think  they  have  lately  re-assumed  that  in  making  an  agreement 
with  the  Canadian  Pacific — taking  them  into  the  Transcontinental  As- 
sociation— we  were  controlling  them  to  a  certain  extent,  although  it 
was  at  our  expense. 

The  Chairman.  Controlling  what? 

Mr.  Hannaford.  The  Canadian  Pacific  competition. 

RATES  ON  the  NORTHERN  PACIFIC. 

The  Chairman.  Well,  as  it  is,  your  road  has  been  making  twice  as 
much  for  the  last  two  or  three  years  as  it  did  before. 

Mr.  Hannaford.  Our  country  is  a  growing  country.  Our  increased 
earnings  in  Montana  alone  probably  have  trebled,  and  the  i)opulation 
of  Puget  Sound  has  doubled  a  number  of  times  since  the  road  was  com- 
pleted. 

The  Chairman.  What  is  the  fact  as  to  your  charges;  have  they 
trebled  or  doubled  or  been  reduced  ? 

Mr.  Hannaford.  They  have  been  reduced  from  the  start. 

The  Chairman.  Gradually  going  down  all  the  time? 

Mr.  Hannaford.  Yes,  sir ;  all  the  time. 

The  Chairman.  Have  your  through  rates  been  the  same  or  less  on 
your  transcontinental  trade  since  the  passage  of  the  interstate  commerce 
a-t  than  before  it  went  into  operation  ? 

Mr.  Hannaford.  Well,  that  is  rather  a  pointed  question  to  answer. 
On  certain  goods  the  rates  have  been  raised.     The  largest  commodities 


THE  UNITED  STATES  AND  CANADA.  573 

have  been  very  much  lowered.  Weeudeavoredto  coustruct  our  tariffs 
on  the  basis  of  observing  the  long  and  short  haul  clause  on  all  local 
business  and  on  all  business  that  could  not  be  called  competitive  with 
the  ocean.  Before  the  passage  of  the  act  we  made  those  tariffs  and  put 
everything  in  competitiou  with  the  ocean.  We  made  what  is  called  the 
old  California  contract  system,  by  which  we  gave  certain  parties  certain 
rates,  provided  they  gave  us  all  their  business ;  and  after  the  passage 
of  the  law  we  eliminated  from  that  tariff  all  goods  that  were  not  com- 
petitive with  the  ocean  as  fast  as  we  could  find  them  and  raised  the  rate 
to  the  coast  on  those  goods,  so  that  they  should  bear  the  maximum 
rate.  On  the  entire  business  we  absolutely  observed  the  long  and  short 
haul  clause.  Then  on  goods  that  were  strictly  competitive  with  the 
ocean  we  had  to  lower  the  rate. 

The  Chairman.  I  do  not  know  whether  I  quite  understand  you.  On 
goods  that  you  ship  from  the  ocean  eastward  the  rate  that  you  charge 
has  been  as  low  or  lower  since  the  passage  of  the  act  than  it  was  be- 
fore! 

Mr.  Hannaford.  On  part  of  the  goods.  We  have  separated  the 
goods  into  two  classes.  There  is  a  good  deal  of  merchandise  shipped 
from  the  Atlantic  coast  to  the  Pacific  Ocean  that  is  not  competitive 
with  the  ocean. 

The  Chairman.  How  is  that  ? 

Mr.  Hannaford.  It  is  goods  that  would  not  under  ordinary  circum- 
stances be  taken  by  sailing  vessels  on  account  of  damage,  perishable 
goods  or  millinery  goods,  or  the  highest  grades  of  dry  goods,  which 
might  go  out  of  style  in  making  the  trip  of  four  or  five  or  six  months. 
Such  goods  a»  the  ocean  would  not  naturally  compete  for  we  have  put 
on  a  tariff  called  non-competitive  tariff,  which  makes  the  rate  from  ]Sew 
York  to  the  Pacific  coast  the  maximum  rate;  no  interior  point  is  charged 
any  more. 

On  the  other  class  of  goods  that  are  directly  competitive  with  the 
ocean,  we  have  not  observed  the  long  and  short  haul  clause,  but  have 
made  the  rate  to  the  coast  which  was  necessary  in  order  to  compete, 
and  a  like  rate  was  made  to  the  interior. 

Senator  Harris.  You  have  increased  through,  rates  upon  some 
classes  of  goods,  and  diminished  them  upon  others. 

Mr.  Hannaford.  Yes,  sir. 

OPERATION  OF  THE  INTERSTATE  COMMERCE  LAW. 

Senator  Harris.  Now,  take  your  whole  freight,  are  your  through 
rates  higher  or  lower  than  before  the  passage  of  the  interstate  commerce 

bill! 

Mr.  Hannaford.  I  should  say  they  were  lower.  We  had  a  leverage 
which  we  could  use  before  under  the  contract  system  which  we  can  not 
do  now.  We  can  not  say  to  the  merchant  as  we  couhl  then,  "Give  us 
your  low-class  freight  and  we  will  make  a  special  contract  on  your  high- 
class  freight."  Now  he  has  the  steamers  or  the  sailing  vessel  b;-  the 
Horn,  or  the  all-rail  route,  and  he  can  use  whichever  is  the  cheapest 
for  certain  classes  of  goods. 

The  Chairman.  How  about  your  local  business ;  are  your  rates  on 
local  traffic  higher  or  lower  than  before  the  act  was  passed  ? 

Mr.  Hannaford.  Our  local  business  is  very  much  lower. 

The  Chairman.  According  to  your  statement,  then,  the  result  of  the 
interstate  commerce  act  on  the  average  has  been  to  lower  both  your 
through  rates  and  local  rates ! 


574  TRANSPORTATION  INTERESTS  OF 

Mr.  Hannaford.  Yes,  sir.  However,  I  would  not  give  the  credit  of 
lowering  the  intermediate  rates  to  the  interstate  commerce  law  entirely, 
as  the  volume  of  business  has  increased,  and  rates  have  been  lowered 
in  that  way.    Both  circumstances  have  combined  to  reduce  the  rates. 

The  Chairman.  Are  you  finding  much  inconvenience  in  doing  an 
honest  and  legitimate  business  under  the  interstate  commerce  act  be- 
cause of  its  being  enforced  ? 

Mr.  Hannaford.  Not  a  great  deal ;  no,  sir. 

The  Chaerman.  You  do  not  think  you  are  losing  any  thing  particu- 
larly by  it  ^ 

Mr.  Hannaford.  No,  sir. 

The  Chairman.  In  competition  with  the  Canadian  Pacific  are  you 
losing  anything  on  account  of  the  law  being  enforced  against  you  and 
not  against  them  ? 

Mr.  Hannaford..  I  should  think  we  were.  If  their  rates  were  the 
same  as  ours  we  would  lose  little  or  no  business  to  that  company,  but 
by  these  differentials  which  they  are  allowed  we  are  losing  a  certain 
percentage. 

The  Chairman.  Can  you  give  the  percentage! 

Mr.  Hannaford.  No,  sir;  I  have  no  knowledge  of  what  the  Cana- 
dian Pacific  is  doing,  except  as  our  transcontinental  statements  show. 
Those  statements  give  their  own  business  as  well  as  ours,  Canadian 
business  not  separated  from  the  American  business. 

THE  CANADIAN  PACIFIC  TRANSCONTINENTAL  TRAFFIC. 

The  Chairman.  Can  you  give  us  the  volume  of  business  which  your 
road  does — I  do  not  ask  for  the  exact  figures — and  also  that  done  on' 
the  Canadian  Pacific? 

Mr.  Hannaford.  I  think  tliey  are  doing  over  50  per  cent,  of  the 
Seattle  business.     Seattle  is  one  of  the  largest  towns  on  the  Sound. 

The  Chairman.  How  near  is  their  terminus  to  Seattle? 

Mr.  Hannaford.  About  160  miles. 

The  Chairman.  And  you  run  to  Seattle? 

Mr.  Hannaford.  Yes,  sir. 

The  Chairman.  Still  they  get  more  than  half  the  Seattle  business? 

Mr.  Hannaford.  Yes,  sir. 

The  Chairman.  How  do  they  manage  to  do  that  ?  Why  can  not  you 
get  all  the  Seattle  business,  practically  ? 

Mr.  Hannaford.  I  can  not  tell  you,  sir. 

The  Chairman.  You  only  know  the  fact  that  the  Oanadian  Pacific 
gets  50  per  cent,  of  if? 

Mr,  Hannaford.  Yes,  sir. 

Senator  Harris.  Is  it  not  securing  this  large  amount  of  traffic  on 
account  of  the  differential  which  it  is  allowed?  What  is  the  differen- 
tial allowed  the  Canadian  Pacific? 

Mr.  Hannaford.  Ten  dollars  on  first-class  passengers  and  $5  on 
second. 

Senator  Harris.  Have  they  a  differential  east-bound  ? 

Mr.  Hannaford.  They  have  some  differential  east-bound.  I  in- 
cluded both  east  aud  west  bound  when  I  made  the  statement. 

The  Chairman.  When  you  say  50  per  cent,  of  the  Seattle  business 
is  carried  by  the  Canadian  Pacific,  does  that  statement  include  both 
passengers  aud  freight? 

Mr.  Hannaford.  No,  sir;  we  would  not  be^ willing  to  concede  them 
quite  50  per  cent,  of  the  freight  business.  ■ 


THE    UNITED    STATES    AND    CANADA.  575 

The  Chairman.  Do  you  know  what  per  cent,  of  the  traffic  of  the 
Pacific  coast,  includiug  the  local  trade  in  Oregon  and  other  Pacific 
coast  States  and  the  San  Francisco  business,  and  all  along  the  line,  is 
carried  by  the  Canadian  Pacific  ? 

Mr.  Hannafoed.  No,  sir.  During  one  month  this  spring  I  figured 
it  out  that  the  Canadian  Pacific  got  43  per  cent,  of  the  North  Pacific 
coast  passenger  business. 

The  Chairman.  What  do  you  mean  by  "the  North  Pacific  coast?" 

Mr.  Hannaford.  North  of  the  Oregon  and  Calfornia  State  line; 
that  is,  taking  out  San  BYancisco  and  the  State  of  California. 

The  Chairman.  Does  the  Canadian  Pacific  carry  a  very  large  amount 
of  goods  from  Winnipeg,  Manitoba,  down  into  the  United  States  ? 

Mr.  Hannaford.  No,  ^ir. 

The  Chairman.  Who  does? 

Mr.  IlANNAFORD.  We  carry  nearly  all  that  is  brought.  They  bring 
some  passengers.    It  is  not  to  their  interest  to  get  that  trade. 

The  Chairman.  Recurring  to  the  main  question,  what  do  you  think 
ought  to  be  done  if  you  are  at  a  disadvantage  in  competition  with  the 
Canadian  Pacific?  Would  you  suggest  that  the  two  systems  of  roads 
be  put  on  the  same  level  ?  What  changes,  in  your  opinion,  ought  to  be 
made  in  the  law  ? 

Mr.  Hannaford.  I  do  not  know  what  can  be  done.  I  know  very 
well  that  if  they  could  be  surrounded  with  the  same  restrictions  that  we 
are,  or  we  could  have  the  same  freedom  that  they  have,  we  could  take 
care  of  ourselves. 

The  Chairman.  Do  you  think  there  is  enough  disadvantage  exist- 
ing now  to  justify  any  legislation  or  action  by  the  Government  of  the 
United  States? 

Mr.  Hannaford.  Oh,  I  do  not  know.  We  are  not  complaining  very 
much. 

The  Chairman.  You  are  not  making  very  much  fuss  about  it. 

Mr.  Hannaford.  No,  sir ;  we  came  here  by  your  invitation,  not  be- 
cause we  had  any  wrongs  we  wanted  righted. 

The  Chairman.  You  understand,  of  course,  that  this  committee  has 
been  directed  by  the  Senate  to  make  these  inquiries  for  the  purpose  of 
getting  information. 

DIFFERENTIALS  TOO   LARGE. 

Mi".  Hannaford.  I  think  we  are  handicapped  almost  too  much  by 
the  diflerentials  which  are  now  allowed.  I  can  not  help  thinking  that 
when  we  are  the  longer  road  by  15  miles  from  St.  Paul  to  San  Francisco 
we  should  not  be  compelled  to  allow  a  differential  of  15  cents  a  hundred 
on  first-class  freight. 

The  Chairman.  Fifteen  cents  a  hundred  on  first-class  freight  to  the 
Canadian  Pacific? 

Mr.  Hannaford.  Yes,  sir. 

The  Chairman.  You  give  them  15  cents  a  hundred  on  first-class 
freight  ? 

Mr.  Hannaford.  We  simply  give  them  the  San  Francisco  business 
for  j)eace  and  harmony. 

Senator  Harris.  If  they  were  subjected  to  the  regulations  of  the  in- 
terstate commerce  act,  having  the  authority,  as  you  have,  under  the 
act  to  make  your  own  rates,  would  you  not  be  at  the  same  disadvan- 
tage? Could  the  Canadian  Pacific  not  demand,  and  would  you  not  be 
compelled  to  give  them,  a  differential  to  prevent  their  publishing  lower 
tariffs  ? 


576  TRANSPORTATION    INTERESTS    01 

Mr.  Hannaford.  I  have  thought  of  that  question,  ])ut  they  would 
then  have  to  subuiit  their  iuterior  business  to  the  same  rates  propor- 
tionately as  they  did  their  through  business,  and  then  possibly  we  could 
make  a  better  trade  with  them  than  we  can  now.  They  know  now  that 
we  simply  have  to  accept  their  terms,  practically. 

The  Chairman.  How  much  does  the  Canadian  Pacific  get  on  freight 
from  San  Francisco? 

Mr.  Hannaford.  By  steamer,  the  same  as  we  get. 

The  Chairman.  Who  owns  the  steamers  which  they  use  in  that  traf- 
fic? 

Mr.  Hannaford.  The  Pacific  Coast  Steam-ship  Company. 

The  Chairman.  And  the  steam-ship  company  is  not  connected  with 
either  vou  or  the  Canadian  Pacific? 

Mr,  Hannaford.  JSTo,  sir. 

The  Chairman.  Each  of  you  make  your  own  bargains  with  it? 

Mr.  HANNAFORD;  Yes,  sir ;  they  are  coastwise  lines. 

Senator  Eeagan.  Does  the  Canadian  Pacific  publish  its  rates  of 
freight  from  San  Francisco  east? 

Mr.  Hannaford.  No,  sir;  not  as  an  individual  line.  The  rates  are 
published  only  by  the  Transcontinental  Association,  both  east  and 
west  bound. 

Senator  Reagan.  So  that  the  Canadian  Pacific  does  not  have  a  sep- 
arate rate  ? 

Mr.  Hannaford.  No,  sir. 

Senator  Reagan.  Is  the  tariff  agreed  upon  and  published  by  the 
Transcontinental  Association  furnished  to  the  Commission  at  Wash- 
ington ? 

transcontinental  association  tariff  sheet. 

Mr.  Hannaford.  Yes,  sir;  I  can  show  you  a  copy  of  the  tariff  sheet. 
Here  it  is  [exhibiting].  The  rates  are  on  the  second  page,  and  the  differ- 
ential of  the  Canadian  Pacific  is  given  on  the  first  page. 

Senator  Reagan.  Those  are  the  rates  of  all  the  Pacific  lines? 

Mr.  Hannaford.  Yes,  sir. 

The  Chairman.  You  can  put  the  tariff  sheet  in  the  record. 

Mr.  Hannaford.  I  will  do  so. 

The  tariff"  sheet  is  as  follows : 

[Note. — The  through  rates  uamed  herein,  via  rail  and  lake  routes,  are  the  same  as  published  via 
otiiet'  routes,  and  in  no  case  will  the  proportions  allowed  east  of  lake  terminals  be  greater  than  the 
published  taritf  rates  thereto  ;  the  remainder  of  the  throuah  rates  to  be  absorbed  l)y  the  roads,  west 
thereof.  If  less  than  the  published  tarifl"  rates  are  charj;ed  to  lake  terminals,  the  roads  west  thereof 
will  absorb  the  remainder  of  the  through  rates.  J 

No.  20. — Transcontinental  Association. 

Atchison,    Topeka   &   Santa  F6  Denver  &  Kio  Grande  Western  Oregon  Short  Lino, 

R-  R-.  R'y,  Sonthem  Pacific  Company,  Atl'c 

Atlantic  &  Pacific  Railroad,  Denver,   Texas    &    Fort  Worth      System, 

Burlington     &    Missouri    Eiver      E.  It.,  Southern    Pacific  Company,  Pac. 

It.  Iv.,  Missouri  Pacific  Railway,  System, 

California  Central  Railway,  Montana  Central  Railway,  St.  Louis  &  San  Francisco  R'y, 

California  Southern  Railroad,         Northern  Pacific  Railroad,  St.  Paul,   Minneapolis    &  Mani- 

Cinadiau  Pacific  Railway,  Oregon  &  California  Railroad,  toba  R'y, 

Chicago,    Kansas    &.    Nebraska  Oregon   Railway    &    Navigation  Texas  &  Pacific  Railway, 

Railway,  Co.,  Union  Pacific  Railway. 

Denver  &  Rio  Grande  Railroad, 

In  connection  with  Eastern  rail  and  lake  lines. 

Through  freight  tariff,  ivest-hound,  via  rail  and  lake,  taking  effect  May  27,  1889. 

From  Boston,  New  York,  Philadelphia,  Baltimore,  and  common  points;  Pittsburgh, 
Buffalo,  and  common  points;  Cincinnati,  Detroit,  and  common  points;  Chicago, 
Milwaukee,  and  commou  points,  to  Sau  Francisco,  Sacramento,  MarysviUe,  Stock- 


THE    UNITED    STATES    AND    CANADA. 


577 


ton,  Sail  Jos^,  Oaklaml  (16tli  street),  Los  Augclcs,  aud  Sau  Diej^o,  California;  Port- 
land and  A.storia,  Oregon;  Tacoina,  Seattle,  and  Port  Townseud,  Washington  Terri- 
tory ;  Victoria,  Vauconvor,  aud  New  Westminster,  British  Columbia,  ami  intermedi- 
ate Pacilic  coast  common  points,  as  provided  herein. 

Exceptions. — Ist.  Eates  provided  herein  aiiply  from  Tacoma,  Seattle,  and  Port  Town- 
send,  W.  T.,  Victoria,  Vancouver,  and  New  Westminster,  B.  C,  when  routed  via 
Canadian  Pacific  Railway  or  Northern  Pacilic  Railroad  only. 

'2d.  Rates  provided  lierein  will  not  ajiply  to  points  south  of  Lathrop,  Cal.,  when 
routed  via  Portland,  Oregon,  nor  to  Portland,  Oregon,  when  routed  via  San  Bernar- 
dino or  Mojave,  Cal. 

AV.  F.White,  traffic  manager,  A.  T.  &  S.  F.  K.R., 
A .  &  P.  It.  R.  and  C.  S.  &.  C.  C.  R'ys,  Cbicago, 
111. 

C.  A.  Paikcr,  general  freight  agent,  A.  T.  &  S.  V. 
11.  K. ,  Topi'ka,  Kaus. 

W.  A.  Bissc  11,  general  freight  agent,   A.&P.K. 

K.,  Sau  Francisco,  Cal. 
Tlioniiis  Miller,  general    freight   agent,  Bui\    &. 

Mo.  lliv.  II.  K.,  Omaha,  Nebr. 
S.  13.  Ll.vne.si,  general  freight  agent,  Cal.  Cen.  Ey. 

and  Cal.  So.  K.  11.,  Lo.s  Angeles,  Cal. 
Wni.  M.  Sage,  traffic  maniJger,   C,  K.  &  N.  E'y. 

Chicago,  111. 

D.  Atwood,  general  freight  agent,  C,  K.  &  N. 
K'y,  Topeka,  Ivans. 

George  Olds,  general    traffic  manager,  Can.Pac. 

Ily.,  Montreal,  Qnebec. 
A.  S.  Hughes,  tralhc  manager,  D.  &  R.  G.  R.  R., 

Denver,  Colo.  _ 

J.  n.  Bennett,  general  freight  agent,  x».  <fc  R.  G. 

W.  Ry..  Salt  Lake  City,  iJtah. 
H.  J.  Lawder,  acting  geu'l    freight  .agent,  D.  T. 

&  Ft.  W.  R.  R.,  Denver,  Colo. 
W.  II.  Newman,  3d  vice-president,  Mo.  Pac.  Ry., 

St.  Louis,  Mo. 
P.  F'.  Shelby,  general  manager,  Mont.  Cent.  ,R'y, 

Helena,  Montana. 


J.  M.  Hannaford,  traffic  manager,  Nor.  Pac.  R.  R., 

St.  Paul,  Minn. 
S.  L.  Moore,  general   freight  agent,   N.  P.  R.  R., 

St.  Paul,  Mmn. 
Richard  Gray,  general  freight  agent,  Oregon   & 

Cal.  R.  R.,  Sau  Francisco,  Cal. 
B.  Campbell,  general  freight  agent,  Oregon  Ry.  <fe 

Nav.  Co.,  Porthiuil,  ()rei;on. 
J.  C.  Stubbs,  general  trallic  manager,  So.  Pac.  Co., 

San  Francisco,  Cal. 
J.  (i.  Scliricver,  traffic  manager,  So.  Pac.  Co.  (At- 
lantic System),  New  Orleans,  La. 
E.  G.  Bleker,  general  freight  agent,  So.  Pac.  Co. 

(Atlantic  System),  Ilouston,  Tex. 
Richard  Gray,  general  freight  agent.  So.  Pac.  Co. 

(Pacific  System).  San  Francisco,  Cal. 
G.  W.  Cale.  general  freight  agent,  St.  L.  &  S.  F. 

Ry.,  St.  Louis,  Mo. 
"W.  S.  Alexander,  general  traffic  manager,  St.  P., 

M.  &  M.  R'y,  St.  Paul,  Minn. 
J.  M.  Sawyer,  general  freight  agent,  St.  P.,  M.  &. 

JSI.R'y,  St.  Paul,  Minn. 
E.  n.  Hinton,ass't  general  freight  agent,  Tex.  <t 

Pac.  Railway,  Dallas,  Tex. 
J.  A.  Munroe,  general  freight  agent,  Union  Pac. 

Railway,  Omaha,  Nebr. 


J.  N.  Faithorn,  chairman,  W.  &  N.  W.  Div.  Western  Freight  Ass'n,  Chicago,  111. 

James  Smith,  general  agent,  Tianscontinontal  Ass'n,  room  154  Stewart  Bld'g,  New  York. 

J.  W.  Midgley,  chairman,  S.  W.  Div.  Western  Freight  Ass'n,  Chicago,  III. 

J.  S.  Leeds,  chairman,  'Transcontinental  Ass'n,  810  Olive  st.,  St.  Louis,  Mo. 

St.  Louis,  Mo.,  May  15lh,  1889. 

Through  freight  rates  via  rail  and  lake. 

[Subject  to  the  Western  classification.! 


To— 

In  cents  per 

100  pounds. 

San   Francisco,   Sacramento,  Marys- 

ville,  Stockton,  Roseville  Junction, 

Merchandise. 

Car-loads. 

San  Jos6,  Oakland  ( ICth  street),  Mo- 

jave, Los  Angeles,  San  Bernardino, 

and  San  Diego,  Cal.;  Portland  and 

Astoria,  Oregon  (via  Canadian   Pa- 

cific R  y,  Northern  Pacilic  It.  R.  or 

Oregon  Short  Line)  ;  Tacoma,  Seat- 

tle, and  Port  To  wnsend.  Wash.  Ter. ; 

Victoria,  Vancoav<  r,  andNewWest- 

minster,  British  Columbia  (via  Can- 

adian Pacific  R'y  or  Northern  Pa- 

cific R.  R.),  and  to  intei  mediate  Pa- 

cific coast  common  points,  as  de- 

m 

« 

scribed  on  page  (5  of  West- bound 

cc 

CS 

c3 

ci 

w 

Tarifi"  No.  18,   effective  January  1, 
1889, 

a 

o 

^ 

J3 

M 

'J 

9) 

ci 

to 
C3 

i 

From— 

.a 

1 

1 

S 

O 

3 

6 

5 

o 

Cbicago,   Milwaukee,    and    common 

3.90 

3.70 

2.70 

2.10 

1.85 

1.90 

1.70 

1.  35 

1.20 

1.10 

Cincinnati,     Detroit,    and     common 

3.95 

3.45 
3.50 

2.75 
2.80 

2.15 
2.20 

1.90 
1.95 

1.95 
1.95 

1.75 
1.75 

1.40 
1.40 

1.25 
1.25 

1.15 

points  -   .- --       .........--- 

Pittsburgh,     Buffalo,    and     common 
points 

4.00 

1.15 

New  York.  Boston,  Philadelphia,  Bal- 

tiimor6  and  common  noints  ......-.- 

4.20 

3.70 

2.95 

2.30 

2.00 

2.00 

L80 

1.45 

1.30 

1.20 

6543 37 


578 


TRANSPORTATION    INTERESTS    OF 


Rates  to  San  Francisco  from  points  named  below,  via  the  Canadian  Pacific  Railway, 
will  be  the  following  differentials,  in  cents  per  100  pounds,  less  than  rates  shown 
above : 


From— 

1. 

2. 

3. 

4. 

5. 

A. 

B. 

C. 

D. 

E. 

Chicago,    Milwaukee,    and   common 
points 

Detroit,  Toledo,  and  eoinmon  points  . . 

Pittsbmgb,     Buffalo,     and     common 

points  . 

New  York,  Boston.  Philadelphia,  Bal- 

25 
30 

32 

40 

21 

25 

27 
35 

17 
21 

23 

25 

14 
17 

18 

20 

14 

17 

18 
20 

11 
13 

14 

15 

11 
13 

14 

15 

9 
10 

11 

12 

7 
8 

9 

10 

7 

7 

7 
74 

Covimodity  rates. — The  commodity  rates  published  on  pages  7  and  8  and  pages  10  to 
47,  both  inclusive,  of  Transcontinental  Association  West-bound  Tariff  No.  18,  effective 
January  Ist,  1889,  and  current  supplements  thereto,  will  also  apply  via  rail  and  lake 
routes  to  and  from  points  as  specified  above,  subject  to  rules  and  regulations  govern- 
ing said  west-bound  tariff" and  supplements  thereto. 

Excepiions  to  classification,  etc. — The  following  articles  will  not  be  received  or  trans- 
ported via  rail  aud  lake  routes  :  Acid,  whether  in  glass  or  iron  tanks ;  dynamite,  dua- 
lin,  nitroglycerine,  gun-cotton,  giant  powder,  Hercules  powder,  gunpowder,  or  sim- 
ilar explosives  ;  phos))horu8,  friction  matches;  benzine,  gasoline,  naphtha,  camphene, 
benzole  ;  loose  hay,  loose  cotton,  loose  hemp,  loose  tow,  loose  manila,  loose  sisal ; 
corn  husks,  palm  fiber  or  excelsior,  in  loose  bales;  gold  or  silverware,  coin  or  bull- 
ion, j(;wels  or  watches. 

The  following  articles  will  not  be  received  for  transportation  via  rail  and  lake 
routes  without  special  authority  in  each  case:  Fire-works,  fire-crackers;  crude  petro- 
leum, refined  )ietroleum  ;  quick-lime,  cast-iron  water-pipe,  railroad  iron  ;  articles  ex- 
ceeding 6  feet  in  height  or  width  ;  articles  weighing  more  than  1  ton  each. 

WITHDRAWAL   OF  NORTHERN  PACIFIC. 

Senator  Reagan.  Has  the  Northern  Pacific  given  notice  to  the  Trans- 
continental Association  of  its  intention  to  withdraw  from  the  present 
association '? 

Yes,  sir. 

Has  the  Sonthern  Pacific  done  so  also  ? 

I  do  not  know.  1  saw  in  the  i>apers  that  they  had. 

When  does  the  notice  of  the  Northern  Pacific  take 


Mr.  Hannaford. 
Senator  Eeagan. 
Mr.  Hannaford. 
Senator  Eeagan. 
effect  ? 
Mr.  Hannaford. 
Senator  Keagan. 


On  the  19th  of  July. 

If  you  withdraw  from  the  association,  in  view  of 
the  fact  that  the  law  on  account  of  water  transportation  does  not  apply 
to  your  Pacific  business,  will  you  not  be  in  a  position  to  compete  with 
th  e  C  an  ad  i  an  Pacific  % 

Mr.  Hannaford.  I  think  so ;  but  it  would  be  rather  an  expensive 
sacrifice,  I  should  think.  We  shall  not  be  without  the  jurisdiction  of 
the  law  because  we  are  out  of  the  association.  We  may  be  able  to  make 
a  little  more  advantageous  trade  with  the  Canadian  Pacific  people. 

The  Chairman.  The  purpose  of  the  withdrawal  is  to  strike  another 
bargain  ? 

Mr.  Hannaford.  Yes,  sir ;  I  do  not  anticipate  that  the  association 
will  be  dissolved. 

Senator  Harris.  You  think  the  contract  needs  revision  % 

Mr.  Hannaford.  Yes,  sir;  circumstances  have  changed  since  the 
contract  was  drawn  up. 


CANADIAN  PACIFIC  DIFFERENTIALS. 

Senator  Reagan.  Is  there  any  just  reason  why  such  a  large  differ- 
ential should  be  allowed  by  the  various  roads  to  the  Canadian  Pacific! 


THE    UNITED    STATES    AND    CANADA.  579 

Mr.  Hannaford.  I  do  not  think  there  is.  I  think  the  differentials 
allowed  it  are  too  large.  I  have  the  statistics,  showing  that  the  Cana- 
dian Pacific  has  done  nearly  all  of  tlie  east-bound  wool  busines.s  from 
San  Francisco  this  season  with  five  or  six  competitors  in  the  field, 
which  demonstrates,  I  think,  that  their  differential  is  too  large. 

Senator  Reagan.  To  use  a  rather  strong  term,  has  not  the  Cana- 
dian Pacific  bluffed  the  other  roads'? 

Mr.  Hannaford.  We  shall  see  whether  they  have  after  our  next 
meeting.     If  they  have,  we  will  call  them. 

Senator  HiscocK.  The  differential  does  not  cover  the  hop  business 
at  Seattle,  for  instance,  does  if? 

Mr.  Hannaford.  ¥0,  sir.  The  export  business  is  the  only  business 
of  which  I  complain.  That  does  not  come  back  into  tliis  country  at 
all.  It  does  not  come  under  the  supervision  or  the  control  of  the 
Transcontinental  Association.  The  Canadian  Pacific  give  through 
bills  of  lading  on  it  from  Vancouver  to  London. 

CANADIAN  PACIFIC   CUTS  RATES. 

Senator  HiscocK.  And  therefore  what  you  suppose  is  that  on  that 
business  the  Canadian  Pacific  cut  rates  I 

Mr.  Hannaford.  ifes,  sir;  that  is,  their  ocean  connections.  They 
own  their  own  ocean  lines. 

Senator  HiscocK.  That  one  or  the  other  cuts  rates? 

Mr.  Hannaford.  Yes,  sir;  I  think  so,  from  the  fact  that  they  get  so 
much  of  the  business. 

Senator  HiscocK.  That  the  Canadian  Pacific  make  rates  below  their 
advertised  rates  ? 

Mr.  Hannaford.  Yes,  sir. 

Senator  Hiscoce:.  The  hops  are  all  shipped  from  some  Canadian 
port  ? 

Mr.  Hannaford.  Yes,  sir.  They  all  leave  the  Sound  t'r^m  some  Can- 
adian port.  I  am  not  in  a  position  to  tell  whether  a  through  bill  of 
lading  was  given  on  them  from  Seattle  or  not. 

Senator  Hiscock.  In  addition  to  the  hop  business,  how  much  freight 
in  bulk  do  you  suppose  there  is  on  which  the  Canadian  Pacific  cuts 
rates,  either  on  the  land  rate  or  else  get  a  drawback  from  the  steam- 
ship— make  some  arrangement  with  the  steamers  to  make  a  less  rate, 
so  as  to  make  the  ex})ort  rate  less.     What  else  is  there? 

Mr.  Hannaford.  Very  little  of  anything.  So  far  as  our  competition 
is  concerned,  there  is  nothing.  I  do  not  know  how  it  is  on  the  Asiatic 
business.  We  are  uot  competitors  of  the  Canadian  Pacific  on  that 
business. 

Senator  Hiscock.  So  far  as  Asiatic  business  is  concerned,  that  is 
something  with  which  we  have  nothing  to  do  any  way.  That  business 
they  take  on  their  own  steamers  and  on  their  own  soil. 

The  Chairman.  Keep  it  on  their  own  soil? 

Mr.  Hannaford.  Yes,  sir;  practically. 

Senator  Hiscock.  So  that  under  any  circumstances,  even  if  the  Can- 
adian Pacific  were  brought  under  the  interstate  commerce  law,  you 
could  not  compete  with  them  for  that  business? 

Mr.  Hannaford.  We  do  not  claim  to  be  competitors  of  the  Canadian 
Pacific  for  that  business. 

Senator  Hiscock.  I  think  you  said  that  so  far  as  all  freight  is  con- 
cerned, except  the  San  Francisco  freight,  there  is  no  differential. 

Mr,  Hannaford.  No,  sir.    But  there  is  a  differential  on  passengers, 


580  TRANSPORTATION    INTERESTS    OP 

NORTHERN  PACIFIC  AND   CANADIAN   PACIFIC   TRAFFIC. 

The  Chairman.  What  is  the  number  of  passengers  carried  west 
during-  the  hist  year,  if  you  have  any  idea? 

Mr.  Hannaford.  We^  ourselves  carried  about  30,000  to  points  west 
of  Spokane  Falls  and  west  during  the  last  year. 

The  (Jhairman.  Do  you  refer  to  Spokane  Falls  in  Washington  Ter- 
ritory ? 

Mr.  Hannaford.  Yes,  sir. 

The  Chairman.  Do  you  think  the  Canadian  Pacific  got  about  as 
many  as  you  did  ? 

.  Mr.  Hannaford.  Ko,  sir ;  E  hardly  think  so.  It  is  possible  they  did, 
but  I  should  say  hardly  as  many.  They  cany  quite  a  large  first-class 
summer  trade,  but  it  is  a  trade  which  I  think  is  carried  to  the  satisfac- 
tion of  all  lines.  It  is  what  we  call  round-trip  trade.  The  passengers 
usually  go  over  one  line  and  come  back  on  another.  The  Canadian 
Pacific,  being  new  and  having  considerable  reputation  for  its  mountain 
scenery,  is  apt  to  get, that  trade  either  one  way  or  the  other.  All  the 
rest  of  the  lines  are  satisfied  if  they  get  it  one  way.  That  swells  the 
number  of  their  passengers  quite  largely.  Then  they  have  this  Asiatic 
business,  which  amounts  to  something. 

Senator  Hiscock.  The  Canadian  Pacific  and  your  line  are  about  the 
same  length  ? 

Mr.  Hannaford.  Yes,  sir,  practically. 

Senator  Hiscock.  Which  road  can  bo  operated  the  more  cheaply? 

Mr.  Hannaford.  I  do  not  know.  I  have  had  no  experience  in  that 
department  of  railroading. 

Senator  Hiscock.  Do  you  know  which  has  the  better  grade? 

Mr.  Hannaford.  No,  sir. 

Senator  Hiscock.  How  about  coal ;  has  the  Canadian  Pacific  any 
advantage  over  you  as  respects  coal  ? 

Mr.  Hannaford.  I  do  not  know.  They  have  coal  along  their  line. 
They  mine  some  anthracite  coal  on  their  own  line,  which  we  have  not. 
I  should  say  they  had  no  advantage  over  us  on  that  score.  We  have 
just  opened  large  coal-fields  about  midway  on  our  line. 

The  Chairman.  Is  it  bituminous  coal  ? 

Mr.  Hanniford.  No,  sir. 

The  Chairman.  Is  your  road  interrupted  to  any  great  extent  by 
snow? 

Mr.  Hannaford.  No,  sir ;  it  has  not  been  of  late  years  to  amount  to 
anything. 

The  Chairman.  Why  not  of  late  years  as  well  as  in  previous  years  I 

Mr.  Hannaford.  I  think  we  know  how  to  handle  it  better.  We  have 
heavier  engines  and  good  snow  plows. 

The  Chairman.  Are  you  required  to  use  snow-sheds  ? 

Mr.  Hannaford.  Only  a  couple  of  miles  on  the  whole  length  of  road, 
a  little  on  the  Cascade  division  and  a  little  in  the  Rockies. 

The  Chairman.  Do  you  know  whether  the  Canadian  Pacific  is  inter- 
rupted by  snow  more  or  less  than  your  road  ? 

Mr.  Hannaford.  I  do  not  know  except  what  I  see  in  the  papers, 
but  I  should  say  more.  Of  course  a  railroad  man  naturally  looks  to  see 
if  the  other  man's  road  is  closed  up. 

The  Chairman.  Is  settlement  going  on  along  the  line  of  your  road  ? 

Mr.  Hannaford.  Yes,  sir. 

The  Chairman.  On  which  part  of  the  road  is  the  most  settlemeut 
^oing  on  ? 


THE    UNITED    STATES    AND    CANADA,  581 

Mr.  Hannaford.  la  Wasbing^ton  Territory,  very  largely. 

The  Chairman.  Does  your  road  run  through  Dakota  'i 

Mr.  Hannaford.  Yes,  sir;  and  Moutana,  Idaho,  and  Washington 
Territories,  and  Wisconsin  and  Minnesota. 

The  Chairman.  Have  you  any  complaints  to  make  against  the  Cana- 
dian Pacific  or  on  any  other  i^oiut  1 

Mr.  Hannaford.  No,  sir;  we  make  very  few  complaints;  we  are 
close  neighbors. 

STATEMENT  OF  GEORGE  BELL  REEVE. 

Mr.  George  Bell  Eeeve,  traffic  manager  of  the  Chicago  and 
Grand  Trunk  Railroad  Company,  appeared. 

The  Chairman.  Where  do  you  reside  ? 
Mr.  Reeve.  In  Chicago. 
The  Chairman.  What  is  your  business? 

Mr.  Reeve.  I  am  traffic  manager  of  the  Chicago  and  Grand  Trunk 
Railroad  Company. 
The  Chairman.  That  is  a  line  between  here  and  Port  Huron  ? 
Mr.  Reeve.  Yes,  sir. 

THE  GRAND  TRUNK'S  TRAFFIC  FROM  CHICAGO. 

The  Chairman.  Give  us  the  volume  of  business  over  your  line  from 
Chicago  f 

Mr.  Reeve.  Taking  it  for  what  period "? 

The  Chairman.  For  1888,  or  any  recent  year,  or  as  near  to  the 
present  time  as  you  can. 

Mr.  Reeve.  I  can  not  give  you  the  figures  exactly  from  memory,  but 
I  can  send  for  them  at  short  notice. 

The  Chairman.  Do  you  know  what  percentage  of  the  east-bound 
traffic  from  Chicago  you  are  doing? 

Mr.  Reeve.  In  the  year  1888  we  did  about  21  per  cent. 

The  Chairman.  Have  you  not  done  a  larger  percentage  of  the  bu.si- 
ness  since  ? 

Mr.  Reeve.  Taking  it  from  the  first  of  January  to  the  end  of  June, 
I  think  not. 

The  Chairman.  It  averaged  about  the  same,  did  it? 

Mr.  Reeve.  About  the  same. 

The  Chairman.  Has  your  business  increased  or  diminished  or  Iield 
about  the  same  for  the  last  two  or  three  years  ? 

Mr.  Reeve.  For  the  last  twelve  mouths  it  has  increased. 

The  Chairman.  About  how  much  over  what  it  was  before? 

Senator  Hiscock.  You  mean  the  percentage  has  increased  ? 

Mr.  Reeve.  The  percentage  has  increased. 

Senator  UiscocK.  As  compared  with  the  other  roads  ? 

Mr.  Reeve.  Yes,  sir. 

The  Chairman.  About  what  has  been  the  increase? 

Mr.  Reeve.  About  0  per  cent,  over  the  year  previous. 

weighing  in  hopper  scales. 

The  Chairman.  How  do  you  account  for  that  increase  ? 
Mr.  Reeve.  Two  years  ago  tlie  Legislature  of  the  State  of  Illinois 
passed  an  act  providing  that  all  laiiways  should  sui>ply  appliances  I'or 


582  TRANSPORTATION    INTERESTS    OP 

keeping  the  identity  of  car-loads  and  for  weighing  in  hoppor  scales. 
We  complied  with  the  law  at  the  earliest  possible  moment,  and  the 
shipj)ers  generally  gave  us  business  on  that  account  in  preference  to 
any  other  line,  and  because  hopper-scale  weights  were  absolutely  cor- 
rect. Since  we  have  adopted  that  principle  we  have  not  had  a  single 
claim  or  complaint  of  underweight  or  overweight,  and  that  has  been 
considered  very  satisfactory  by  the  trade,  both  in  the  West  here  and  in 
the  East.  Shippers  who  never  gave  us  any  business  prior  to  adopting 
the  hopper  scales,  now  give  us  all  their  business  to  points  that  we  can 
reach. 

The  Chairman.  Particular  shippers  you  mean  ? 

Mr.  Reeve.  Almost  the  entire  trade  will  give  us  preference  on  that 
account. 

The  Chairman.  Are  not  the  other  roads  complying  with  that  statute? 

Mr.  Reeve.  Jfo,  sir  5  the  Fort  Wayne  have  got  what  they  call  a 
Jumbo  transfer.  It  is  a  car  transfer.  The  hopper  scale  is  in  the  car, 
and  the  weights  are  not  as  satisfactory  as  in  a  standard,  steady  build- 
ing. The  Baltimore  and  Ohio  has  adopted  a  somewhat  similar  transfer 
to  ours ;  but  the  other  roads  have  not  yet  done  so. 

The  Chairman.  I  believe  the  statute  prescribes  the  particular 
method  by  which  the  weighing  shall  be  done. 

Mr.  Reeve.  It  does,  sir. 

The  Chairman.  And  you  have  literally  followed  the  statute,  have 
you? 

Mr.  Reeve.  Yes,  sir. 

The  Chairman.  And  the  other  roads  have  not? 

Mr.  Reeve.  No,  sir ;  the  weighing  is  done  under  the  supervision  of 
the  Board  of  Trade  weigh-master. 

Senator  Reagan.  Will  you  please  describe  the  process  of  weighing 
the  cargoes  ? 

Mr.  Reeve.  We  put  the  loaded  cars  from  the  Western  roads  on  one 
track  and  unload  them  into  an  elevator  pit.  It  is  then  lifted  to  hopi)er 
scales,  which  are  84  feet  from  the  ground,  and  when  we  get  the  entire 
load  transferred  into  the  hopper  we  weigh  it  in  one  part.  It  is  then 
shipped  out  and  loaded  in  empty  cars  on  the  other  side  of  the  elevator 
ready  to  go  east. 

The  Chairman.  Is  this  grain  to  which  you  refer  ? 

Mr.  Reeve.  All  kinds  of  grain. 

The  Chairman.  That  does  not  apply  to  miscellaneous  goods  ? 

Senator  Reagan.  Such  as  flour  and  meat '? 

Mr.  Reeve.  No,  sir ;  it  does  not  apply  to  miscellaneous  goods. 

The  Chairman.  It  applies  to  the  weighing  of  wheat,  oats,  and  corn; 
but  does  it  apply  to  flour  ? 

Mr.  Reeve.  Not  to  flour. 

The  Chairman.  And  that  you  say  gives  you  an  imr^^ase  of  business 
that  you  would  not  have  but  tor  a  compliance  with  the  statute  ? 

Mr.  Reeve.  Yes,  sir. 

The  Chairman.  What  is  the  character  of  the  bulk  of  your  business 
east? 

Mr.  Reeve.  Heavy  grain—  wheat  and  corn ;  principally  corn. 

THE  grand  trunk's  DRESSED-BEEF  TRAFFIC. 

The  Chairman.  Do  j^ou  do  very  much  business  in  the  dressed-beef 
trade  ? 

Mr.  Reeve    We  do  a  very  large  percentage  of  the  diessed-beef  trade. 


THE    UNITED    STATES    AND    CANADA.  583 

The  Chairman.  What  percentage  ? 

Mr.  TtEEVE.  This  year,  from  the  1st  of  Jixnuary  to  the  eud  of  June, 
about  29  per  cent. 

The  Chairman.  Of  the  whole  trade  ? 

Mr.  liEEVE.  Of  the  whole  trade.  That  is  much  less  than  vte  carried 
in  1880  and  1887.     We  carried  up  to  that  time  about  55  to  (H)  ])er  cent. 

The  Chairman.  How  did  that  happen  to  be  so  ? 

Mr.  Eeeve.  The  Grand  Trunk  Railway  of  Canada  has  always  fos- 
tered tlie  dressedbeef  traffic.  They  v  ere  not  a  cattle  line  on  account 
of  their  route,  and  they  fostered  the  dressed-beef  trade  from  its  infancy. 
It  increased  year  by  year,  ami  it  was  only  natural  that  the  Grand  Trun\ 
route  should  get  the  major  part  of  that  business.  At  that  time  the 
business  went  entirely  over  the  Michigan  Central  and  the  Grand  Trunk 
from  Detroit  and  Windsor.  The  Chicago  Grand  Trunk  was  not  built 
at  that  time.  We  consequently  held  on  to  the  large  percentage  up  to 
the  fall  of  1886,  when  the  other  lines  made  an  attack  on  the  traffic  by 
reducing  the  rates,  and  before  they  got  through  made  the  rate  as  low  as 
(3  cents.  They  naturally  took  a  large  portion  of  the  traffic  from  the 
Grand  Trunk  at  that  time. 

The  Chairman.  In  what  year  was  that  ? 

Mr.  Reeve.  In  the  fall  of  188G  and  almost  the  entire  year  of  1887. 

THE  GRAND  TRUNK  AND  THE  INTERSTATE  LAW. 

The  Chairman.  In  the  transaction  of  business  by  your  road  between 
Chicago  and  New  York,  and  Boston  and  Portland,  do  you  observe  the 
interstate  commerce  act? 

Mr.  Reeve.  Yes,  sir ;  absolutely. 

The  Chairman.  To  what  extent  do  you  regard  it  as  in  force  in  busi- 
ness done  partly  within  Canadian  jurisdiction? 

Mr.  Reeve.  I  consider  the  interstate  commerce  law  as  in  force  just 
as  much  on  interstate  traffic  going  through  Canada  as  it  is  on  interstate 
traffic  going  through  the  United  States.  The  only  traffic,  as  I  under- 
stand, to  which  the  interstate-commerce  law  does  not  apply  is  traffic 
from  one  point  in  Canada  to  another  point  in  Canada;  but  as  respects 
all  traffic  passing  from  the  Western  States  to  the  Eastern  States  through 
Canada,  and  vice  ver.sa,  I  consider  tlie  interstate  commerce  act  to  be 
complied  with  absolutely.  In  fact,  we  treat  Canada  as  one  of  the  States 
of  the  United  States  in  that  respect. 

The  Chairman.  And  as  to  all  traffic  going  out  of  the  United  States 
into  Canada  for  consumption  or  coming  from  Canada  into  the  United 
States  for  consumption,  you  regard  the  law  as  in  force  ? 

Mr.  Reeve.  Yes,  sir;  and  on  all  export  traffic  as  well. 

The  Chairman.  With  respect  to  traffic  that  goes  out  of  Chicago  to 
Montreal  for  export,  do  you  regard  that  as  under  the  interstate  com- 
merce act  ? 

Mr.  Reeve.  Yes,  sir. 

The  Chairman.  And  do  you  observe  it  on  that  business? 

Mr.  Reeve.  Yes,  sir. 

The  Chairman.  Literally  ? 

Mr.  Reeve.  Literally. 

The  Chairman.  Have  you  ever  had  any  occasion  to  be  called  upon 
by  the  Interstate  Commerce  Commission  for  any  violation  of  the  act  in 
the  way  of  the  payment  of  rebates,  or  anything  of  that  sort  ? 

Mr.  Reeve.  No,  sir. 

The  Chairman.  So  far  as  your  department  is  concerned. 


584  TRANSPORTATION   INTERESTS    OF 

Mr.  Reeve.  So  far  as  the  Chicago  and  Grand  Trunk,  and  the  Detroit, 
Grand  Haven  and  Milwaukee  Railways,  which  I  also  represent,  are  con- 
cerned. 

The  Chairman.  What  is  the  proportion  of  the  traffic  going  over  the 
Chicago  and  Grand  Trunk  Railway,  and  the  Grand  Trunk  proper,  for 
export,  if  you  know  ? 

Mr.  Reeve.  I  can  only  give  an  approximate  guess  at  that.  It  would 
be  somewhere  between  20  and  25  per  cent. 

EXPORT  rates  over  THE  GRAND  TRUNK. 

The  Chairman.  It  has  been  intimated  by  one  or  two  gentlemen  who 
have  been  before  us  that  you  observe  the  interstate  commerce  act,  so 
far  as  the  publication  of  rates  is  concerned,  in  your  shipments  inland 
for  exportation,  but  that  your  connection  with  steam-ships  is  used  as  an 
advantage  to  the  shipper,  so  that  a  man  shipping  over  your  road  for 
exportation  gets  an  advantage  on  the  ocean  that  a  man  shipping  over 
an  American  road  fails  to  get.     Do  you  know  anything  about  that  ? 

Mr.  Reeve.  Some  time  ago,  and  in  fact  prior  to  the  time  the  Inter- 
state Commerce  Commission  gave  a  ruling  in  regard  to  export  traffic, 
stating  that  the  inland  rate  must  be  the  tariff  rate,  the  Grand  Trunk 
Railway  of  Canada  had  an  agreement  with  the  steam-ship  company  on 
a  percentage  basis.  It  enabled  me  to  make  the  same  rate  as  was  quoted 
by  way  of  Baltimore  and  Philadelphia,  if  necessary,  and  the  steamship 
company  got  a  percentage  of  that  through  rate,  and  the  percentage  ac- 
cruing to  the  inland  carrier  varied  from  time  to  time.  Those  through 
rates  were  always  published,  and  were  made  public  just  the  same  as 
our  rates  are  now  since  the  ruling  of  the  Interstate  Commerce  Commis- 
sion. Since  their  ruling  the  Grand  Trunk  canceled  entirely  its  agree 
ment  with  the  steam-ship  companies,  and  we  are  now  making  our 
through  rates  under  the  ruling  of  the  Commission  mainly  by  getting  the 
ocean  rate  from  the  steam-ship  company  and  adding  the  inland  rate  to 
their  rate,  making  a  through  rate.  And  since  that  agreement  the  in- 
land carrier  has  had  its  full  inland  tariff,  and  the  steam-ship  company 
has  had  their  rate  as  s^  ipulated  to  us. 

The  Chairman.  And  you  have  no  secret  arrangement  with  the  steam- 
ship comjiany  by  which  they  supjdy  you  a  secret  lower  rate  than  to 
others "? 

Mr.  Reeve.  Wo  have  no  secret  rate  with  them,  but  ask  them  from 
time  to  time  to  give  us  a  rate  by  way  of  Boston  or  ^ew  York,  where 
we  do  a  large  export  business,  and  we  treat  the  Montreal  line  now  just 
the  same  as  we  do  the  lines  out  of  New  York  and  Boston. 

The  Chairman.  It  was  stated  to  the  committee  in  Detroit  by  a  lum- 
berman that  he  could  ship  over  your  load  to  New  York  for  exportation, 
and  could  get  from  the  steam-ship  line  one  dollar  and  a  quarter  per 
1,000  feet  less  rate  than  he  could  by  shipping  on  an  American  or  any 
other  road.  I  have  not  been  able  to  find  out  how  that  could  be  done 
unless  there  was  some  secret  arrangement  between  your  road  and  the 
steam-ship  line. 

Mr.  Reeve.  I  think  that  may  refer  to  traffic  from  Detroit.  I  know 
of  no  such  case  as  that  by  our  line. 

traffic   out   op   CHICAGO. 

Senator  Hiscock.  What  was  the  highest  percentage  of  traffic  you 
ever  carried  out  of  Chicago "? 


THE  UNITED  STATES  AND  CANADA.  585 

Mr.  Reeve.  There  are  two  classes  of  traffic  and  we  treat  tliem  differ- 
ently. One  is  the  dead-freight  traffic,  and  the  other  is  the  live-stock 
and  dressed-beef  traffic.     We  keep  these  two  separate. 

Senator  Hiscock.  Take  the  dead  traffic. 

Mr.  Reeve.  The  highest  we  ever  carried  in  one  week  was  39  per 
cent. 

Senator  Hiscock.  What  percentage  of  the  other  1 

Mr.  Reeve.  Of  the  dressed  beef? 

Senator  Hiscock.  Yes. 

Mr.  Reeve.  The  highest  of  the  dressed  beef  this  year  has  been  29 
j)er  cent. 

Senator  Hiscock.  For  how  long  a  period  of  time? 

Mr.  Reeve.  Only  one  week. 

Senator  Hiscock.  Of  the  dead  freight  it  was  39  per  cent,  and  of  the 
live-stock  traffic  it  was  29  per  cent.     Was  this  for  only  a  week  ? 

Mr.  Reeve.  That  is  all.  Our  billing,  through  some  error,  was  not 
sent  in  for  a  whole  week  ;  not  reported  to  the  Central  Traffic  Associa- 
tion, and  that  made  a  difference  of  about  11  per  cent.  The  published 
report  of  39  per  cent,  was  therefore  erroneous. 

Senator  Hiscock.  What  you  mean  by  that  is,  that  your  reports  were 
not  all  in  for  the  week  previous,  and  coming  in  later  added  to  the  sub- 
sequent week  and  made  up  to  that  per  cent. 

Mr.  Reeve.  Yes,  sir. 

Senator  Hiscock.  What  was  it  the  week  previous? 

Mr.  Reeve.  Twenty-three  per  cent. 

Senator  Hiscock.  So  really  for  that  week  it  should  have  been  33  per 
cent.? 

Mr.  Reeve.  Yes,  sir. 

Senator  Hiscock.  And  for  this  subsequent  week  you  speak  of,  it 
should  have  been  29  instead  of  39. 

Mr.  Reeve.  Yes,  sir. 

Senator  Hiscock.  And  how  much  would  be  added  to  the  live  freight 
for  the  week  previous  ? 

Mr.  Reeve.  I  do  not  remember. 

Senator  Hiscock.  Would  10  per  cent,  cover  it  ? 

Mr.  Reeve.  It  might  be  2  per  cent,  higher  or  2  per  cent.  lower. 

Senator  Hiscock.  Do  you  remember  whether  there  was  any  very 
great  change? 

Mr.  Reeve.  There  was  no  very  great  change. 

Senator  Hiscock.  And  this  percentage  was  in  existence  for  only  one 
week. 

Mr.  Reeve.  That  is  all. 

Senator  Hiscock.  Will  you  furnish  to  the  committee  statements 
showing  the  returns  to  the  Central  Traffic  Association  ? 

Mr.  Reeve.  Yes,  sir;  I  shall  do  so. 

Senator  Hiscock.  Taking  the  entire  month  in  which  were  included 
those  two  weeks,  your  percentage  was  not  anj-  higher  than  for  the 
month  preceding  and  the  month  subsequent. 

Mr.  Reeve.  I  think  not. 


686 


TRANSPORTATION    INTERESTS    OF 


EAST-BOUND   SHIPMENTS  FROM  CHICAGO. 

The  statement  is  as  follows : 

Central  Traffic  Association, 

Office  op  the  Chairman, 

Chicago,  July  20,  1889. 

SPECIAL   STATEMENT. 

East-hound  dead-freight  tonnage  forwarded  from  Chicago  and  vicinity  to  and  east  of  the 
irtitik  lilies^  western  termini  for  the  years  1886,  1887,  1888,  and  first  half  of  ISS9. 

[Including  biisiuess  from  Joliet,  Matteson,  Bloom,  Dyer,  Spenc'-r,  Frankfort,  Blue  I.sland,  Elsdon, 
Englewood,  Giaud  Crossing,  South  Ohicago.  "Washington  Heights,  and  Stony  Island.  Also  from 
Kankakee  and  Seneca  September  1,  1886,  to  January  31,  1889;  from  South  Lawn  since  February  1, 
1889,  and  from  Kensington  aince  January  1,  1889.] 


Month. 

Koads. 

1886. 

1887. 

1888. 

1889. 

0.  &Gr.T 

Tons. 
17,217.00 
32,  952.  00 
25,  008.  00 
34, 171.  00 
21,  597. 00 
20,  209.  00 
12, 839.  00 

Per  ct. 
10.5 
20.1 
15.3 
20.8 
13.2 
12.3 
7.8 

Tons. 

26,  994.  68 
30,  994.  56 
34,  566. 00 
28,  524.  80 

15,  089.  99 
9,  838.  78 

14,  975.  02 

16,  786. 66 

Per  ct. 
1.5.2 
17.5 
19.4 
16.1 
8.5 
5.5 
8.4 
9.4 

Tons. 
34,  527,  86 
41,757.71 
35,041.48 
36,  508.  07 
17,  659.  04 
22.183.29 
15,  528. 90 

1, 413.  77 

Per  ct. 

16.9 

20.4 

17.1 

17.9 

8.6 

10.8 

7.6 

0.7 

Tons. 
40,  704.  00 
40,  MQ.  00 
30,  437.  00 
47,  biQ.  00 
10,  440. 00 
34,  498.  00 
29.  363.  00 

1,635.00 

Per  ct. 
16.9 

M.C    

16.8 

L.S.&M.S 

P.,Ft.  W.&C... 

C.,St.L.  &P 

B.&O  

N.  Y.,  C.  .fcSt.L.. 
C    I    St.  L  &  C 

12.6 
19.7 

6.8 
14.3 
12.2 

0.7 

Total 

C.  &  G.T 

163, 993.  00 

100.0 

177,  770. 49 

100.0 

204,  620. 12 

100.0 

14.2 

13.4 

18.1 

17.1 

9.5 

17.9 

8.6 

1.2 

241,063.00 

42,  703. 00 
34,  499.  00 
28,  569.  00 
39,  516.  00 
26,  679.  00 
22,  992. 00 
26,  540.  OJ 

100.0 

Feb 

38,  693.  68 
42,  0^8. 55 
25,  515. 12 
30,  944.  62 

24,  635. 36 
13, 127.  64 

25,  722. 50 

18.7 
20.3 
12.3 
17.9 
11.9 
6.4 
12.5 

18,  887.  97 
24,  295.  66 
31,  62.3.  98 
41,  004.  98 

19,  435.  92 
12,  261. 16 
11,  436.  08 

4,  028. 93 

11.6 

14.9 

19.4 

25.2 

11.9 

7.5 

7.0 

2.5 

30,  582.  25 
28,  875.  34 
39, 165.  91 

37,  046.  98 
20,  621. 81 

38,  790.  82 
18,  573. 46 

2,  669.  20 

19.3 

M  C         

15.6 

L.S.&M.S 

P.,  Ft.  W.&C... 

C.,St.L.  &P 

B.&O 

12.9 
17.8 
12.0 
10.4 

N.Y.,C.&St.L.. 
C    I    St  L  &  C 

12.0 

Total 

C.&G.T 

206,647.47 

100.0 

162,974.68 

100.0 

216,  325.  77 

100.0 

221,  498.  00 

100.  0 

Mar  . . . 

31,631.77 
;4,244.81 
45,  330.  79 
28,  409. 17 
13,  824.  21 
21,779.80 
11,090.99 

17.0 
18.4 
24.3 
15.3 

7.4 
11.6 

6.0 

41,  369.  34 

25,  800.  05 

35,  21 '3. 63 
70,916.09 
37,  96.5.  74 

36,  088.  56 

26,  793.  98 
3,  645.  07 

14.9 

9.3 

12.7 

25.5 

13.7 

13.0 

9.6 

1.3 

54, 637. 32 
31,  315.  84 
36,  442. 93 
46,481.15 
35,  592.  36 
26, 426. 65 
22,  903. 18 
2,060.40 

21.4 
12.2 
14.2 
18.2 
13.9 
10.3 
9.0 
0.8 

58,611.00 
32,  072.  00 
29, 153.  00 
37,  209.  00 
19,822.00 
22,  497.  00 
21,  556.  00 

26.5 

M.C  

L.S.&M.S 

P.,  Ft.  W.&C.... 

C,  St.  L.  &  P 

B.  &  0 

14.5 
13.2 
16.8 
9.0 
10.2 

N.  T.,  C.  &  St.  L.. 
C    I    St  L  &  C 

9.8 

Total 

C.&G.T 

186,  311. 54 

100.0 

277,842.46 

100.0 

255,  919.  83 

100.0 

220, 920.  00 

100.0 

Apr  ... 

14,  630. 01 
23,  698.  04 
19,081.62 
30,  499.  79 
18,  082. 84 
17,  068. 42 
9, 482. 33 

11.0 
18.0 
14.4 
23.0 
13.6 
12.9 
7.1 

16,  546. 39 
16,  050. 99 

27, 983.  72 
28,  720.  88 
14,541.91 
13, 441.  04 
25,  792.  70 
302. 43 

11.6 
11.2 
19.5 
20.0 
10.1 

9.4 
18.0 

0.2 

42,  254.  94 

29,  200.  83 

30,  959.  66 
37,  337.  08 

19,  765. 12 
22,  937. 29 

20,  044.  64 
2,  826.  52 

20.6 

14.2 

15.1 

18.2 

9.6 

11.2 

9.7 

L4 

24,  885.  00 
25, 42.5.  00 
22,  »67. 00 
30,  659.  00 
12,116.00 
16, 823.  00 
12,  249.  00 

17.2 

M.C 

17.5 

L.S.&M.S 

P., Ft.  W.&C... 

CSt.L.  &P 

B.  &0  

15.8 

2L1 

8.4 

n.6 

N.Y.,C.&St.L.. 
C    I    St  L  &  C 

8.4 

Total 

C.&G.T 

M.  C 

132,  443.  05 

14,  .544. 48 
15,503.08 
19,  947. 18 
30,  133.  22 
21.950.15 
7,  836.  32 
9, 277. 78 

100.0 

143,  380. 06 

100.  0 

205,  326. 08 

100.0 

145,  024.  00 

100.0 

May... 

12.2 
13.0 
16.7 
25.3 
18.4 
6.6 
7.8 

16,  490.  96 

17,  795.  82 
21,  322.  86 
25,  441.  08 
12,  098.  58 
19,  759.  64 
10,112.30 

1,  736. 01 

13.2 

14.3 

17.1 

20.4 

9.7 

15.8 

8.1 

L4 

17,  i;J3.  00 
21,  Oil.  00 
27,  512. 00 
33,  561.  00 
11,  996.  00 
17,  118.  00 
13,  686.  00 
1, 968.  00 

11.9 

14.6 

19.1 

23.3 

8.3 

11.9 

9.5 

1.4 

24, 163.  00 
25,  973.  00 
23,  993.  00 
28,  437.  00 
9,  690.  00 
18,  900.  00 
10,  343.  00 

17.1 
18.4 

L.S.&M.S 

P.,  Ft.  W.&C... 

C.,St.L.  &C 

B.  &0 

16.9 

20.1 

6.8 

13.4 

N.  Y.,C.  &St.L.. 
C    I    St  L  &  C 

7.3 

Total 

C.&G.T 

M.C 

119, 192. 19 

100.0 

124,  757. 25 

100.0 

143,  975. 00 

100.0 

141,  499.  00 

100.0 

June... 

16,  614.  78 
18,  897.  62 

17,  624.  75 
28,  441.  72 
20,  608.  04 
11,  .331.  09 

9,  800. 41 

13.5 
16.3 
14.3 
23.0 
16.7 
9.2 
8.0 

22,  936.  05 

22,  476.  28 

23,  263.  08 
32,  467.  94 
15,  824.  32 
25,  535.  25 

9,  730.  22 
2,  696.  37 

14.8 
14.5 
15.0 
21.0 
10.2 
16.5 
6.3 
L7 

18,  252.  00 
10,  371.  00 
20,  282.  00 
27,  52.5.  00 
11,181.00 
13,  804.  00 
10,  839.  00 
840.  00 

15.3 

13.7 

17.0 

23.1 

9.4 

11.6 

9.1 

0.8 

23,  390.  00 

27,  915.  00 

28,  442.  (10 
21,911.00 

8,  450.  00 
21,  200.  00 

9,  829.  00 

16.6 
19.8 

L.S.&M.S 

P.,Ft.W.  &C.... 

C.,St.L.  &P 

B.  &0 

20.1 
15.5 
6.0 
15.0 

N.Y.,C.  &St.L.. 
C    I    St  L  &  C 

7.0 

Total 

123,  318. 41 

100.0 

154, 935.  51 

100.0 

119, 100.  00 

100.0 

141,149.00 

100.0 

THE   UNITED   STATES   AND   CANADA.  58? 

East-hound  dead-freight  tonnage  forwarded  from  Chieago,  e/c. -Continued. 


Month. 


July . 


Aus 


Sept . . 


Oct.... 


Nov 


Dec. 


Roads. 


C.&G.T 

M.  O 

L.S.  &M.  S  .... 
P.,  Ft.W.  &C.. 
C.   St.  L.&P... 

B.&O 

K  Y.,  0.  &  St.  L 
C,  I.,  St.L.&C 

Total 


C.  &  G.  T 

M.  C 

L.  S.  &  M.  S  . . . . 
P.,  Ft.  W.  &C.. 
C,  St.  L.&P.. 

B.  &  O 

N.  Y.,C.&St.L 

C,  I.,  St.  L.  &  C 


Total 

C.&G.T 

M.  C 

L.S.  &M.S  .... 
P.,  Ft.  W.  &G.. 
C,  St.L.  &P... 

B.&O 

N.Y.,  C.&St.L 
C,  I.,  St.L.&C 


Total 

C.&G.T... 
M.C 

L.  S.  &  M.  S 
P.,  Ft.  W.&C. 
C,  St.L.  &P 

B.  &0 

N.Y.,  C.&St.L 

C,  L,  St.L.&C 

Total 

C.  &  G.  T 
M.C 

L.S.&M.S 

P.,  Ft.  W.&C. 
C,  St.L.  &P... 

B.  &0 

N.Y.,  C.&St.L 

C,  I.,  St.L.  &C 

Total. 

C.  &  G.  T 

M.  C 

L.  S.  &  M.  S 

P.,  Ft.  W.&C... 

C,  St.  L.&P.... 

B.  &  O 

N.Y.,  C.&St.L. 
C.,L,  St.L.&C. 

Total 240,263.02 


588 


TRANSPORTATION    INTERESTS    OP 


East-lound  dead-freight  tonnage  foriveircled  from  Chicago,  etc. — Contiuned. 
EECAPITULATION  BY^YEAES. 


Boads. 

1886. 

1887. 

1888. 

First  half  Of  1889. 

C.&G.T 

M.C 

Tons. 
242,  901.  59 
368,  088.  GO 
315,520.90 
369, 920. 77 
229,  778. 25 
166,  929. 14 
159, 647.  58 
*19,  001. 17 

Per  ct. 
12.9 
19.7 
10.9 
19.7 
12.3 
8.9 
8.5 
1.1 

Tons. 
301,  895. 13 
303,  862. 93 
360,  896. 22 
480,  022. 18 
226,  935.  85 
238, 894. 16 
201, 149.  07 

36,  387. 19 

Per  ct. 
14.0 
16.4 
16.3 
21.7 
10.2 
10.7 
9.1 
1.6 

Tons. 
400,651.37 
377, 107.  72 
399,  035.  98 
448,  578.  28 
218,  345.  33 
283,  904.  05 
222,  555. 18 

16,  650. 89 

Per  ct. 
10.9 
15.9 
10.9 
18.9 
9.2 
11.9 
9.6 
0.7 

Tons. 
214, 462.  00 
186.  324. 00 
162, 461.  00 
295, 278.  00 

93, 197.  00 
136,916.00 
109.  880. 00 

tl,  635.  00 

Per  ct. 
19.3 
16  8 

L.S.&M.S,... 
P.,Ft.W.&C.. 
C,  St.L.  &P... 
15.  &  O 

14.7 

18.5 

8.4 

12  3 

N.Y.C.  &St.L. 
C.I.,  St.L.&C. 

9.9 
0.1 

Total 

1, 872,  387. 90 

100.  0  1  2,  210,  042.  73 

100.0 

2,  366,  888.  80 

100.0 

1,111,153.00 

100.0 

C.  H.  McKnight, 

Secretary. 
Certified  correct, 

H.  G.  Smith,  Accountant. 

Approved  by 

G.  R.  Blanchaed,  Chairman. 

Note. — Chicago  and  Atlantic  Railway  business  not  reported  to  this  office. 

*  The  tounaso  .shown  for  C,  I.,  St.  L.  &  C.  Ry.  for  year  1836  represents  only  the  business  of  that  road 
from  September  1  to  December  31,  reports  of  business  prior  to  September  1,  1886,  not  having  been 
made  to  this  office. 

t  The  tonnage  shown  for  C,  I.,  St.  L.  &  C.  Ry.  for  the  first  half  of  year  1889,  represents  only  the  busi- 
ness of  that  road  for  the  month  of  January,  1889,  as  reports  of  business  from  February  1,  1889,  have 
been  discontinued. 

The  Chairman.  I  tliiuk  tins  would  be  a  good  time  to  take  a  recess. 
There  seems  to  be  no  gentleman  in  the  room  who  is  prepared  to  be 
heard  now. 

At  12  o'clock  m.  the  committee  took  a  recess  until  2  o'clock  p.  m. 

At  the  expiration  of  the  recess  the  committee  resumed  its  session. 
STATEMENT  OF  WILLIAM  C.  GOUDY. 


Mr.  William  C.  Goudy,  an  attorney  at  law  of  Chicago,  appeared. 

The  Chairman.  You  have  read  the  resolution  of  the  Senate,  I  take 
it,  under  which  the  committee  is  pursuing  its  investigation  ? 

Mr.  Goudy.  I  believe  I  have  seen  it. 

The  Chairman.  Then  please  take  up  the  subject  and  discuss  it  in 
your  own  way. 

Mr.  Goudy.  I  have  not  given  much  attention  to  the  traffic  which  ex- 
tends into  Canada.  That  belongs  rather  to  the  officers  who  are  attend- 
ing to  the  operating  department  of  the  roads.  I  know  that  a  competi- 
tion exists  between  competitive  lines  in  regard  to  that  business,  and 
that  there  is  an  inability  of  the  carriers,  which  are  subject  to  the  act 
of  Congress,  to  compete  successfully  with  the  lines  that  run  into  Canada. 
It  is  understood  that  they  so  manipulate  the  rates  that  they  are  lower 
on  such  lines  of  railway  than  upon  those  entirely  within  the  United 
States.  I  see  no  difficulty  about  Congress  having  power  to  control  that 
business.  It  can  be  done  under  the  laws  which  give  the  power  to  regu- 
late commerce  with  foreign  nations,  or  it  can  be  done  under  the  provis- 
ion of  the  Constitution  which  authorizes  the  levy  of  duties  or  imposts. 

The  Chairman.  Which  do  you  think  is  probably  the  better  way  under 
the  Constitution  ? 

Mr.  Goudy.  Not  being  entirely  familiar  with  the  ojieration  of  the 
railways,  1  do  not  know  that  my  opinion  about  that  would  be  worth 


THE    UNITED    STATES    AND    CANADA.  589 

much.  It  might  bo  accomplished  by  resortiug  to  both  ot  those  methods, 
perhaps. 

The  Chairman.  There  is  a  clause  in  the  interstate-commerce  act  now, 
as  you  are  perhaps  aware,  that  seeks  to  require  i)ayment  of  duty  in  case 
the  law  is  not  complied  with  in  reference  to  publication  of  rates,  etc, 

Mr.  GouDY.  I  know  that,  but  I  have  never  heard  of  any  effort  to  en- 
force it.  It  has  seemed  to  me  tliat  a  remedy  exists  for  that  and  other 
kindred  difficulties,  if  Conoress  woukl  see'fit  to  exercise  its  ])()wer  to 
take  control  of  all  the  carriers  that  are  called  interstate,  and  all  of  the 
business  of  those  carriers,  which,  in  my  judgment,  can  be  done  under  the 
provisions  of  the  Constitution. 

POWER   OF   CONGRESS   TO   REGULATE  TRAFFIC  WITHIN    THE   STATES. 

The  Chairman.  I  should  like  to  hear  you  on  the  question  of  the  con- 
stitutional power  of  the  Government  to  take  control  of  all  the  business 
of  railroads  doinj;  an  interstate  business,  if  that  is  the  proi)o.sitiou  you 
lay  down. 

Mr.  GouDY,  My  proposition  is  that  Congress  can  regulate  all  of  the 
business  of  an  interstate  railway,  and  also  all  of  the  business  of  a  State 
radway  engaged  in  interstate  business,  when  necessary  to  make  effect- 
ual regulations  of  commerce  with  foreign  nations  or  among  the  several 
States.  The  Constitution  provides. that  Congress  shall  have  power  to 
regulate  commerce  with  foreign  nations  and  among  the  several  States. 
There  is  no  limitation  in  the  Constitution  of  the  grant;  it  is  ])lenary, 
absolute,  and  without  qualification. 

The  Supreme  Court,  however,  have  said  in  several  decisions  that  it  is 
subject  to  the  so-called  police  power  of  the  States,  and  to  the  right  of 
the  States  to  pass  inspection  laws.  That  utterance  was  made  by  C.iief- 
Justice  Marshall  in  a  very  early  period  of  the  history  of  the  country,  in 
Brown  vs.  Maryland,  12  Wheaton,  410. 

An  examination  of  that  case  would  show  that  that  question  was  not 
before  the  court.  The  only  point  involved  was  as  to  the  ])ower  to  im- 
pose a  license  fee  upon  a  person  who  was  engaged  in  selling  imported 
goods,  and  it  was  decided  that  such  an  act  passed  by  the  State  of  Mary- 
land was  in  conflict  with  the  Constitution  of  the  United  States,  and 
therefore  void. 

lu  the  argument  Chief- Justice  Marshall  took  occasion  to  say  that  they 
conceded  that  the  State  had  reserved  police  power. 

In  the  case  of  one  hundred  and  twentieth— the  Shel!)y  County  tax- 
ing district — where  there  was  a  drummer  who  had  a  license  fee  imposed 
on  him  in  Tennessee,  Justice  Bradley,  after  holding  that  the  law  was 
invalid,  because  repugnant  to  the  Constitution,  went  on  to  say  that 
there  was  a  police  power  reserved  to  the  State,  and  that  this  i)ower  to 
regulate  commerce  was  subject  to  that  reservation. 

But  that  question  was  not  involved,  nor  has  it  been  in  other  cases 
where  similar  expressions  are  to  be  found.  But  whenever  this  question 
of  conflict  between  the  State  law  and  the  provision  of  the  Constitution 
has  directly  arisen  the  law  lias  been  held  invalid.  That  talk  of  reserva- 
tion of  police  power  seems  to  be,  if  I  may  be  permitted  to  use  the  ex- 
pression, "a  tub  thrown  to  the  whale." 

Senator  Harris.  Before  you  proceed,  will  you  allow  me  to  ask  if  your 
argument  goes  to  the  extent  of  assuming  that  Congress  has  the  power 
to  regulate  that  commerce  which  begins  and  ends  in  the  same  State  ? 

Mr.  GouDY.  Yes,  sir ;  that  is  my  position,  provided  the  business  is 
<]ope  by  a  carrier  which  is  an  interstate  one.    Where  the  carrier  and 


590  TRANSPORTATION  INTERESTS  OF 

the  business  are  both  confined  to  the  limits  of  the  same  State,  I  think 
that  under  the  Constitution  the  carrier  and  the  traffic  are  under  the 
control  of  the  State. 

Senator  Harris.  To  illustrate  and  understand  distinctly  the  prem- 
ises, would  a  railroad  beginning-  and  ending  in  the  same  State,  with- 
out any  connections  on  eitlier  end,  be  purely  a  State  carrier '} 

Mr.  GrOUDY.  Yes,  sir. 

Senator  Harris.  Would  Congress  have  power  to  regulate  it  so  far 
as  it  did  interstate  business  ?  I  am  assuming  that  the  railroad  over 
which  the  commerce  is  carried  begins  and  ends  in  the  same  State,  and 
has  no  connection  at  either  end. 

CONGRESS  CAN   REGULATE  THE  ENTIRE  BUSINESS  OF  AN  INTERSTATE 

CARRIER. 

Mr.  GouDY.  Congress  has  the  power  to  regulate  the  interstate  traffic 
of  such  a  road,  and  if  necessary  to  accomplish  that  successfully  the 
power  of  regulation  could  embrace-  its  entire  business.  Such  a  road 
may  do  no  business  except  that  which  originates  and  ends  in  the  same 
State,  but  it  may,  however,  take  freight  which  comes  to  it  from  another 
State  and  carry  it  tlirough  that  State  or  to  some  point  within  the  State. 
There  has  been  some  confusion  as  to  what  traffic  is  within  the  defini- 
tion of  interstate  commerce.  If  freight  is  shipped  from  a  point  in 
one  State  to  a  point  in  another  State,  directed  to  a  point  in  another 
State,  that  is  interstate  business.  Such  a  carrier  may  do  interstate 
business  by  taking  up  this  through  freight  and  carrying  it  to  the  extent 
of  its  line  ;  so  far  as  that  carrier  is  engaged  in  doing  this  interstate 
business,  I  think  Congress  can  take  the  control  of  it. 

In  the  Daniel  Ball  case,  10  Wallace,  there  was  a  steam-boat  running 
on  the  Grand  River  in  the  State  of  Michigan.  It  ran  from  a  point  up 
the  river  to  its  mouth  at  Grand  Rapids,  on  Lake  Michigan.  It  had  no 
connections  whatever  with  any  other  carrier.  It  received  some  freight 
on  the  river  destined  to  Milwaukee,  which  was  billed  and  shipped  to  be 
carried  by  the  Daniel  Ball  to  Grand  Rapids,  but  it  was  directed  to  a 
consignee  in  Milwaukee. 

The  Daniel  Ball  had  no  arrangement  with  any  othercarrier  whatever. 
Its  duties  began  with  the  shipment  of  that  freight  at  the  up-river  point, 
and  ended  with  the  landing  of  it  at  Grand  Rapids.  The  Supreme  Court 
held  that  the  shipment  was  interstate,  and  that  the  Daniel  Ball  was 
subject  to  the  law  of  Congress,  and  was  required  to  take  out  a  license 
in  i)ursuance  of  an  act  of  Congress.  So  too,  when  freight  is  carried 
from  a  point  in  a  State  to  another  in  the  same  State,  but  passes  through 
another  State  on  the  route,  the  business  is  a  part  of  interstate  com- 
merce. 

The  case  of  Hall  vs.  DeCuir,  95  U.  S.  485,  is  an  authority  as  to  the 
carriers  who  are  interstate.  This  was  a  case  where  there  was  a  steam- 
boat running  from  New  Orleans,  in  the  State  of  Louisiana,  to  Vicks- 
burg,  in  the  State  of  Mississippi.  The  State  of  Louisiana  passed  an 
act,  in  obedience  to  the  constitution  of  that  State,  providing  that  there 
should  be  no  discrimination  made  by  a  carrier  on  account  of  color,  and 
that  a  colored  passenger  was  entitled  to  the  same  privileges  and  treat- 
ment on  board  steam-boats  as  a  white  person. 

A  negro  woman  got  on  a  boat,  the  Governor  Allen  by  name,  at  New 
Orleans,  destined  to  Hermitage,  both  points  being  in  Louisiana.  The 
captain  declined  to  give  her  accommodations  in  the  cabin  set  apart  for 
white  people.    She  brought  suit  and  recovered  a  judgment  against  the 


THE    UNITED    STATES    AND    CANADA.  591 

owner  of  the  vessel.  The  case  went  to  the  Supreme  Court  of  the  Uuited 
States,  and  the  only  question  was  whether  that  statute  was  valid.  The 
court  held  that  it  was  void,  because  it  was  repugnant  to  the  provision 
of  the  Constitution  of  the  United  States ;  that  although  this  steam  boat 
was  doing  business  between  points  in  the  State  of  Louisiana,  yet  it  was 
also  engaged  in  transporting  passengers  and  freight  to  Vicksburg,  in 
the  State  of  Mississippi,  and  therefore  the  captain  had  a  right  to  make 
regulations  with  reference  to  the  business  with  other  States.  As  the 
statute  in  Louisiana  conflicted  with  his  right  to  make  his  own  rules 
with  reference  to  such  interstate  business,  it  was  void,  even  when  ap- 
plied to  the  business  entirely  within  Louisiana. 

The  principle  established  by  the  Ball  case  is,  that  a  State  (nirrier 
transacting  some  interstate  business  is  subject  to  the  control  of  Con- 
gress ;  the  principle  asserted  in  Hall  vs.  De  Cuir  is,  that  an  interstate 
carrier  engaged  to  some  extent  in  doing  State  business  may  be  con- 
trolled by  Congress ;  the  principle  common  to  both  cases  is,  that  the 
power  of  the  State  in  all  cases  where  interstate  business  is  done  or  an 
interstate  carrier  exists,  must  yield  to  the  paramount  power  of  Congress 
to  regulate  commerce.  The  inference  is  inevitable  that  it  is  only  when 
a  railway  lies  within  the  limits  of  a  State  and  confines  itself  to  freight 
and  passengers  taken  and  discharged  in  the  same  State,  that  State  leg- 
islation is  superior  to  Federal  legislation.  There  is  no  police  power 
reserved  to  the  States  which  operates  as  a  limitation  upon  the  grant  to 
Congress  to  regulate  commerce.  I  think  when  the  test  is  applied  it 
will  be  seen  that  Congress  alone  has  the  right  to  enact  police  regula- 
tions with  reference  to  interstate  traffic  and  with  reference  to  interstate 
carriers. 

Allow  me  to  illustrate :  Several  of  the  States  have  enacted  laws  re- 
quiring that  a  particular  kind  of  coupler  shall  be  used;  others,  i)rovid- 
ing  how  a  passenger  car  shall  be  heated  ;  some  States  providing  one 
way  and  some  another.  If  a  car  should  start  at  New  York,  destined 
to  the  Missouri  River,  it  would  ]>ass  through  six  or  eight  States.  In 
going  through  these  States  it  would  find  that  one  State  required  a  par- 
ticular kind  of  coupler  or  heater,  and  another  a  diiferent  kind  of  coupler 
or  heater. 

Now  if  those  laws  passed  by  the  different  States  requiring  these  va- 
rious modes  of  coupling  and  heating  are  valid  they  would  have  the 
effect  of  requiring  a  change  of  couplers  and  heaters  at  every  State  line. 
That  is  purely  a  police  regulation,  yet  it  contlicts  with  the  power  of 
Congress  to  regulate  commerce  among  the  several  States. 

The  right  of  a  State  to  enact  police  laws  is  sometimes  asserted  on  the 
ground  that  the  franchise  was  derived  from  the  State,  by  virtue  of 
which  the  road  was  constructed.  It  is  true  that  most  of  the  railway 
corporations  were  organized  under  State  authority,  but  where  they  have 
been  consolidated  and  have  become  interstate  roads  it  has  been  by  the 
consent  of  the  State;  so  that  the  States  which  have  thus  i)ermitted  the 
consolidation  have  allowed  the  roads  to  become  interstate  lines,  jsubject 
to  the  control  of  Congress.  If  the  State  has  lost  its  power  it  is  because 
of  the  action  of  the  State  authorities,bringing  such  railways  within  the 
clause  granting  to  Congress  power  to  regulate  commerce. 

THE  POWER  TO  KEQULATE  COMMERCE  NOT  LIMITED  BY  THE  POLICE 
POWERS  OF  THE  STATES. 

It  was  never  the  intention  of  the  Supreme  Court  to  hold  that  the  grant 
of  power  to  Congress  to  regulate  commerce  with  foreign  nations,  among 


592  TKANSPORTATION  INTERESTS  OF 

tbe  several  States,  and  with  the  Indian  tribes  was  limited  by  a  re- 
served right  to  a  State  to  make  police  regulations  or  to  pass  inspeciion 
laws.  Whenever  the  point  has  been  directly  before  the  court  the  de- 
cision has  been  to  the  reverse. 

If  you  will  allow  me  to  refer  to  some  expressions  of  the  Sui)reme 
Court,  which  go  to  show  that  this  power  to  regulate  commerce  is  not 
limited  by  the  police  i)ower  of  a  State,  I  will  do  so. 

In  Brown  vs,  Maryland,  12  Wheaton  448,  Chief-Justice  Marshall,  af- 
ter expressing  the  opinion  that  police  power  was  reserved  to  the  State, 
proceeded  to  make  an  exc  'ption  as  to  powers  granted  to  Congress.  IJe 
says : 

It  has  beeu  contended  that  this  construction  of  the  power  to  regulate  connuerce,  ns 
was  contended  in  construing  the  prohibition  to  lay  duties  on  imjiorts,  would  abridge 
the  acknowledged  power  of  a  State  to  tax  ita  own  citizens,  or  their  property  within 
its  own  territory. 

We  admit  this  power  to  be  sacred,  but  cannot  admit  that  it  may  be  used  so  as  to 
obstruct  the  free  course  of  a  power  given  to  Congress.  We  can  not  admit  that  itmay 
be  used  so  as  to  obstruct  or  defeat  the  power  to  regulate  commerce.  It  has  been  ob- 
served that  the  powers  remaining  with  tliQ  States  may  be  so  exercised  as  to  come  in 
conflict  with  those  vested  in  Congress.  When  this  happens,  that  which  is  not  su- 
preme must  yield  to  that  which  is  supreme.  This  great  and  universal  truth  is  insep- 
arable in  the  nature  of  things,  and  the  constitution  has  applied  in  to  the  often  inior- 
fering  powers  of  the  General  and  State  Governments  as  a  vital  principleof  ])erpetual 
operation.  It  results  necessarily,  from  this  ])rincii>l<^,  that  the  taxing  poweis  of  the 
States  must  have  some  limits.  It  can  not  reach  and  restrain  the  action  of  the  National 
Government  within  its  proper  sphere.  It  can  not  reach  the  administration  of  justice 
in  the  courts  of  the  Union,  or  the  collection  of  the  taxes  of  the  United  States,  or  re- 
strain the  operation  of  any  law  which  Congress  may  constitutionally  pass.  It  can 
nor  interfere  with  any  regulation  of  commerce. 

In  Henderson  v.  Mayor,  etc.,  92  XT.  S.,  259,  Mr.  Justice  Miller,  in  dis- 
cussing the  boundaries  of  the  police  power,  said  {p.  271) : 

Whatever  may  be  the  nature  and  extent  of  that  power,  where  not  otherwise  re- 
stricted, no  definition  of  it,  and  no  urgency  for  its  use,  can  authorize  a  State  to  use  it, 
in  regard  to  a  subject-matter  which  has  been  confided  exclusively  to  the  discretion  of 
Congress  by  the  Constitution. 

»  *  »  »  «  «  « 

It  is  clear,  from  the  nature  of  our  complex  form  of  government,  that  whenever  a 
statute  of  a  State  invades  the  domain  of  the  legislation  which  belongs  exclusively  to 
the  Congress  of  the  United  States,  it  is  void,  no  matter  under  what  class  of  powers  it 
may  fall,  nor  how  closely  allied  to  powers  conceded  to  belong  to  the  States. 

la  Walling  v.  Michigan,  116  U.  S.,  449,  the  court,  speaking  of  the  claim 
that  the  act  in  question  was  a  ])roper  exercise  of  the  police  power  of  the 
State  for  the  discouragement  of  the  use  of  intoxicating  liquors,  said  : 

This  would  be  a  perfect  justification  of  the  act  if  it  did  not  discriminate  against 
the  citizens  and  products  of  other  States  in  a  matter  of  commerce  between  the  States, 
and  thus  usurp  ore  of  the  prerogatives  of  the  national  legislature.  The  police  power 
can  not  be  set  up  to  control  the  inhibitions  of  the  Federal  Constitution,  or  the  powers 
of  the  United  States  Government  created  thereby. 

In  Bowman  v.  Chicago  and  Northwestern  Kailway  Company,  125  U. 
S.,  489,  Mr.  Justice  Matthews  quotes  with  approval  from  the  opinion  of 
Mr.  Justice  Catron  in  the  License  cases,  5  How.,  599.  Speaking  of  the 
police  power  as  reserved  to  the  States  and  the  power  granted  to  Con- 
gress over  commerce,  and  dissenting  from  the  decision  that  the  law  was 
a  proper  exercise  of  police  authority,  he  says : 

If  this  be  the  true  construction  of  the  constitutional  provision,  then  the  paramount 
power  of  Congress  to  regulate  commerce  is  subject  to  a  very  material  limitation,  for 
it  takes  from  Congress  and  leaves  with  the  States  the  power  to  determine  the  com- 
modities, or  articles  of  property,  which  are  the  subjects  of  lawful  commerce.  Con- 
gress may  regulate,  but  the  States  determine  what  .shall  or  shall  not  be  regulated. 
Upon  this  theory  the  power  to  regulate  commerce,  instead  of  being  paramount  over 


THE  UNITED  STATES  AND  CANADA.         .   593 

the  subject,  would  become  subordinate  to  the  State  police  power;  for  it  is  obvious 
that  the  power  to  determine  the  articles  which  may  be  the  subjects  of  commerce, 
and  thus  to  circumscribe  its  scope  and  operation,  is,  in  efiect,  the  controlling  one. 
The  police  power  would  not  only  be  a  formidable  rival,  but,  in  a  struggle,  must 
necessarily  triumph  over  the  commercial  power,  as  the  power  to  regulate  is  dependent 
upon  the  power  to  fix  and  determine  upon  the  subjects  to  be  regulated.  The  same 
process  of  legislation  and  reasoning  adopted  by  the  State  and  its  courts  could  bring 
within  the  police  power  any  article  of  consumption  that  a  State  might  wish  to  ex- 
clude, whether  it  belonged  to  that  which  was  drunk,  or  to  food  and  clothing;  and 
with  nearly  equal  chiims  to  propriety,  as  malt  liquors  and  the  produce  of  iVuits  other 
than  grapes  stand  on  no  higher  ground  than  thd  light  wines  of  this  and  other  coun- 
tries, excluded,  in  eiiect,  by  the  law  as  it  now  stan(ls.  And  it  would  bo  only  another 
step  to  regulate  real  or  supposed  extravagances  in  food  or  clothing. 

In  Brown  v.  Honston,  114  U.  S.,  G30,  it  was  declared  that  the  i)ower 
over  commerce  "is  certainly  so  far  exclusive  that  no  State  has  power  to 
make  any  law  or  regulation  which  will  aftect  the  free  and  unrestrained 
intercourse  and  trade  between  the  States,  as  Congress  has  left  it,  or 
which  will  impose  any  discriminating-  burden  or  tax  upon  the  citizens 
or  products  of  other  States,  coming  or  brought  within  its  jurisdiction." 

In  Kailroad  v.  Husen,  95  U.  S.,  477,  the  court  says : 

But  whatever  may  be  the  nature  and  reach  of  the  police  power  of  a  State,  it  can 
not  be  exenised  over  a  subject  confided  exclusively  to  Congress  by  the  Federal  Con- 
etitiition.  It  can  not  invade  the  domain  of  the  National  Government.  It  was  said  in 
Henderson  et  al.  r.  Mayor  of  the  City  of  New  York  el  al.,  supra,  to  be  "  clear,  from  the 
nature  of  our  complex  form  of  government,  that  whenever  the  statute  of  a  State  in- 
vades the  domain  of  legislation  which  belongs  exclusively  to  the  Congress  of  the 
Uni»ed  States,  it  is  void,  no  matter  under  what  class  of  i)ower8  it  may  fall,  or  how 
closely  allied  it  may  be  to  powers  conceded  to  belong  to  the  States."  Substantially 
the  same  thing  was  said  by  Chief  Justice  Marshall  in  Gibbous  rs.  Ogden,  9  Wheat.,  1. 
Neither  the  unlimited  powers  of  a  State  to  tax,  nor  any  of  its  large  police  powers, 
can  be  exercised  to  such  an  extent  as  to  work  a  practical  assumption  of  the  powers 
properly  conferred  upon  Congress  by  the  Constitution. 

I  think  the  substance  of  all  this  is  that,  whenever  it  is  conceded  that 
a  carrier,  as  an  interstate  carrier,  or  the  article  of  freight  which  is 
carried,  is  a  subject  of  commerce,  then  the  State,  under  the  right  to 
enact  police  regulations,  has  no  power  over  it  whatever. 

Senator  HiscocK.  Do  you  go  to  the  extent  of  saying  that  the  State 
has  not  power  to  regulate  the  sale  1 

Mr.  GOUDY.  Yes,  sir.  It  has  been  decided  repeatedly  that  the  right 
to  sell  is  a  necessary  part  of  the  right  to  bring  the  article  into  the  State, 
and  there  is  no  decision  of  the  Supreme  Court  to  the  contrary. 

The  supreme  court  of  Iowa  recently  decided  that  you  can  take  li(pior 
into  the  State  but  you  can  not  sell  it.  With  that  exception  I  do  not 
know  of  any  decision  of  that  kind. 

Senator  Ricagan.  I  did  not  exactly  understand  the  proposition  you 
have  just  made. 

Mr.  aoUDY.  My  proposition  is  that  the  power  of  the  United  States 
to  regulate  commerce  is  supreme  and  exclusive  and  not  qualified  by  any 
right  in  the  State  to  make  police  regulations,  that  whenever  those  po- 
lice regulations  relate  to  commerce,  that  is,  with  the  regidation  of  an 
interstate  carrier,  or  with  the  transactions  of  interstate  commerce,  re- 
ferring both  to  the  traffic  and  the  articles,  that  they  are  void. 

Senator  Reagan.  Do  you  hold,  Mr.  Goudy,  that  the  law  passed  by 
the  State  of  Missouri,  prohibiting  the  carrying  through  that  State  of 
Texas  cattle,  is  not  good  law  I 

Mr.  Goudy.  That  act  was  held  to  be  invalid.     It  was  decided  to  bo 
invalid,  because  it  was  not  a  proper  exercise  of  the  police  ])ower,  and 
because  it  conflicted  with  the  right  to  take  any  healthy  cattle  as  well 
as  diseased  cattle  through  the  State. 
6543 38 


594  TRANSPOKTATION  INTERESTS.  OF 

A  line  of  cases,  where  it  has  been  held  that  in  the  absencM^  of  action 
1)3^  Congress  the  State  might  legislate  on  the  subject  of  interstate  coin- 
uieree,  is  apparently"  inconsistent  with  my  position.  The  first  of  th<'S  > 
cases  related  to  harbors  and  bridges.  In  the  94th  United  States  llc- 
ports,  in  the  "  Granger  cases,"  the  Supreme  Court  applied  that  principle 
more  generally. 

The  Supreme  Court  held  that  the  States  might,  in  the  absence  of  leg- 
islation by  Congress  on  the  subject,  fix  the  rates  that  might  be  charged 
by  a  warehouseman  or  railway  corporation.  In  the  Wabash  case,  118 
IJ.  S.  liep.,  5G0,  the  court  retracted  what  was  said  in  the  Muun  case  on 
that  subject,  and  declared  that  the  States  could  only  make  reguhttions 
upon  those  subjects  which  were  local,  like  a  bridge,  or  harbor,  or  |)il<'t. 
age,  and  that  on  all  other  subjects,  where  general  rules  were  required  and 
Congress  had  not  acted,  the  absence  of  action  by  Congress  was  equiv:i- 
lent  to  a  declaration  that  commerce  should  be  free,  that  on  these  sub- 
jects the  power  of  Congress  was  exclusive. 

THE  GREATER  INCLUDES   THE  LESS. 

Recurring  to  the  question  Senator  Harris  propounded  awhile  ago, 
there  is  the  difficulty.  It  will  certainly  be  conceded  that  so  far  as  in- 
terstate business  is  concerned,  either  the  traffic  or  the  carrier.  Congress 
may  make  such  rules  as  it  sees  proper;  but  here  is  a  carrier  confined  to 
the  limits  of  a  State,  and  I  will  take  for  illustration  the  most  prominent, 
the  New  York  Central.  It  begins  and  ends  in  the  State  of  New  York, 
and  yet  is  engaged  in  both  kinds  of  business.  It  is  engaged  in  the  do- 
mestic traffic,  and  it  is  engaged  in. the  interstate  traffic. 

It  will  be  conceded  that  Congress  can  regulate  all  the  interstate  busi- 
ness done  on  the  New  York  Central.  The  question  is,  whether  it  can 
regulate  the  transportation  of  freight  which  is  taken  up  within  the  State 
of  New  York  and  put  down  in  the  same  State ;  whether  Congress  can 
regulate  the  manner  in  which  a  passenger  taken  up  in  one  point  in  the 
State  of  New  York  and  discharged  at  another  point  in  the  same  State, 
shall  be  carried. 

There  are  implied  powers  as  well  as  express  powers.  The  general 
rule  is  that  where  express  power  is  given,  implied  power  can  be  exer- 
cised so  far  as  may  be  necessary  to  give  effect  to  the  expressed  power. 

Now,  if  it  becomes  necessary,  in  making  suitable  regulations  to  con- 
trol the  interstate  traffic  and  the  interstate  carriers,  to  make  rules  whiith 
will  govern  that  which  is  not,  then  it  seems  to  me  that  Congress,  in 
order  to  carry  out  the  express  power,  can  and  ought  to  make  rules  to 
include  the  State  business.  To  make  a  mathematical  proposition,  the 
greater  includes  the  less. 

It  is  simply  a  necessary  conclusion  in  order  to  enable  Congress  to 
exercise  this  express  grant  of  power.     In  politics  I  am  a  Democrat. 

The  Chairman.  I  will  testify  to  that. 

Mr.  GOUDY.  And  I  am  in  favor  of  the  rights  of  the  State  where  they 
exist,  but  we  have  this  duplex  form  of  Government,  and  when  a  subject 
is  committed  to  the  National  Government  like  that  of  coining  money, 
passing  naturalization  laws,  and  regulating  commerce,  etc.,  the  power 
is  plenary,  and  there  is  no  right  of  the  State  to  be  asserted.  It  is  only, 
howe%^er,  where  these  express  grants  of  power  are  in  the  Constitution, 
in  my  judgment,  that  the  State  has  no  power  to  act. 

Senator  Harris.  While  I  think  every  one  will  concede  the  power  of 
Congress  to  regulate  interstate  commerce — the  power  of  Congress  to 
regulate  the  interstate  carrier  as  an  instrument  of  interstate  commer(!e., 


THE    UNITED    STATES    AND  CANADA.  595 

even  tbongh  be  be  au  interstate  carrier,  when  eiigagied  entirely  in  local 
and  State  commerce— the  fact  brings  up  a  difUcult  question  in  my 
mind.  The  carrier  may  be  a  State  and  an  interstate  carrier  at  the  same 
time.     In  point  of  fact,  as  I  take  it,  the  New  York  Central  is  both. 

Mr.  GouDY.  It  is  one  of  those  cases  of  conflict  between  the  two 
forms  of  government,  and  under  our  Constitution  the  decisions  on  these 
subjects  by  the  Supreme  Court  of  the  United  States  is  the  supreme 
law. 

The  object  of  this  grant  of  power  was  to  prevent  the  people  of  one 
State  from  gaining  an  advantage  over  the  people  of  another  State. 
There  is  now  an  attempt  in  every  State  to  regulate  commerce  by  law. 
We  have  commissions  in  everyone  of  them,  and  Congress  has  provided 
a  commission  for  the  General  Government.  These  are  in  collision,  and 
the  question  is  how  can  this  conflict  be  avoided  ? 

Tlie  subject  on  which  the  main  conflict  arises  is  as  to  rates ;  to  some 
extent  as  to  what  are  interstate  matters. 

Trade  is  easily  influenced  by  delicate  questions,  and  complicated  with 
various  circumstances.  A  disturbance  of  any  kind  affects  others,  and 
changes  the  result.  The  law  of  competition  is  such  that  the  rates 
adoi)ted  by  one  carrier  compels  like  rates  by  a  rival.  Kates  tixed  as 
to  one  distance  necessarily  affect  those  as  to  other  distances.  Congress 
has  provided  that  a  greater  charge  shall  not  be  made  for  a  shorter  tlian 
a  longer  distance  over  the  same  line  in  the  same  direction  under  similar 
circumstances  and  conditions,  and  with  the  additional  requirements 
that  all  rates  shall  be  reasonable  and  without  discrimination,  has  there 
left  the  subject.  Some  of  the  States  have  jirescribed  a  schedule  of 
rates ;  some  demand  that  the  same  rate  per  ton  i)er  mile  shall  be 
charged;  some  have  established  other  rules.  When  these  are  applied 
to  the  same  carrier  there  is  an  inevitable  conflict ;  when  rates  for  traffic 
within  the  limits  of  a  State  are  fixed,  those  for  interstate  business  are 
seriously  affected. 

The  compensation  received  by  the  carrier  goes  directly  to  its  right  to- 
exist.  State  commissioners  in  the  Western  States  are  the  agents  of 
the  shippers  and  faithfully  represent  the  private  interests  of  their  prin- 
cipals, regardless  of  the  right  of  the  stock-holder  to  a  fair  interest  on 
the  capital  after  paying  operating  expenses  and  fixed  charges. 

If  the  control  were  lodged  in  Congress,  and  agencies  provided  by  it, 
where  the  Constitution  puts  the  power,  it  may  be  assumed  that  all  in- 
terests would  be  more  justly  protected  than  by  local  authorities. 

The  Chairman.  You  think  the  taking  control  of  the  domestic  busi- 
ness and  State  traflflc  is  a  necessity  in  order  to  properly  regulate  under 
the  Constitution  the  interstate  traffic  that  the  road  does? 

Mr.  GouDY.  Yes,  sir;  that  is  my  view  of  it. 

The  Chairman.  You  are  connected  with  the  Northwestern  Eailroad  ? 

Mr.  GoUDY.  I  am  the  general  counsel  for  that  company. 

The  Chairman.  Have  you  full  knowledge  of  the  particular  question 
that  we  are  authorized  to  inquire  into,  as  to  whether  the  American 
roads — your  line,  for  instance — carrying  freight  from  St.  Paul  or  Min- 
neapolis are  at  a  disadvantage  in  competition  with  the  railroads  run- 
ning through  Canada? 

Mr.  GouDY.  1  am  not  familiar  with  it;  we  have  one  of  our  lines  run- 
ning from  Chicago  to  St.  Paul.  Kunniug  parallel  with  it  north  is  the 
Burlington  and  Northern.  Tiiat  road  has  no  local  business  and  depends 
upon  a  through  business.  The  Burlington  and  Northern  comes  in  direct 
competition  with  the  Hues  running  from  St.  Paul,  running  into  Canada 
at  Sault  St.  Marie  and  connecting  with  the  Canadian  Pacific.    The  Bur- 


596  TRANSPORTATION    INTERESTS    OF 

Ihigton  and  Northern  in  order  to  get  business  has  to  compete  with  these 
Canadian  lines,  which  affects  directly  the  other  lines  between  St.  Paul 
and  Chicago  and  compels  them  to  receive  less  compensation  than  they 
otherwise  would.  In  other  words,  they  are  controlled  by  the  Canadian 
lines.  It  is  very  much  like  it  was  when  I  was  a  boy,  when  I  used  to  lay 
a  line  of  bricks  on  the  end  and  by  pushing  down  the  one  at  the  extreme 
end  of  the  line  all  the  others  went  down.  When  one  road  adoi)ts  a  i^olicy 
as  to  rates  its  competitors  must  follow,  and  finally  the  rates  are  changed 
all  over  the  country. 

OBSERVANCE  OF  INTERSTATE  LAW  BY  CANADIAN  LINES. 

The  Chairman.  Do  you  understand  that  the  Canadian  Pacific  in  the 
transaction  of  all  business  touching  the  United  States  observes  the  in- 
terstate commerce  law  f 

Mr.  GouDY.  I  do  not  so  understand  it. 

The  Chairman.  They  insist  that  they  do,  and  I  do  not  know  whether 
it  is  true  or  not. 

Mr.  GouDY.  I  have  never  understood  it  that  way.  I  understand  it 
to  be  just  the  reverse;  that  they  manipulate  their  rates  so  that  they 
observe  the  law  as  to  the  United  States  end  of  the  line,  but  do  not  observe 
it  with  respect  to  that  portion  of  the  line  in  Canada. 

The  Chairman.  The  officers  of  both  the  Grand  Trunk  and  the  Cana- 
dian Pacific  testified  before  this  committee  that  in  the  transportation 
of  all  Ireight  going  out  of  the  United  States  into  Canada  and  back 
in  the  United  States,  and  all  freight  going  out  of  the  United  States 
into  Canada,  and  all  freight  coming  from  Canada  into  the  United 
States,  and  all  freight  going  out  of  the  United  States  through  Canada 
for  exportation  at  Montreal  or  elsewhere  in  that  country,  they  observe 
the  interstate  commerce  law  and  j)"^Jish  their  rates  and  adhere  to 
them. 

Mr.  GouDY.  I  can  not  say  that  that  is  untrue,  but  I  can  say  it  is  not 
believed  by  other  carriers. 

Senator  Reagan.  They  are  required  to  publish  their  rates  in  such 
cases,  and  if  they  charge  more  than  their  published  rates  tliej^  are  lia- 
ble to  punishment. 

Mr.  GouDY.  I  understand  that  while  they  charge  the  schedule  rates 
that  are  published  in  the  United  States,  yet  when  they  go  into  Canada 
rebates  are  allowed  by  some  device. 

The  Chairman.  They  insist  that  they  do  not.  That  charge  may  be 
said  to  have  been  one  of  the  reasons  for  this  investigation.  We  are 
directed  to  ascertain  what  the  facts  are  and  see  if  any  additional  legis- 
lation or  any  modification  of  the  interstate  commerce  act  is  necessary. 

GOVERNMENTAL  PROPRIETORSHIP  OF  MEANS  OF  TRANSPORTATION. 

Senator  HiscocK.  Do  you  go  to  the  extent  of  advocating  that  the 
General  Government  shall  take  the  proprietorship  of  the  means  of  con- 
ducting interstate  commerce? 

Mr.  GouDY.  I  do  not  know  as  I  quite  understand  your  question.  I 
do  not  think,  however,  that  the  Government  ought  to  take  the  proprie- 
torship of  the  railways  themselves,  if  that  is  the  question.  That  is  the 
socialistic  idea,  I  believe. 

Senator  Hiscock.  It  seems  to  me  that  there  would  be  a  little  trouble 
ip  drawing  the  line,  carrying  it  as  far  as  you  do. 


THE    UNITED    STATES    AND    CANADA.  597 

CONGRESS   TO   CONTROL   ALL   COMMERCE. 

Mr.  GouDY.  You  have  a  general  law  now  aud  the  only  thing  to  do  is 
to  extend  it«  terms  so  as  to  include  all  commerce. 

Senator  Hiscock.  But  1  understand  your  idea  is  this:  Take,  for  in- 
stance, the  New  York  Central  liailroad;  if  it  chooses  to  engage  in  inter- 
state commerce,  then  the  General  Government  has  a  right  to  regulate 
its  entire  commerce.     Is  that  your  point"? 

Mr.  GouDT.  Yes,  sir. 

Senator  Uiscock.  And  if  it  chooses  to  throw  off  this  interstate  com- 
merce and  engage  in  purly  State  traffic,  then  not? 

Mr.  GouDY.  Yes,  sir. 

Senator  Hiscock.  The  other  position  follows  as  a  matter  of  necessity 
on  account  of  the  sympathy  between  freights. 

Mr.  GouDY^  Yes,  sir ;  and  the  inability  to  make  any  effective  regula- 
tion under  this  provision  of  the  Constitution  without  taking  control  of 
all.  I  do  not  know  of  any  carrier  in  this  country  that  does  not  do  some 
interstate  business,  although  there  mtiy  be. 

Senator  Hiscock.  That  may  be  all  true,  but  I  do  not  see  the  inability 
so  strongly  as  you  do.  I  concede  that  now  and  then  a  railroad  com- 
mission may  make  a  decision,  as  a  court  may,  that  is  unreasonable,  etc., 
but  I  do  not  see  enough  of  that  on  which  to  predicate  this  necessity  of 
which  you  speak. 

Mr.  GouDY.  It  will  not  do  to  judge  the  balance  of  the  country  by 
New  York  and  the  New  York  Central.  The  New  V^ork  Central  could 
probably  live  off  its  domestic  business,  but  it  is  the  only  road  in  the 
country  that  could.  An  examination  into  the  business  aud  financial 
condition  of  railroads  west  of  Ohio  and  in  the  southwestern  States  will 
show  a  very  bad  state  of  affairs ;  many  of  them  are  insolvent,  and  none 
earning  fair  interest.  Notwithstanding,  the  State  legislatures  and  com- 
missions created  by  them  are  further  reducing  the  receipts  and  endeavor- 
ing to  increase  the  burdens.  This  certainly  creates  the  necessity  for 
action  by  Congress. 

Senator  Reagan.  With  reference  to  the  Daniel  Ball  case,  my  remem- 
brance is  that  the  question  of  transportation  was  not  the  question  in 
that  case  at  all. 

Mr.  GouDY.  It  was  a  question  of  license. 

Senator  Reagan.  That  the  vessel  was  required  to  take  out  a  license 
because  it  was  doing  interstate  business  ? 

Mr.  GouDY.  Yes,  sir ;  that  was  the  question. 

Senator  Reagan.  And  it  was  held  there,  as  it  was  held  in  many 
other  cases,  that  a  road  or  river — as  in  that  case — which  was  wholly 
within  a  State  and  had  traffic  passing  over  that  road  to  other  roads  or 
over  that  water  to  other  waters  in  other  States  or  foreign  countries,  was 
interstate  commerce.  There  was  nothing  in  the  case  about  commerce 
beginning  and  ending  in  the  State,  but  it  was  as  to  a  river.  The  ques- 
tion was  whether  a  river  wholly  within  one  State  could  be  an  interstate 
stream,  aud  they  held  that  if  there  was  continuous  transportation  from 
State  to  State,  or  to  a  foreign  country  over  that  stream,  it  was  interstate 
commerce. 

Mr.  GouDY.  They  required  a  vessel  to  take  out  a  license.  It  was  a 
question  whether,  in  engaging  in  interstate  business,  they  were  required 
to  take  out  a  license  or  not,  and  it  was  hold  that  they  must  take  out  the 
license. 

Senator  Hiscock.  Your  single  point  would  be  that  for  the  sake  of 
making  just  rates  on  interstate  commerce,  the  Federal  Government 
would  have  the  power  to  regulate  the  rates  on  domestic  commerce. 


598  TRANSPORTATION  INTERESTS   OP 

Mr.  GoUDY.  Yes,  sir. 

Senator  HisCOCK.  And  that  is  the  only  ground  for  it. 

Mr.  GouDY.  Yes,  sir;  and  to  establish  uniform,  permanent,  and  just 
regulations  in  other  respects. 

Senator  Hiscock.  You  want  Congress  to  say  to  the  individual  "We 
will  tell  you  what  you  shall  charge  on  your  domestic  traffic  for  the  pur- 
pose of  maintaining  a  just  tariff  as  to  interstate  business.  "  When  you 
say  that  in  reference  to  transportation,  why  can  you  not  carry  it  a  great 
deal  further  ? 

Mr.  GouDY.  I  think  the  principle  which  applies  would  have  to  bo 
enforced  whenever  the  public  interest  demanded  it. 

Senator  HisCOCK.  Do  you  carry  your  doctrine  to  the  extent  of  say 
ing,  practically,  in  reference  to  interstate  or  foreign  commerce,  that  the 
Government  may  fix  the  price? 

Mr.  GouDY.  Yes,  sir;  if  any  government  can  do  it. 

Senator  HiscoCK.  It  seems  to  me  that  the  logic  of  your  argument  is 
that,  in  reference  to  foreign  commerce  you  would  carry  it  to  the  extent 
of  saying  that  the  price  might  be  fixed  by  the  Government.  I  under- 
stand, rather  infereutially,  from  what  you  have  said  that  your  idea  in 
reference  to  interstate  commerce — take  the  Iowa  case  you  have  cited — is 
that  the  State  had  not  the  power  under  the  police  regulations  to  pre- 
vent the  sale  of  the  liquor;  do  you  go  to  that  extent! 

Mr.  GouDY.  Yes,  sir. 

Senator  Hiscock.  Now,  when  you  go  to  that  extent  you  practically 
give  Congress  the  right  to  regulate  the  market.  Does  not  this  question 
come  in  there  to  some  extent,  that  whenever  ownership  in  the  i)roi)erty 
is  acquired  by  an  individual  in  a  State,  that  individual  being  the  sub- 
iect  of  that  State,  domiciled  in  that  State,  the  police  regulation  takes 
hold  of  him,  if  you  please,  and  says  what  he  shall  do.  It  simply  says 
to  him  :  "You  have  a  right  to  bring  liquor  into  this  State  ;  you  have  a 
right  to  keep  it  here;  you  can  use  it  yourself,  and  even  when  it  comes 
down  to  the  question  of  disposing  of  it,  to  the  ques'ion  of  what  you  do 
with  it,  we  do  not  interfere  with  tluit ;  but  we  have  the  right  to  say  you 
shall  not  commit  a  crime  in  connection  with  it."  In  Iowa  the  selling  of 
liquor  is  a  crime.  The  jurisdiction  it  takes  is  over  the  subject  of  the 
State. 

Mr.  GouDY.  You  mean  the  person. 

Senator  HiscocK.  I  mean  the  subject,  the  ]3erson.  It  is  he  the  law 
regulates.  It  is  upon  him  the  license  is  imposed  rather  than  upon  the 
goo«ls,  which  are  the  subject  of  interstate  commerce.  It  seems  to  me 
there  is  a  line  there. 

Mr.  GouDY.  I  think  there  is. 

Senator  HiscocK.  I  think  the  same  point  I  suggested  a  moment  ago 
comes  in  on  this  question  of  interstate  commerce  and  State  commerce, 
that  one  has  to  go  a  little  further  than  I,  as  a  liepublican  and  a  Fed- 
eralist, am  willing  to  go. 

Mr.  GouDY.  I  do  not  think  our  Southern  friends  have  any  right  to  com- 
])lain  of  the  Sui)reme  Court  of  the  United  States.  They  have  gone 
further  to  sustain  State's  rights,  barring  only  the  right  to  secede,  than 
any  other  court  ever  did.  They  have  sustained  State's  rights  in  every 
case  where  there  was  an  opportunity,  audit  is  a  Republican  courr,  too. 

The  Chairman.  The  whole  point,  as  I  understand  you,  is  that  where^ 
in  tho  judgment  of  Congress  in  the  first  i)lace,  it  becomes  necessary,  in 
order  to  i)roperly  regulate  interstate  commerce  under  the  Constitution, 
to  also  regulate  State  commerce,  Congress  has  the  power,  in  order  to 
regulate  interstate  commerce,  to  regulate  State  commerce  as  well? 


THE    UNITED    STATES    AND    CANADA.  699 

Mr.  GouDY.  I  think  so;  and  I  tliiuk  the  SiiprLMiie  Court  of  the  United 
States  would  not  inquire  into  the  conclusions  of  Congress  as  to  the  facts. 

They  so  held  in  regard  to  the  oleomargarine  act  of  Pennsylvania. 
They  held  that  they  would  not  inquire  iuto  the  propriety  of  the  act  of 
the  Legislature.  The  Legislature  passed  au  act  prohibiting  the  sale  of 
all  articles  made  from  any  ingredient  except  milk  or  cream,  and  it  was 
claimed,  in  that  case,  that  oleomargarine  was  healthy,  etc.,  and  i)ioof 
was  offered  to  show  that;  but  the  court  held  that  the  action  of  the  Leg- 
islature and  its  judgment  as  to  the  remedy  were  conclusive. 

The  Chairman.  The  court  would  not  go  iuto  the  question  of  fact  at 
all. 

Mr.  GouDY.  No,  sir. 

THE   CONSTITUTIONAL   PROVISIONS   AS  TO   COMMERCE. 

Senator  Harris.  Would  your  theory  be  changed  if  the  language  of 
the  Constitution  had  stopped  with  the  simple  declaration  that  Congress 
shall  have  power  to  regulate  commerced  It  appears  in  the  Consti- 
tution that — 

Congress  shall  have  power  to  regulate  commerce  with  the  foreign  nations,  autl 
amoug  the  several  States,  and  with  the  Indian  tribes. 

Mr.  GouDY.  Yes,  sir.  My  position  is  that  the  construction  would  be 
the  same  if  all  alter  the  word  "commerce"  were  eliminated  from  it; 
provided  that  circumstances  are  such  as  to  require  the  regulation  of 
all  commerce  in  order  to  regulate  that  specified  in  the  Constitution. 

Senator  HiscocK.  On  the  line  of  Senator  Harris's  question,  it  is  not 
eliminated  from  it,  but  the  words  are  there,  and  the  question  is 
whether  it  is  not  an  express  limitation. 

Mr.  GouDY.  It  is  nothing  else  than  a  grant  of  an  express  j>ower, 
and  with  that  goes  the  implied  authority  to  do  whatever  is  necessary 
to  give  it  full  effect. 

Senator  HiscocK.  I  do  not  put  it  on  the  ground  of  a  grant.  I  want 
it  distinctly  understood  that  1  believe  in  the  legal-tender  decision. 

STATEMENT  OF  EDWARD  T.  JEFFERY. 

Mr.  Edward  T.  Jeffery,  general  manager  of  the  Illinois  Central 
Kail  way  Company,  appeared. 

The  Chairman.  What  is  your  business,  Mr.  Jeffery  ? 

Mr.  Jeffery.  I  am  general  manager  of  the  Illinois  Central  Bail  way 
Company. 

The  Chairman.  Where  do  you  live  ? 

Mr.  Jeffery.  In  Chicago. 

The  Chairman.  You  have  a  copy  of  the  resolution,  and  you  have 
noticed  through  the  newspapers  that  we  have  been  pursuing  an  inves- 
tigation under  it.  Will  you  be  kind  enough  to  go  on  and  state  your 
views  and  lay  before  us  any  facts  that  may  be  in  your  possession  in 
reference  to  the  subject-matter  before  us  ? 

Mr.  Jeffery.  In  reference  to  the  first  branch  of  the  subject,  Mr. 
Chairman  and  gentlemen,  "  What  is  the  effect  of  Canadian  competition 
on  American  railroads  and  American  commerce,"  it  is  i)roper  for  me  to 
state  that  the  road  I  represent  is  mainly  a  north  and  south  railroad,  ex- 
tending from  Chicago  to  New  Orleans,  and  therefore  is  not  one  that 
feels  directly  the  effect  of  that  competition.     In  common  with  other 


GOO  TRANSPORTATION  INTERESTS  OF 

railroad  mauajrers  who  no  doubt  have  expressed  tbeir  views  fully  and 
clearly  before  you  heretofore,  and  perhaps  better  thau  I  cau  do,  I  believe 
that  the  same  restrictions  ought  to  be  thrown  around  foreign  railroads 
engaged  in  similar  traffic  in  the  United  States  as  are  thrown  around 
United  States  carriers.  It  is  a  self-evident  proposition  and  also  one 
borne  out  by  the  facts  and  the  evidence  that  you  have  had  before  you 
heretofore,  that  the  Canadian  lines  can  and  do  affect  materially  the 
traffic  of  the  West  and  Northwest — particularly  of  the  Northwest. 

The  United  States  railroads  are  held  nuder  the  interstate  commerce 
law  to  certain  lines  of  action.  The  restrictions  that  are  thrown  upon 
the  United  States  railroads  are  such  that  these  railroads,  as  a  general 
thing,  do  not  complain  seriously  of  them,  provided  their  competitors, 
who  ai)parently  have  been  free  from  such  restrictions,  are  held  up  to 
the  law  and  are  required  to  abide  by  it. 

THE  INTERSTATE  COMMERCE  LAW. 

lu  my  opinion  if  the  interstate  commerce  law  and  the  various  opinions 
of  the  Interstate  Commerce  Commission  under  that  law  are  proper 
things  for  the  government  of  the  United  States  railroads  and  United 
States  traffic — if  they  are  desirable  things  to  have  in  this  country — 
they  are  equally  desirable  and  ought  to  be  made  applicable  to  the  Cana- 
dian railroads.  If,  on  the  other  hand,  the  Canadian  railroads  find  it  to 
their  advantage  and  to  the  advantage  of  Canada  not  to  have  these 
legislative  restrictions,  it  seems  to  me  it  would  be  equally  clear  as  a 
proposition  that  such  restrictions  and  such  legislation  are  not  good  for 
the  United  States  roads. 

Now,  personally,  I  will  say  right  here  that  I  am  one  of  the  railway 
managers  who  believe  in  the  interstate  commerce  law  and  its  enforce- 
ment. I  believe  in  a  strict  compliance  with  it.  I  believe  in  the  en- 
forcement of  the  penalties  that  go  with  the  violation  of  that  law  as  it 
now  stands. 

With  these  views  you  readily  see  that  1  could  not  express  myself 
differently  from  what  I  have  done  in  reference  to  similar  legislative  re- 
strictions on  Canadian  and  other  foreign  roads  that  enter  into  compe- 
tition with  American  railways.  Wiien  I  say  American  railways  I  mean, 
of  course,  the  railways  of  the  United  States. 

The  very  fact  that  the  Canadian  railways  can  and  do  affect  traffic 
upon  United  States  lines,  and  the  very  fact  that  they,  as  carriers,  can  and 
do  affect  the  commerce  of  the  United  States,  as  well  as  the  traffic,  and  the 
very  fact  that  they  can  carry  outof  the  United  States  for  export  through 
Canadian  ports  commerce  that  ought  be  held  to  the  United  States  and 
passed  through  United  States  ports,  is  evidence  to  my  mind  that  there 
ought  to  be  the  same  restrictions  ui)on  foreign  or  Canadian  roads  as 
upon  the  United  States  railroads. 

How  that  is  to  be  brought  about  I  am  neither  lawyer  nor  statesman 
enough  to  suggest ;  but  it  would  a|)pear  to  my  mind,  from  what  practical 
experience  I  have  had  in  railroad  matters,  and  from  what  I  have  had  to 
do  with  business  matters  generally,  that  if  it  be  shown  that  foreign 
railroads  do  not  conform  to  the  requirements  of  United  States  legisla- 
tion in  respect  to  carriers,  then  by  treaty  with  Canada  there  can  bo 
obtained  in  Canada  legislation  for  carriers  and  the  government  of  them 
similar  to  that  which  obtains  in  the  United  States,  affixing  by  Canadian 
laws  the  same  penalties  to  violations  of  it  as  existing  law  in  the  United 
States  imposes  u]X)n  carriers,  and  imposing  all  the  obligations  through 
Canadian  law  upon  Canadian   carriers  that  are  to-day  or  may  be  iu 


THE   UNITED   STATES   AND   CANADA.  601 

future  imposed  upon  United  States  carriers  by  United  States  laws  and 
through  United  States  courts. 

THE   REGULATION   OF   COMMERCE. 

With  your  permission  I  would  like  to  say  a  few  words  in  reference  to 
a  branch  of  the  subject  on  which  Judge  Goudy  dwelt  at  some  length. 

The  Chairman.  Certainly. 

Mr.  Jeffery.  I  will  not  do  so  from  the  legal  stand-point,  because,  as 
you  must  know,  I  am  not  a  lawyer,  but  from  the  practical  standpoint. 

I  have  been  conversant  for  some  time  past  with  the  views  entertained 
by  Judge  Goudy  in  reference  to  the  desirability  of  having  the  General 
Government  assume  control  as  to  rates,  and  in  some  other  respects,  of 
all  traffic  carried  by  rail. 

The  Chairman.  You  mean  assume  power  of  regulation"? 

Mr.  Jeffery.  Yes,  sir. 

Senator  Harris.  You  mean  exercise  the  same  power  as  to  State  com- 
merce as  it  exercises  over  interstate  commerce  *? 

Mr.  Jeffery.  Yes,  sir.  Being  familiar  with  Judge  Goudy's  views 
1  have  naturally  given  some  thought  to  the  subject.  The  consideration 
of  it,  and  the  exDerience  I  have  had  in  trai3ic  matters,  convince  me  that 
it  is  practically  impossible  for  the  Government  to  regulate  interstate 
carriers,  and  interstate  traffic,  and  decide  upon  the  reasonableness  and 
otherwise  of  interstate  rates,  and  the  propriety  and  otherwise  of  regu- 
lations as  to  interstate  traliic,  unless  there  be  at  the  same  time  consid- 
eration given — great  consideration  given — to  the  so  called  domestic 
traffic  of  the  States. 

The  system  of  railroad  that  I  represent  traverses  nine  States  and  one 
Territory.  It  has  to  deal  with  three  or  four  railroad  commissions.  It 
has  to  deal  with  three  or  four  codes  of  laws  in  reference  to  carriers.  It 
finds  sets  of  rules  established  in  one  State  entirely  different  from  the 
rules  established  by  commissioners  in  the  other  States  upon  tlie  same 
articles.  It  finds  in  some  respects  police  powers  undertaken  by  the  one 
State  through  which  it  may  run  that  are  the  opposite  of  those  assumed 
by  other  States  through  which  it  runs. 

The  net-work  of  railroads  in  this  country  is  so  interwoven,  so  com- 
prehensive, that  it  is  to-day  almost  impossible  to  materially  change  the 
rates  on  any  100  milesof  railway  without  affecting  the  rates  on  all  other 
railways  within  a  large  scope  of  adjacent  territory.  It  is  impossible 
to-day  on  certain  commodities  to  change  the  rates  between  Chicago,  St. 
Paul,  and  Minneapolis  without  affecting  the  rates  between  Chicago  and 
Sioux  City,  Iowa;  between  Chicago  and  Omaha;  between  Chicago  and 
Kansas  City;  between  Kansas  City  and  St.  Louis,  and  between  Kansas 
City  and  iNlemphis,  and  then  through  the  southeastern  States,  and 
probably  into  the  lower  Mississippi  Valley  as  far  as  the  Gulf 

To  illustrate  this  let  me  mention  that  a  rate  may  be  made  on  pack- 
ing-house products  from  St.  Paul,  Minn.,  to  Chicago,  which  might  be 
affirmed  a  reasonable  rate,  as  it  might  be  a  lower  rate  than  formerly  and 
would  be  called  a  reasonable  rate  by  the  Interstate  Commerce  Commis- 
sion, or  the  courts.  That  rate,  if  made,  will  at  once  affect  the  standing 
of  tlio  makers  of  products  in  Sioux  City  packing-houses.  The  carriers 
between  Sioux  City  and  Chicago  would  be  compelled  to  reduce  rates 
in  order  to  meet  the  competition  from  the  St.  Paul  packing-houses  to 
Chicago  and  through  Chicago  beyond  to  the  seaboard.  A  reduction  made 
at  Sioux  City  will  at  once  affect  Omaha  and  a  corresponding  reduction 


G02  TRANSPORTATION  INTERESTS  OF 

will  then  have  to  be  ipade  to  Chicago  aud  tbence  to  St.  Louis.  At  once 
the  Kansas  Citj^  packers  are  affected.  A  similar  reduction  must  be 
made  from  Kansas  City  to  Chicago  and  to  St.  Louis.  Then  Memphis, 
being  a  gateway  not  only  to  the  southeastern  States,  but  also  to  the 
Atlantic  seaboard,  must  have  a  similar  reduction  to  and  through  that 
place,  and  hence  the  effect  of  a  rate  made,  as  I  have  already  stated,  in 
the  Northwest  would  be  felt  down  in  the  lower  Mississippi  Valley  and 
through  to  the  eastern  Atlantic  seaboard. 

Again,  to  reverse  the  train  of  reasoning,  a  change  in  rates  may  be 
made  from  Kansas  City  to  Memphis  on  packing-house  products.  At 
once  lines  from  Kansas  City  to  St.  Louis  and  Kansas  City  to  Chicago 
are  placed  at  a  disadvantage,  and  so  are  the  packing-house  proprietors 
of  Chicago  as  against  Kansas  City.  Therefore  the  same  course  must 
be  pursued  as  to  reducing  correspondingly,  or  else  give  Kansas  City, 
of  course,  an  advantage  over  all  others,  and  the  same  course  must  be 
l)ursued  of  reducing  rates  from  Kansas  City  to  St.  Louis,  Kansas  City 
to  Chicago,  Omaha  to  Chicago,  Sioux  City  to  Chicago,  and  St.  Paul  to 
Chicago.  And  then,  in  order  that  Chicago  packers  may  hold  their  su- 
premacy— T  will  not  say  supremacy,  but  that  they  may  stand  on  an 
equal  basis — rates  must  be  made  correspondingly  to  all  points  from 
Chicago  packing-houses  with  those  from  the  other  points  I  have  enu- 
merated. 

You  will  therefore  see  that  it  is  within  the  province  of  a  railroad  350 
or  400  n)iles  long  to  disturb  the  rates  on  that  one  commodity  through- 
out the  entire  United  States.  It  could  be  narrowed  down  and  demon- 
strated that  a  railroad  ICO  miles  long,  located  exclusively  within  the 
borders  of  a  State,  or  a  State  railroad,  so  called,  could  affect  materially 
the  rates  on  interstate  traffic  throughout  a  wide  scope  of  country. 

It  therefore  strikes  me  as  a  practical  proposition  to  say  that  a  rail- 
road engaged  nearly  wholly  in  the  carriage  of  State  traffic,  domestic 
traffic,  if  you  please  to  call  it,  of  the  State,  can  so  affect  rates  and  rules 
and  regulations  of  interstate  carriers  as  to  bring  about  the  results  I 
have  outlined.  It  can,  of  course,  and  does  affect  the  operations  of  the 
interstate  commerce  law  and  the  Commissioners  appointed  under  that 
law.  If  this  State  railroad  can  and  does  have  this  effect,  then  it  must 
be  taken  into  consideration  as  a  factor  in  commercial  or  traffic  legisla- 
tion, and  it  would  be  impossible,  in  my  opinion,  to  obtain  stability  in 
rates  and  to  properly  carry  out  the  intentions  of  the  interstate  law  and 
to  confer  the  benefits  the  interstate  law  was  intended  to  confer  unless 
the  traffic  and  the  carrier  could  be  brought  within  its  scope. 

As  to  the  Federal  powers  I  have  nothing  to  say  ;  you  are  thoroughly 
conversant  with  that  part  of  the  subject.  But  as  a  practical  railroad 
man  I  desire  to  emphasize  the  points  I  have  drawn  out. 

COMPETITION   OF   THE   CANADIAN  PACIFIC. 

The  Chairman.  Does  your  road  have  any  business  connections  with 
the  Grand  Trunk  Railroad  of  Canada? 

Mr.  Jeffery.  No,  sir ;  only  with  the  Chicago  and  Grand  Trunk. 

The  Chairman.  Which  leads  to  the  Grand  Trunk  of  Canada  ? 

Mr.  Jeffery.  Yes,  sir. 

The  Chairman.  Do  you  do  a  very  large  amount  of  business  with  the 
Chicago  and  Grand  Trunk,  sufficient  to  determine  in  j'our  own  mind 
whether  they  are  really"  obeying  the  interstate  commerce  law  ? 

Mr.  Jeffery.  I  have  no  knowledge  or  experience  on  that  subject. 

The  Chairman.  What  effect  has  the  Canadian  Pacific,  in  conjunction 


THE    UNITED    STATES    AND    CANADA.  603 

with  tbe  "Soo  line,"  which  has  beeu  spoken  of  here  by  Mr.  Goiidy,  on 
the  American  roads  I 

Mr,  JEFFEiiY.  It  aflects  principally  the  roads  to  St.  Panl  and  Min- 
neapolis and  in  the  territory  west,  northwest,  and  southwest  of  those 
points,  and  in  affecting  them  it  affects  the  roads  and  traffic  through 
Chicago  and  other  commercial  centers. 

The  (3HAIRMAN.  Yon  have  a  line  now  to  St.  Paul,  I  believe? 

Mr.  J  PUFFERY.  Our  line  is  within  110  miles  of  St.  Paul. 

The  Chairman.  Yon  are  on  the  road  to  St.  Paul  ? 

Mr.  Jeffery.  Yes,  sir  ;  we  are  pointing  in  that  direction,  but  it  may 
be  some  years  before  we  arrive  at  oar  destination. 

The  Chairman.  Where  does  your  road  stop  now  I 

Mr.  Jeffery.  At  the  Minnesota  State  line,  about  100  miles  west  of 
the  Mississippi  River,  And  110  miles  west  of  St.  Paul. 

The  Chairman.  You  do  not  mean  at  Sioux  City  ? 

Mr.  Jeffery.  No,  sir ;  we  stop  at  a  station  called  Lyle. 

The  Chairman.  How  tar  is  that  from  Sioux  City  ! 

Mr.  Jeffery.  About  90  miles  north  on  an  east  and  west  line  passing 
through  Sioux  City,  and  225  miles  east  on  a  north  and  south  line  pass- 
ing through  Sioux  City. 

The  Chairman.  Do  you  find  that  your  traffic  from  that  end  of  the 
line  is  in  any  way  affected  by  the  opening  of  the  "Soo  line,"  connecting 
witli  the  Canadian  Pacific? 

Mr.  Jeffeky.  Yes,  sir.  Lower  rates  through  to  St.  Paul  from  the 
Atlaniic  sea-board  enable  St.  Paul  and  Minneapolis  merchants  to  ship 
down  into  Iowa,  in  the  territory  heretofore  occupied  by  the  shi|)pers 
of  Sioux  City,  and  it  interferes  with  the  commerce  of  Sioux  City  and 
all  other  commercial  centers  in  northern  Iowa. 

The  Chairman.  So  that  the  "  Soo  line,"  in  conjunction  with  the  Cana 
dian  Pacific,  is  now  getting  goods  all  the  way  from  Boston,  for  instance, 
to  St.  Paul,  and  down  the  road  from  S*^.  Paul  to  Sioux  City  at  cheaper 
rates  than  you  can  send  them  direct  from  Chicago  by  .your  own  line  ? 

Mr.  Jeffery.  Y'es,  sir;  and  there  is  no  way  by  which  we  can  pre- 
vent it  upon  our  500  miles  of  railroad,  except  by  reducing  the  rates 
probably  from  20  to  33i  per  cent,  below  what  they  now  are. 

The  Chairman.  They  can  haul  freight  so  much  farther — it  is  100 
miles  to  St.  Paul,  I  believe  ? 

Mr.  Jeffery.  Y^es,  sir. 

The  Chairman.  And  then,  150  or  200  miles  from  St.  Paul  to  Sioux 
City 

Mr.  Jeffery.  About  330  miles. 

The  Chairman.  Three  hundred  and  thirty  miles — they  can  haul  freight 
that  much  farther  at  a  less  rate  than  you  can  haul  it  the  shorter  dis- 
tance? 

]\rr.  Jeffery.  Yes,  sir. 

The  Chairman.  Do  they  go  through  Chicago  to  get  to  St.  Paul? 

Mr.  Jeffery.  1  think  they  come  into  St.  Paul  and  Minnea])olis  from 
the  East  over  the  "  Soo  line,"  so  called,  or  the  South  Shore  and  Atlantic, 
or  by  vessel  to  Duluth,  and  then  by  the  short-rail  line  to  St.  Paul  or 
Minneai)o]is. 

The  Chairman.  Is  it  the  Canadian  roads  or  is  it  the  water  which 
enables  the  Canadian  Pacific  to  supply  Sioux  City  in  this  round-about 
way  instead  of  your  road,  which  has  a  straight  line? 

Mr.  Jeffery.  Both. 

The  Chairman.  Why  should  the  Canadian  roads  be  able  to  transport 


604  TRANSPORTATION   INTERESTS    OP 

goods  from  Boston  to  St.  Paul  cheaper  tliau  you  can  transport  them  from 
Jioston  through  by  Chicago  and  on  a  straight  liue  westf 

Mr.  Jeffery.  I  could  not  say  as  to  that.  I  suppose  probably  these 
new  roads  have  done  as  a  great  many  new  roads  do,  herald  their  oi)en- 
ing  and  advertise  themselves  by  excessively  low  rates,  for  the  jiurpose 
of  obtaining  prestige  and  building  up  traffic.  Our  line  has  been  in 
operation  for  thirty  or  forty  years,  and  we  are  conservative,  and  we  tind 
it  difficult  to  get  through  a  year's  labors  and  make  fair  profits  for  the 
owners. 

The  Chairman.  So  you  think  you  are  carrying  freight  from  Chicago 
to  Sioux  City  as  cheaply  as  you  ought  to? 

Mr.  Jeffery.  To  illustrate,  I  would  say  that  our  railroad  of  GOO 
miles  in  Iowa,  which  has  no  fictitious  capital  about  it  at  all,  earned,  over 
and  abov'e  its  interest  charges  last  year,  about  $39,000. 

Senator  Harris.  You  mean  over  and  above  fixed  charges  and  oper- 
ating expenses? 

Mr.  Jeffery.  Yes,  sir;  over  and  above  its  fixed  charges,  its  interest, 
etc.,  about  $39,000.' 

The  Chairman.  That  much  was  left  with  which  to  pay  dividends? 

Mr.  Jeffery.  Yes,  sir. 

The  Chairman.  How  much  per  cent,  was  paid  in  dividends? 

Mr.  Jeffery.  One  half  of  1  per  cent.,  and  if  we  should  meet  the 
reductions  which  are  now  api)areut  to  everj^  one  as  being  necessary  in 
order  to  hold  the  business  which  is  being  diverted  by  the  northern 
routes  it  would  wi]>e  out  that  amount  of  money  and  three  or  four  times 
as  much  more.  That  COO  miles  of  road  in  Iowa  would  be  compelled  to 
delault  in  its  interest  charges  unless  money  was  taken  out  of  the  Illi- 
nois Central  treasury  to  make  up  the  deficiency. 

The  Chairman.  If  the  "■  Soo"  road  were  not  in  existence,  would  it  not 
be  true  that  the  water  transportation  would  still  produce  pretty  nearly, 
if  not  exactly,  the  same  result? 

Mr.  Jeffery.  It  could,  but  it  is  quite  probable  that  arrangements  or 
an  understanding  could  be  had  with  the  water  carriers  which  would  pre- 
vent their  introducing  such  rates  as  would  make  it  unremuneratiye  to 
the  rail  carriers  to  compete  with  them. 

The  Chairman.  You  think  you  could  make  arrangements  with  the 
water  carriers  more  easily  than  you  can  with  the  rail  carriers  ? 

Mr.  Jeffery.  No;  I  do  not  wish  to  be  understood  as  saying  that, 
but  it  would  seem  to  me  that  if  the  element  of  foreign  rail  cai  riage  were 
eliminated,  with  the  large  interests  in  the  Lake  Superior  lines  which 
the  United  States  rail  carriers  have,  there  could  be  an  understanding 
reached  with  those  water  carriers  on  Lake  Superior. 

The  Chairman.  You  say  if  these  foreign  lines  were  eliminated.  You 
do  not  mean  to  say  by  that  that  you  would  cut  them  off  entirely  from 
doing  business  in  this  country? 

Mr.  Jeffery.  I  meant  if  they  were  not  in  existence ;  if  they  had  not 
been  constructed. 

The  Chairman.  They  are  in  existence,  however,  and  the  question 
this  committee  is  here  to  investigate  and  inquire  into  is  whether  any- 
thing is  necessary  to  be  done  to  i)lace  them  npon  the  same  footing  and 
under  the  same  regulations  as  you  are  under. 

Mr.  Jeffery.  I  would  refer  you  to  the  remarks  I  made  upon  first 
appeariiig  before  this  committee,  which  were  to  the  effect  that  all  foreign 
jail  carriers  should  be  held  to  as  strict  a  conformity  with  the  interstate- 
commerce  law  and  all  other  Federal  legislation  as  ai  e  the  United  States 
carriers,  and  if  it  be  necessary  in  order  to  bring  that  about  to  have  a 


THE  UNITED  STATES  AND  CANADA.  605 

treaty  with  the  Canadian  Government  to  that  efifect  it  ought  to  be 
undertaken  and  negotiated. 

The  Chairman.  Or,  if  it  can  be  done  by  legislation,  you  would  be 
satisfied  with  that  ? 

Mr.  Jeffery.  Oh,  yes;  but  I  should  think  it  would  be  a  broader  view 
to  take  of  it  to  negotiate  by  treaty  with  Canada  for  legislation  on  its 
part  as  to  its  rail  carriers  who  are  in  competition  with  United  States  rail 
carriers,  so  that  the  Canadian  railroads  would  be  held  to  the  same  re- 
strictions in  Canada  as  are  the  lines  in  the  United  States— the  same 
penalties  attached  to  violations  of  the  law  in  one  case  as  the  other. 

The  Chairman.  All  you  desire  is  tiiat  by  some  means  they  shall  be 
placed  under  the  same  regulations  as  are  the  United  States  roads  ? 

Mr.  Jeffery.  Yes,  sir. 

The  Chairman.  And  if  that  were  done  you  would  be  satisfied  to  take 
your  chances  in  competition  with  the  Canadian  roads  I 

Mr.  Jeffery.  Yes,  sir.  I  do  not  think  it  would  be  wise  or  just  to 
arbitrarily  shut  off  the  Canadian  railroads  unless  they  ignored  the 
United  States  law  when  in  competition  with  the  United  States  road. 

bates   under   THE  INTERSTATE-COMMERCE  LAW. 

Senator  Harris.  I  want  to  ask  you  one  question  a  little  off  of  the 
direct  question  under  investigation.  As  a  railroad  man  I  want  to  ask 
you  if  through  rates  have  increased  or  diminished  since  the  interstate 
commerce  {ict  went  into  operation  f 

Mr.  Jeffery.  1  think  they  have  diminished,  Senator. 

Senator  Harris.  And  how  has  it  been  with  respect  to  local  rates ; 
have  they  increased  or  diminished  ? 

JNIr.  Jeffery.  Generally,  they  have  diminished. 

Senator  Harris.  Have  local  rates  diminished  more  than  through 
rates  ? 

Mr.  Jeffery.  In  some  sections  of  the  country  they  have  been  dimin- 
ished materially  more  than  through  rates.  Let  me  illustrate :  When 
the  interstate-commerce  law  became  effective  the  rates  at  various  junc- 
tion points  in  the  interior  of  Illinois,  on  grain,  to  the  Atlantic  sea- 
board were  higher  than  they  are  now.  The  rates  from  those  same 
junction  points  to  Chicago,  which  would  be  considered  local  rates,  being 
purely  in  the  State,  were  higher  than  they  are  now.  I  believe  that 
within  a  circuit  of  150  miles  of  Chicago  the  rates  on  grain  from  these 
junction  points  referred  to  have  been  reduced  between  30  and  40  per 
cent,  in  two  years. 

The  Chairman.  From  tliose  junction  points  to  the  Eastern  sea-board  ? 

Mr.  Jeffery.  Yes,  sir;  both  for  home  consumption  and  for  export. 

Senator  Harris.  That,  is  all. 

Mr.  Jeffery.  I  might  add  in  replying  to  the  question  of  Senator 
Harris  that  the  effect  of  the  law  has  heen  very  burdensome  upon  the 
Illinois  roads  in  the  loss  of  revenue  which  it  has  entailed  ui)ou  them 
within  the  last  two  years. 

The  Chairman.  The  roads  have  carried  the  burden,  though,  and  sur- 
vived. 

Mr.  Jeffery.  Some  have  and  some  have  found  it  very  difficult  to 
breathe ;  it  is  the  survival  of  the  fittest. 

The  Chairman.  You  have  survived  so  far. 

At  3  o'clock  and  40  minutes  p.  m.  the  committee  adjourned  until 
Monday,  July  15,  1889,  at  10  o'clock  a,  m. 


606  TRANSPORTATION  INTERESTS  OF 

Chicago,  III.,  July  15,  1889. 
The  coiniuittee  met  at  10  o'clock  a.  m.,  pursuant  to  adjouruLnent. 

STATEMENT  OF  G.  F.  STONE. 

Mr.  (t.  F.  Stone,  representing  the  committee  of  the  Chicago  Board  of 
Trade,  appeared. 

The  Chairman.  What  is  your  relation  to  the  Board  of  Trade  of  this 
city? 

Mr.  Stone.  I  am  secretary. 

The  Chairman.  You  represent  the  views  of  the  committee  appointed 
by  the  Board  of  Trade,  do  you  ? 

views  of  the  CHICAGO  BOARD  OF  TRADE  COMMITTEE. 

Mr.  Stone.  Yes,  sir,  I  do.  I  am  also  a  member  of  the  s])ecial  com- 
mittee of  the  Chicago  Board  of  Trade.  We  make  the  following  an- 
swers to  your  circular : 

Chicago,  July  15,  1889. 
Hon.  Shelby  M.  Cullom, 

Chairman  Interstate  Commerce  Committee,  U.  S.  Senate: 

Sir:  Complying  with  the  request  made  in  your  communication  of 
the  10th  inst.,  the  Chicago  Board  of  Trade  appointed  the  undersigned 
as  a  committee  to  meet  your  honorable  body,  and  to  make  answer  to 
the  (piestion  submitted  under  the  resolution  of  inquiry  adopted  by  the 
U.  S.  Senate,  directed  to  the  Committee  on  Interstate  Commerce. 

In  addition  to  the  condensed  replies  hereto  attached,  the  m*  mbers 
present  will  endeavor  to  answer  any  question  which  it  maj'  please  your 
body  to  propound  to  them;  and,  if  desired,  will  orally  submit  in  detail 
their  views  upon  the  general  subject  of  the  relations  existing  between 
the  United  States  and  Canada,  in  so  far  as  they  affect  the  commercial 
and  transportation  interests  of  this  country. 

First  interrogatory.  Do  the  Canadian  lines  of  transportation  opera- 
ting in  the  United  States  affect  the  commercial  interests  of  this  country 
favorably  or  unfavorably  f 

Answer.  Favorably. 

Second  interrogatory.  In  what  manner  do  they  affect  such  interests, 
and  to  what  extent! 

Answer.  First — By  their  effect  in  smashing  iniquitous  and  scandal- 
ous pools  and  agreements  at  tiuies  existing  between  the  Michigan  Cen- 
tral, Michigan  Southern,  and  Pennsylvania  Eailways,  by  which  unjust 
and  unreasonable  rates  were  exacted  on  Western  products  from  Chicago 
to  the  sea  board  i>revious  to  the  entrance  of  the  so-called  Canadian 
lines  into  this  city.  For  facts  and  figures  on  this  point,  see  special 
report  of  Chicago  Board  of  Trade  of  February,  1876,  herewith  ap- 
pended. 

Second — By  the  equalization  of  freights  on  all  Western  products  to 
numerous  points  in  New  England,  where  previously  American  railway 
lines  charged  and  exacted  severe  and  unjust  arbitraries,  averaging 
from  5  to  25  cents  per  cental  over  rates  to  Boston  and  other  seaboard 
points,  which,  under  the  competition  of  Canadian  lines,  have  been  en- 
tirely discontinued. 

Third — The  Grand  Trunk  system  of  railway  was  the  pioneer  in  the 
dressed -beef  traffic,  which  it  commenced  and  fostered  years  ago,  while 
the  New  York  Central  and  Pennsylvania  systems  antagonized  the  ship- 
ment of  dressed  beef  and  favored  the  shipment  of  live  cattle,  that  their 


THE    UNITED    STATES   AND    CANADA.  607 

triinsportatiou  ami  stockyard  reveuues  might  be  augmeuted,  to  the 
detriment  of  the  cattle  producing  and  beef-consuming  ])iiblic. 

Third  interrogatory.  Is  traffic  originating  in  the  United  States,  and 
wliich  wouhl  naturally  be  carried  over  American  lines,  diverted  from 
them  to  Canadian  lines;  and,  if  so,  to  what  extent  and  by  what  means! 

Answer.  Tratlic  origiimting  in  the  United  States  and  which  would 
naturally  be  carried  over  American  lines  has  not,  in  tiie  opinion  of  tins 
committee,  been  diverted  to  Canadian  lines,  only  in  so  far  as  the  latter 
have  offered  greater  facilities  for  the  safe  and  quick  carriage  of  peri.sh- 
able  and  other  propeity  to  eastern  points  and  for  export.  The  Canadian 
lines  were  among  the  first  to  build  and  operate  transfer  elevators  here  for 
the  preservation  of  identity  and  the  weighing  of  grain  in  hopper  scales, 
as  re(]uired  by  the  law  of  this  State  (a  copy  of  which  is  hereto  annexed), 
and  which  law  is  now  openly  defied  by  some  of  the  American  lines  cen- 
tering here.  The  Canadian  lines  have  won  the  larger  share  of  this 
business  from  the  West  by  such  and  kindred  measures,  and  by  uni- 
formly just  and  equitable  treatment  of  their  patrons,  and  not  by  any 
favoritism  to  one  shipper  over  another,  as  evinced  by  the  popular  re- 
gard that  is  had  for  these  lines  so  universally  by  the  merchants  of  this 
and  other  Western  cities. 

Fourth  interrogatory.  Do  you  consider  any  additional  legislation  ex- 
pedient or  desirable  for  the  regulation  of  the  commerce  carried  on  by  rail- 
road or  water  routes  between  the  United  States  and  Canada  ?  If  so, 
what  measure  would  you  suggest"? 

Answer.  We  do  not  coiisider  any  additional  legislation  necessary. 
l^o  further  restrictions  upon  commerce  between  the  United  States  and 
Canada  by  the  water  routes  should  be  tolerated,  but  this  committee 
would  recommend  the  enforcement  of  the  interstate-commerce  act,  and 
such  laws  as  ])ertain  to  the  bonded  regulation  of  the  United  States 
products,  passing  over  the  great  commejcial  highways  of  Canada,  as 
will  allow  such  products  to  pass  untrammeled  in  the  future  as  in  the 
past. 

The  adoption  of  any  legislative  measures  calculated  to  restrict  the 
transportation  facilities  now  enjoyed  by  the  farmers,  cotton  growers,  and 
cattle  raisers  of  the  West  and  Southwest,  would,  in  the  opinion  of  this 
committee,  bury  in  impenetrable  oblivion  the  political  party  that  ac- 
complished it.  The  West  would  act  as  one  man,  and  be  aided  and 
abetted  by  the  independent  voter  of  New  England  in  the  furtherance 
of  such  desirable  obsequies. 

Fifth  interrogatory.  Is  any  legislation  necessary  with  respect  to  the 
operations  of  the  Canadian  lines  of  transportation  in  order  to  promote 
the  enforcement  of  the  interstate  commerce  act "?  If  so,  what  would  you 
suggest '? 

Answer.  We  do  not  consider  any  additional  legislation  necessary  for 
the  regulation  of  commerce  carried  on  by  rail  between  the  United  States 
and  Canada;  but  would  suggest  that  all  connecting  lines  of  Canadian 
railways  within  the  United  States,  as  well  as  all  United  States  railways, 
be  held  to  a  strict  compliance  with  the  provisions  of  the  interstate  com- 
merce law  ;  and  this  committee  would  further  suggest  that  additional 
legislation  is  needed  which  will  make  it  unlawful  for  railway  (corpora- 
tions to  combine  for  the  formation  of  railway  associations  like  the  Trunk 
Line,  Central  TraflBc,  Southwestern,  and  Interstate  Commerce  Railway 
Associations,  or  railway  trusts  of  any  form  or  nature,  believing,  as  we 
do,  that  such  associations  tend  to  destroy  competition,  and  to  opi)Ose 
or  evade  the  enforcement  of  the  interstate  commerce  law,  and  are  detri- 
fliental  to  the  commercial  interests  of  this  country. 


608  TRANSPORTATION    INTERESTS    OF 

Statistical  iuforuiatioa  bearing  upon  the  subject-matter  of  this  report 
is  herewith  submitted. 

SUPPLEMENTAL  STATISTICAL  REPORT. 

We  have  the  honor  to  present  the  following  statistical  statements 
with  reference  to  and  in  support  of  the  condensed  answers  already  sub- 
mitted in  the  formal  report  of  the  Chicago  Board  of  Trade. 

As  to  the  second  interrogator^^,  and  in  support  of  the  second  answer 
of  said  interrogatory,  we  wish  to  call  the  attention  of  your  honorable 
committee  to  the  rate  charged  by  railroads  running  wholly  through  the 
United  States,  on  grain  and  flour,  from  Chicago  to  Springtield  and  Bos- 
ton, Mass.,  and  Nashua,  N.  H.,  in  the  winter  of  2867-8,  which  was  85 
cents  per  cental;  the  arbitraries  charged  from  these  junction  points 
named  to  points  in  Maine,  New  Hampshire,  and  Vermont  ranged  from 
10  to  25  cents  per  cental.  The  last-named  rate  applied  from  Nashua, 
N.  11.,  to  Newport,  Vt.,  making  the  through  rate  from  Chicago  to  New- 
I)ort,  Vt.,  $1.10  per  cental. 

The  present  tariff — Chicago  to  Newport,  Vt. — on  like  commodities, 
via  the  Canadian  railways,  is  25  cents  per  cental,  and  while  we  do  not 
claim  that  all  this  reduction  has  been  caused  by  Canadian  railways,  we 
do  claim  that  Canadian  railways  have  eradicated  all  arbitraries  and 
given  practically  to  all  the  territory  north  of  the  Boston  and  Albany 
Kailway  in  New  England,  rates  equal  with  Boston  to  and  from  the 
West.  " 

In  support  of  the  third  answer  of  the  said  second  interrogatory,  we 
wish  to  call  your  attention  to  one  of  the  largest  industries  of  Chicago, 
viz,  the  (Iressed-beef  trade,  and  show  the  tonnage  east-bound  as  car- 
ried by  the  Central  Traffic  associated  roads,  as  tabulated  by  them  for 
the  period  as  below  stated. 

For  the  year  1887,  total  tonnage  dressed  beef,  354,802  tons,  carried  as 
follows : 

Per  cent. 

By  C.&G.  T.  R'y 47.1 

By  M.  C.R.  R H.2 

By  L.  S.  «fc  M.  S.  R'y 17.8 

By  P.,  F.  W.  &C.R'v 8.7 

By  CSt.L.  &P.R.R 9.0 

ByB.  &O.R.R 3.3 

By  N.  Y.  C.  &  St.  L.  R'y 5.9 

For  the  year  1888,  total  dressed  beef  tonnage,  351,411  tons,  carried  as 
follows : 

Per  cent. 

C.  &  G.T.R'y '. 28.4 

M.  C.  R.  R 17.1 

L.  S.  &M.  S.R.  R 17.0 

P.,  F.  W.  &.  C.  R'y 10.(5 

est.  L.  &  P.R'y 13.3 

B.  «feO.R.R 2.3 

N.  Y.  C.  &  St.  L.  R'y 11.3 

For  six  months  ending  June  30,  1889,  total  tonnage  dressed  beef, 
172,966  tons,  carried  as  follows : 

Per  cent. 

C.&  G.T.R'y 40.0 

M.  C.R.  R 19. S 

L.  S.  4&M.  S.  R'v.: 13.9 

P.,F.W.  *feC.R'y 7.6 

C.,St.L.&  P.R'y 13.2 

B.  &  O.R'v  5.0 

N.  Y,  C.  &  St.  L.  R'y 1.0 


THE    UNITED    STATES   AND    CANADA.  609 

lu  explauatiou,  the  reasou  for  the  lar^e  falling  oflfiu  the  Cliicagoaiul 
Grand  Trunk  Railway  percentage  carried,  from  47.1  in  1887,  to  28.4  per 
cent,  in  1888,  which  was  caused  by  a  war  of  rates  made  by  the  iSTew  York 
Central  and  Pennsylvania  systems,  to  deprive  the  Grand  Trunk  system 
of  railway  of  a  business  which  it  had  fostered  and  protected  from  its 
infancy. 

In  support  of  the  answer  to  the  third  interrogatory,  the  tabulated 
statements  of  the  Central  Traffic  associated  roads  from  Chicago  in  the 
distribution  of  the  tonnage  carried  for  the  year  188^,  show  that  the  total 
tonnage  carried  by  them  from  Chicago  to  New  England  was  491,993 
tons  of  dead  freight  (dressed  beef  not  included),  carried  as  follows : 

Per  cent- 

C.  &.G.  T.R'y 40.06 

M.C.E.R 20.52 

L.S.&M.S.R'y l'J.84 

N.  Y.  C.  &  St.  L.  R'y 6.26 

C.St.L.  &P.R'y 4.07 

P.,  F.  W.  &  C.  K'y 8  ni 

B.  &  O.  R'y 74 

Total 100.00 

Carried  by  connections  of  Canadian  roads  : 

C.  &G.  T.  R'y 40.06 

M.  C.  R.  R 20.52 

Total 60.58 

Carried  by  connections  of  American  Trunk  lines,  39.42.  per  cent. 

From  November  1,  1888,  to  April  1,  1889,  the  New  England  dead 
freight  tonnage  (dressed  beef  not  included)  of  these  same  roads  was 
291,062  tons,  carried  as  follows  : 

Per  cent. 

C.  &G.  T.  R'y 46.95 

M.  C.  R.  R 20.02 

L.  S.  &M.  S.  R'y l^>-99 

N.  Y.  C.  &St.L.  R'y -"^^S 

C.,St.  L.  &  P.  R.R :J-^1 

P.,  F.W.  &C.  R'y 8.15 

B.  &0.  R.  R 1^1^ 

Total 100.00 

Carried  by  connections  of  Canadian  railways  : 

C.&G.  T.R'y 46.9.5 

M.  C.  R.  R -0-0- 

Total ''<^-97 

Carried  by  connections  of  American  Trunk  lines,  33.03  per  cent. 

Again,  in  support  of  the  second  clause  of  the  answer  to  the  fourth 
interrogatory,  we  wish  to  call  your  attention  to  the  total  shipments  by 
water  from  the  port  of  Chicago,  of  corn  and  oats,  for  the  years  1887  and 
1888,  and  the  six  months  ending  June  30,  1889,  and  at  the  same  tune 
to  show  what  percentage  of  such  shiiimeuts  was  carried  on  American 
vessels  to  Canadian  ports,  on  Georgian  l]ay  and  the  St.  Clair  River, 
and  thence  forwarded  under  the  United  States  customs "  in  transit 
bonded  system"  over  Canadian  territory  and  back  into  the  States. 

Total  water  shipments  from  Chicago  for  1887 :  Corn,  38,710,856  bushels ;  oata, 
10,215,112  bushels,  ^,       ,    ,  ,n  rr 

Shipped  throii,i,4i  Canadian  iwrts  in  transit:  Ccjrn,  4,p88,0XX  busUels,  or  lO.iH)  pep 
^cent. ;  oats,  3,3cSb,96l  bushels,  pr  31.63  per  cent.      '   '    ' 

6543^«=-39 


610  TRANSPORTATION    INTERESTS    OF 

For  1888,  total  water  shipments:  Corn,  47,759,708  bushels  ;  oats,  13,704,336  bushels. 

Shipped  through  Canadian  ports  in  transit:  Corn,  3,845,931  bushels,  or  8.05  per 
cent. ;  oats,  2,652,721  bushels,  or  19.23  per  cent. 

For  six  months  ending  June  30,  1889,  total  water  shipments  :  Corn,  23,385,580 bush- 
els ;  oats,  9,798,599  bushels. 

Shipped  through  Canadian  ports  in  transit:  Corn,  2,307,786  bushels,  or  9.87  per 
cent. ;  oats,  2,693,151  bushels,  or  27.49  per  cent. 

We  have  not  for  the  years  1887  and  1888  any  statistics  to  show  the 
number  of  American  vessels  employed  to  transport  the  amount  carried 
in  transit  to  Canadian  ports,  but  for  the  six  months  ending  June  30, 1889, 
the  in  transit  grain  carried  to  Canadian  ports  was  transpoi-ted  on  ]81 
American  vessels.  You  will  readily  see  that  from  the  amountcarried  they 
are  of  the  smaller  class  of  lake  vessels,  and  while  they  are  well  adapted 
to  the  Georgian  Bay  trade,  they  can  not  successfully  compete  with  the 
larger  lake  craft  in  the  Lake  Erie  trade,  and  we  wish  to  impress  upon 
the  minds  of  your  honorable  cooimittee  that  any  legislation  by  Congress 
which  abrogates  the  present  "in  transit  bonded  system"  will  most  ef- 
fectually tie  up  to  the  dock,  to  lie  there  and  rot,  every  American  ve.^sel 
engaged  in  this  Georgian  Bay  trade,  and  turn  over  the  torn  Rge  they 
now  enjoy  to  the  steam-ship  lines  running  in  connection  with  a  id  prac- 
tically owned  by  the  New  York  Central,  Erie,  and  Pennsylvania  Rail- 
ways. 
•  A.  M.  Wright,  W.  J.  Pope, 

Geo.  Clark,  E.  O.  Seymour, 

E.  J.  Martyn,  N.  T.  Wright, 

H.  J.  Coon,  H.  F.  Dousman, 

J.  C.  Hately,  G.  F.  Stone, 

G.  M.  How,  W.  T.  Baker. 

THE   ILLINOIS  LAW  IN  RELATION   TO   HOPPER   SCALES. 

The  law  of  the  State  of  Illinois  relating  to  hopper  scales,  referred  to 
in  the  report  of  the  Board  of  Trade,  is  as  follows  : 

Section  1.  Be  it  enacted  hy  the  people  of  the  State  of  Illinois,  represented  in  the  general 
assembhi,  Tiiat  in  all  counties  of  the  third  class,  and  in  all  cities  having  not  less  than 
50,000  inhabitants,  where  bulk  grain,  millstuflFs,  or  seeds  are  delivered  by  any  rail- 
road transporting  the  same  from  initial  points  to  another  road  i'or  transi>ortatiou 
to  other  points,  such  road  or  roads  receiving  the  same  i'or  transportation  to  said  points 
or  other  connections  leading  thereto,  shall  provide  suitable  appliances  for  unloading, 
weighing,  and  transferring  such  property  from  one  car  to  another  without  mixing  or 
in  any  way  changing  the  identity  of  the  property  so  transferred,  and  such  property 
shall  be  accurately  weighed  in  suitably  covered  liopper  scales,  which  will  determine 
the  actual  net  weight  of  the  entire  contents  of  any  car-load  of  grain,  millstufts,  or 
seeds  at  a  single  draft,  without  gross  or  tare,  and  which  weights  shall  always  be 
given  in  the  receipts  or  bills  of  lading  and  nsed  as  the  basis  of  any  freight  contracts 
affecting  such  shipments  between  such  railroad  companies  and  the  owners,  agents, 
or  shipper  of  such  grain,  miilstuffs,  or  seeds  so  transported  and  transferred. 

Sec.  2.  The  practice  of  loading  grain,  miilstuffs,  or  seeds  into  foreign  or  connecting- 
line  cars  at  the  initial  point  from  which  the  grain,  miilstuffs,  or  seeds  are  originally 
shipped,  or  the  running  of  the  original  car  through  without  transfer,  shall  not  relievo 
the  lailrood  making  contract  to  transport  the  same  to  its  destination  or  connection 
leading  thereto  from  weighing  and  transferring  such  property  in  the  manner  afore- 
said, unless  the  shipper,  owner,  or  agent  of  such  grain,  miilstuffs,  or  seeds  shall  other- 
wise order  or  direct. 

Sec.  3.  Any  railroad  company  neglecting  or  refusing  to  comply  i)romptly  with  any 
and  all  of  the  requirements  of  either  sections  1  or  2  of  this  act  shall  be  liable  iu  dam- 
ages to  the  party  interested,  to  be  recovered  by  the  party  damaged  in  an  action  of 
assumpsit,  and  such  party  may  proceed  by  mandamus  agaiust  any  railroad  com|)any 
so  refusing  or  neglecting  to  3omply  with  the  requirements  of  this  act;  and  if  the 
shipper,  owner,  or  agent  of  ary  such  grain,  miilstuffs,  or  seeds  shall  fail  orneglcct  to 
proceed  by  mandamus,  it  shall  then  bo  the  duty  of  the  railroad  and  warehouse  com- 
missioners of  this  State,  upon  complaint  of  the  party  or  i)arti«s,  iatcrested,  to  jiroceed 


THE    UNITED    STATES    AND    CANADA.  611 

agaiust  the  railroad  failin<j  or  refusiug  to  comply  with  the  provisions  of  this  act ;  and 
all  the  powers  heretofore  conferred  by  law  npou  the  board  of  railroad  and  warehouse 
commissioners  of  this  8tale  shall  be  applicable  in  the  conduct  of  any  legal  proceed- 
ing commenced  by  such  commissioners  under  this  act. 

Sec.  4.  Any  railroad  company  so  refusing  or  neglecting  as  aforesaid,  shall  be  liable 
to  a  penalty  of  not  less  than  $100  nor  more  than  |500  for  each  neglect  or  refusal  as 
aforesaid,  to  be  recovered  in  an  action  of  assumpsit  in  the  name  oi  the  people  of  the 
State  of  Illinois  for  the  nso  of  the  county  in  which  such  act  or  acts  of  neglect  or  re- 
fusal shall  occur,  and  it  shall  be  the  duty  of  the  railroad  and  warehouse  commis- 
sioners to  cause  prosecutions  lor  such  penalties  to  be  instituted  and  prosecuted. 

The  Chairman.  The  purport  of  the  paper  read,  as  I  gather  it,  is  au 
expression  of  satisfaction  with  the  present  condition  of  aftairs,  and  an 
argument  to  show  the  reason  why  matters  shouUl  remain  as  thej'  are! 

Mr.  Stone.  Yes,  Sir. 

The  Chairman.  Do  you  wish  to  submit  any  statements  in  rehition  to 
the  subject  under  investigation  I 

Mr.  Stone.  I  submit  a  report  of  the  Chicago  Board  of  Trade  under 
date  of  February  7,  1876. 

RAILROAD  DISCRIMINATIONS  AGAINST  CHICAGO. 

The  report  is  as  follows : 

To  the  rresident  and  Directors  of  the  Board  of  Trade  of  Chicago  : 

Gentlkmen:  The  undersigned,  a  committee  appointed  in  response  to  a  petition 
signed  by  the  memliers  of  Chicago  Board  of  Trade,  and  intrusted  with  investi- 
gating the  alleged  railroad  discriminations  against  Chicago  as  a  shipping  point,  have 
the  honor  to  submit  herewith  a  report  of  their  work: 

Your  committee  have  held  almost  daily  meetings  during  the  past  month,  and  al 
fourteen  of  those  sessions  have  had  before  them  gentlemen  rei)reseuting  various  ship- 
ping and  railroad  interests,  and  have  taken  a  mass  of  testimony  covering  several 
hundred  pages.  This  has  been  accomplished,  it  should  be  said,  in  the  fjice  of  a  gen- 
eral apathy  among  the  shippers  on  account  of  their  failure  to  realize  the  critical 
character  of  the  situation,  and  in  spite  of  the  disinclination  of  many  of  the  railroad 
men  to  aflbrd  an  insight  into  their  business.  It  would  be  folly  to  encumber  your- 
selves, the  Board  of  Trade,  or  the  public,  with  a  transcription  of  this  testimony  and 
copies  of  the'^etters  in  our  possession  bearing  upon  the  subject.  We  have  deter- 
mined, therefore,  to  present  to  you  an  epitome  of  the  information  we  have  collected, 
merely  premising  that  all  of  the  statements  made  in  this  report  are  fully  sustained 
by  the  testimony  of  competent  and  trustworthy  witnesses,  and  by  documentary  evi- 
dence that  can  be  produced  if  desired. 

It  is  as  well  to  say,  at  the  very  outset,  that  our  investigation  has  conlirmcd  the 
most  serious  rumors  that  have  prevailed  regarding  the  deliberate  and  systematic  dis- 
crimination against  the  shipping  interests  of  Chicago.  We  have  found  actual  cases 
of  discrimination  which  exceed  in  injustice  the  reports  which  we  were  at  tirst  inclined 
to  regard  as  exaggerated.  In  presenting  but  a  meager  idea  of  the  Injustice  whicli 
the  Eastern  trunk  lines  have  combined  to  do  Chicago,  we  desire  to  impress  upon 
every  man  whose  commercial  interests  are  in  any  way  identical  with  the  jirosperlty 
and  progress  of  this  city  that  this  combination  is  the  most  serious  blow  ever  aimed  at 
the  business  of  Chicago,  and  it  must  be  met  with  a  prompt  and  determined  resistant*c 
on  all  sides  unless  we  would  succumb  to  It.  It  is  probal)lo  that  the  annual  rejjort  of 
the  secretary  of  the  Hoard  of  Trade  will  indicate  a  large  increase  in  tlie  volume  of 
the  mei'cautile  transactions,  a  continued  growth  of  the  manufacturing  interests,  an 
eulargementof  the  lumber  trade,  and  an  improvement  in  the  amount  of  business  gen- 
erally. It  also  shows  that  the  grain  trade  of  the  last  year  was  something  move  than 
15,000,000  bushels  less  than  that  of  the  preceding  ye.ir.  If  this  were  the  rule  through- 
out the  country  it  might  be  attributed  to  the  partial  failure  of  the  corn  crop  of  lo74 
in  the  sections  tributary  to  Chicago,  and  to  the  hard  times.  But,  turning  elsewhere, 
we  liud  that  Baltimore,  Philadeliihia,  Cincinnati,  T(dedo,  Clevelaml,  Indianapolis, 
Milwaukee,  Peoria,  and  other  cities,  have  either  Increased  the  volume  of  their  grain 
business,  or,  at  least,  maintained  it  by  comparison  with  former  years.  This  cir- 
cumstance is  unavoidably  significant  of  the  fact  that  Chicago  is  losing  its  advantages 
as  a  distributing  center,  and  tiie  loss  can  be  readily  traced,  In  largo  part,  to  the  dis- 
criminating policy  of  the  eastward-bound  railioads. 

Your  committee  also  desire,  before  entering  into  the  details  of  this  di.scriminating 
policy,  to  impress  upon  the  general  mercantile  public  that  all  interests  will  sullV'r, 
each  in  its  own  way,  a  full  share  of  the  misfortunes  from  the  injustice  horeiu  com- 


.612  TRANSPORTATION    INTERESTS    OF 

plained  of,  autl  tliat  tbey  should  be  equally  concerned  with  thoHC  branches  of  trade 
more  particnhirly  represented  on  this  board  in  enterinf^  a  protest  and  providing 
•A,  remedy.  The  elie(;t  on  the  lumber  interest  is  too  obvious  to  recpiire  comment, 
but  the  merchants  gtuierally  may  close  their  eyes  to  the  fact  that  tho  loss  of  every 
car-load  of  grain  to  this  city  is  at  the  same  time  a  loss  of  a  proi)ortiouate  sale  and 
shipment  of  merchandise.  As  in  earlier  times  and  in  rural  districts  the  farmer  took 
his  supplies  from  tho  town  where  ho  hauled  his  wagon-load  of  grain,  and  purchased 
where  lie  had  sold ;  so  also  when  the  traffic  is  carried  on  by  steam  on  a  larger  scale. 
The  same  disposition  that  prompts  certain  railroads  to  make  more  favorable  rates 
for  the  shipment  of  grain  to  the  sea-board  from  other  competing  i)oiuts  than  from 
Chicago  will  prom])!  them  to  fix  more  favorable  rates  in  return.  Freights  west- 
ward will  always  follow  the  discrimination  of  the  eastwai"d  freights,  with  tbe  ad- 
ditional advantage  for  the  favored  cities  that  the  railroads  will  rather  drawback 
their  cars  laden  than  empty.  If  the  products  of  the  Northwest  must  find  a  market 
other  than  Chicago,  then  it  is  certain  that  the  cities  to  which  this  trade  is  diverted 
will  also  sell  the  supplies,  the  dry  goods,  the  agricultural  implements,  the  groceries, 
the  dressed  lumber,  and  the  manufactured  articles  of  all  kinds  which  the  farmers 
want  in  exchange  for  their  grain.  Tho  merchants  of  the  favored  cities  will  not  be 
slow  to  recognize  their  advantages  and  build  upon  them.  They  will  sell  where  the 
Chicago  merchants  have  been  in  the  habit  of  selling,  and  they  will  be  able,  with  tho 
help  of  the  railroads,  to  make  better  prices  at  the  point  of  delivery  without  any 
sacritice  on  their  own  part.  Both  interest  and  convenience  dictate  this  reciprocity 
in  trade,  and  it  is  on  this  account  that  the  entire  mercantile  community  should  join 
with  the  grain,  produce,  and  live-stock  interests  in  demanding  a  correction  of  the 
abuses  which  we  have  considered. 

Having  thus  endeavored  to  arouse  the  attention  of  all  the  business  classes  of  Chi- 
cago to  the  importance  of  tho  matter  in  hand,  we  will  proceed  as  briefly  as  possible 
to  set  forth  the  character  of  the  discrimination  practiced  against  Chicago. 

We  have  found  three  distinct  classes  of  railroads  in  tleir  bearing  to  this  question, 
and  they  may  be  described  as  follows  : 

(1)  The  "pool"  railroads,  or  those  which  have  fixed  an  arbitrary  and  unvarying 
rate  from  Chicago  eastward.  Those  which  have  entered  into  an  agreement  to  "pool" 
their  earnings  on  this  basis  are  the  Michigan  Central, the  Michigan  Southern,  and  the 
Pittsburgh  and  Fort  Wayne  roads.  But  the  Baltimore  and  Ohio,  though  not  pooling, 
have  agreed  to  abide  by  the  same  policy.  The  three  former  a<i-e  aided  and  abetted, 
when  not  entirely  controlled,  by  their  eastern  connections,  viz:  the  New  York  Cen- 
tral, the  Pennsylvania  Central,  and  the  Erie  Railroads. 

(2)  The  "bankrupt"  roads,  so  called  because  they  are  all  either  in  the  hands  of  re- 
ceivers, in  default  of  interest,  or  on  the  verge  of  bankruptcy.  These  are  the  compar- 
atively short  roads  running  east  and  west,  and  north  and  south,  tapping  the  State  in 
various  parts  and  the  Illinois  railroads  at  different  points.  We  include  such  roads  as 
the  Toledo,  Wabash  and  Western  ;  Toledo,  Peoria  and  Warsaw  ;  Indianapolis,  Bloom- 
ington  and  Western;  Rockforil,  Rock  Island  and  St.  Louis;  Oilman  and  Springfield, 
etc. 

(;!)  The  roads  that  may  be  called  "independent,"  to  distinguish  them  from  the 
others,  which  are  not  permitted  to  pro-rate  with  their  eastern  connections  at  Chicago 
on  terms  that  enable  them  to  compete  with  the  "  bankrupt"  roads.  These  are  the 
Illinois  Central,  Chicago  and  Alton,  Chicago  and  Rock  Island,  the  Burlington  and 
Quincy,  and  the  Chicago  and  North-Westeru.  The  interest  of  these  roads  is  origin- 
ally identical  with  that  of  Chicago  as  their  principal  terminus. 

Now,  the  burden  of  Chicago's  complaint  is  that  the  "  jjooI"  roads,  under  the  man- 
agement of  certain  eastern  railroad  kings,  have  formed  a  combination  against  Chi- 
cago, and  leave  what  we  have  called  tho  "  independent"  roads  powerless  to  compete 
for  business  reached  liy  the  "  bankrupt"  lines.  This  is  a  grave  charge  ;  but  it  seonis 
to  be  fully  sustained  l)y  the  facts.  The  evidence  of  it  is  to  be  found  in  the  persistent 
discrimination  recounted  further  on.  The  reason  for  it,  we  think,  lies  in  the  fact  that 
the  Baltimore  and  Ohio  and  tho  Pennsylvania  Companies  conceive  it  to  be  in  their  in- 
terest to  divert  the  carrying  trade  to  the  south  of  Chicago,  and  hope  and  believe  that, 
once  directed  in  that  channel,  thej'  will  secure  a  larger  proportion  of  the  business 
than  herelofore.  A  careful  survey  of  the  map,  with  their  various  railroad  connec- 
tions, will  reveal  this  project.  That  the  New  York  Central  has  loaned  itself  to  this 
scheme  by  consenting  to  the  arbitrary  and  fixed  rate  from  Chicago  Avhich  renders  it 
possible  can  only  be  accounted  for  either  because  it  entered  into  the  agreement  with 
a  single  view  to  increase  rates  from  Chicago,  and  without  estimating  the  ultimate 
purpose  of  diverting  the  trade,  or  because  it  is  content  with  the  assurance  of  all  tho 
"New  England  business,  whether  it  comes  from  Chicagoorpoints  to  the  south  and  west 
of  Chicago.     In  any  case  the  etfect  is  the  same. 

The  operation  of  the  policy  of  discrimination  is  as  follows:  The  rate  is  fixed  from 
Chieago  to  New  York  at  45  cents  per  100  pounds  on  grain,  and  to  New  England  points 

(j,t  r>0  ceftts,  ivncl  froii)  tbi^  tlii>re je  po Yatiatiop  wltatevej-,  J3iit  we fiod that fjeigUt om 


THE   UNITED   STATES  AND   CANADA.  613 

be  shipped  from  nearly  all  poiuts  north  aud  south  of  Chicago  on  an  equal  mileage  for 
from  5  to  10  cents  per  100  pounds  less  than  from  this  city.  Wo  Hud  that  the  same 
rate  from  Chicago  is  fixed  lor  Milwanivce,  85  miles  farther,  which  niiikes  th(^  rate  of 
freight  only  41  cents  from  Ciiicago  on  Milwaukee  business.  We  Had  tiiat  tiie  rate 
from  ludianapolis,  which  is  about  as  much  less  tliau  the  distance  from  (Chicago  as 
Milwaukee  is  more,  is  from  5  to  7  cents  less  than  the  Chicago  rate.  Wc  find  that  freight 
istaken  from  poiuts  south,  southwest,  north,  au<l  northwest  of  Ciiicago,  and  carried  a 
long  distance  aiouiul  Ciiicago  to  ntucli  the  sea-board,  at  a.  lower  rate  than  it  can  bo 
brought  through  (Miicago  on  aluiost  an  air-line.  We  liiid  that  these  discriminations 
are  worked  out  agaiust  Chicago  principally  in  two  ways,  viz: 

(1)  By  an  insidious  system  of  rebate,  wherel)y  a  diltferenceof  from  5  to  10  cents  per 
100  pounds  is  refunded  to  shippers  from  points  soutli  and  southeast  of  Chicago, 
while  no  rebate  or  concession  whatever  is  allowcid  to  Ciiicago  shippers. 

(2)  There  is  a  deceptive  and  vicioushabit  of  "  underbiUiiig  "  tolerated  and  even  en- 
couraged by  certain  railroads  froiiipoiutsorhcrthanCliicago  which  is  neither  permitted 
nor  desired  in  Chicago.  An  instance  has  Ijceu  reported  to  us  of  the  shipment  of  corn 
from  interior  points  to  an  eastern  city,  in  which,  during  an  entire  mouth,  there  was 
an  average  "nnderbilliug,"  or  over-weight,  of  :5()  bushels  to  the  car-load,  which  alone 
would  make  a  ditierence  of  about  8  cents  per  100  pounds  iii  the  through  rate. 

The  answer  which  the  eastern  "  pool  '  lines  make  when  these  complaints  are  brought 
to  their  attention  is,  that  the  "  cutting"  of  rates  is  done  by  the  "  bankrn])t "  lines, 
which  are  struggling  for  mere  existence,  and  that  they  can  not  compete  with  such 
desperate  fellows.  Y(^t  it  seems  to  bo  well  established  that  they  pro-rate  with  these 
'•bankrupt"  lines,  and  the  diSerence  in  rate  is  sometimes  so  great  that  it  .seems  im- 
possible that  the  "  bankrupt"  lines  should  sustain  all  the  "  cutting,"  unless  they  are 
in  a  condition  to  pay  a  preinium  for  hanliug  freight.  But  if  bankruptcy  in  railroads 
means  the  squeezing  out  of  watered  stock,  aud  the  willingness  to  do  husiness  on  abasia 
that  will  earn  a  fair  interest  on  the  actual  capital  invested,  then  it  is  a  "  consumma- 
tion devoutly  to  be  wished  ;  "  and,  as  th'j  bankrupt  Hues  seem  to  be  doing  a  better 
business  than  ever  before,  paying  their  salaries  and  working  out  of  their  ditliculti(>s, 
perhaps  it  would  be  well  for  roads  not  bankrupt  toimitate  theirpolicy  before  arriving 
at  that  condition. 

The  general  superintendent  of  one  of  the  leading  western  railways  centering  here 
stated  to  your  committee  that  "the  effect  ot  the  arbitrary  rate  made  by  llic  ])ooIcd 
lines  east  from  Chicago  had  been  to  entirely  stop  the  grain  trade  of  his  road  with 
Chicago,  except  a  very  little  that  his  line  was  hauling  here.  At  many  crossed  points 
on  his  road  southwest  of  Chicago  they  could  not  move  grain  at  all,  as  it  was  going 
east  aud  northeast  around  Chicago  at  Chicago  rates.  His  line  was  hauling  grain 
from  local  iioints  ou  his  road  to  the  crossed  points  at  high  local  rates.  " 

When  asked  to  give  his  opinion,  as  a  railway  official  of  large  and  practical  experi- 
ence, suggesting  a  remedy  for  our  situation,  he  replied  : 

"  You  have  a  right  not  only  to  ask,  but  to  demand,  of  the  managers  of  these  pooled 
lines  that  they  protect  yon  ;  that  they  should  not  permit  lower  rates,  relatively,  east 
from  Milwaukee,  St.  Louis,  Peoria,  Indianapolis,  etc.,  than  from  Chicago;  and  that 
they  could  not  close  the  doors  hero  until  they  had  closed  them  there  also." 

The  general  manager  of  anotherof  our  longest  and  most  important  railways  particu- 
larly committed  to  Chicago's  best  interests  stated  "  that  at  points  in  Illinois  where 
his  line  was  crossed,  and  from  his  intermediate  stations,  grain  was  being  drawn  into 
the  current  of  the  cheap  eastern  rates  prevahmt  immediately  .south  of  us,  notwith- 
standing his  local  rates  to  these  cross  roads  wore  maintained  at  high  figures  while  his 
rates  to  Chicago  were  at  bare  cost  of  transportation.  "  His  criticism  of  the  manage- 
ment of  the  arbitrary  pooled  lines  was  similar  to  that  just  quoted  as  to  the  injustice 
of  their  accepting  a  pro  rata  from  their  connections  south  and  southwest  of  us  rela- 
tively much  less  than  insisted  upon  ou  business  originating  in  Chicago.  He  said  also 
that  "he  could  not  understand  the  line  of  policy  which  would  enable  these  pooled 
lines  to  go  85  miles  north  of  here  aud  carry  freight  at  a  lesser  rate  than  they  are 
willing  to  carry  it  from  Chicago." 

Eeferriug  to  his  earnest  desire  to  bring  property  to  Chicago,  aud  the  causes  of  his 
unsuccessful  efforts  in  this  direction,  he  said: 

"  We  are  in  this  position.  Our  general  freight  agent  has  asked  these  pooled  lines 
leading  from  here  east:  Will  you  lot  us  come  in  aud  compete  for  this  (Illinois)  busi- 
ness, and  pro-rate  it  through— bring  it  through  f  They  say:  We  can  not ;  here  are 
our  rates;  we  can  not  violate  them." 

In  speaking  of  his  own  line,  he  said : 

"  Wo  can  not  haul  it  I'^o  to  150  miles  to  Chicago  for  nothing.  We  control  over  700 
miles  of  railway  in  splendid  condition,  with  an  equipment  of  4,000  to  5,000  cars,  aud 
can  haul  property  as  cheaplv  as  anybody,  aud  yet  we  brought  in  the  past  twenty- 
four  hours  just  14' cars  of  grain,  all  told,  to  Chicago,  We  feel  that  v.e  must  do  bet- 
ter than  that  or  else  go  to  the  wall." 


G14  TRANSPORTATION  INTERESTS  OP 

These  are  tlie  utterancesof  the  general  manager  of  a  great  heretofore  dividend-paying 
railway,  whose  fame  is  world-wide,  and  whose  resources  of  traffic  have  been  regarded 
as  well-nigh  inexhaustible.  His  lines  center  here,  and  that  the  relentless  grip  of  the 
pool  managers  is  felt  by  his  railway  company  his  declarations  too  painfully  attest. 

The  general  freight  agent  of  still  another  great  railway  company,  controlling  more 
miles  of  roads  and  with  perhaps  greater  property  interests  here  than  any  railway 
company  in  the  West,  said,  with  reference  to  bringing  iiour,  grain,  etc.,  here  from 
local  points  on  his  road,  for  shipment  east : 

"  Our  feeling  has  been  since  the  combination  (of  the  eastern  lines),  after  remon- 
strating with  them  and  showing  them  that  a  large  proportion  of  this  business  was 
going  that  way  (via  Milwaukee),  that  we  could  jnst  stand  and  take  (suffer)  it  as  long 
as  they  could  ;  that  we  would  not  deviate  from  our  position  and  policy  in  regard  to 
that.  The  rates  were  the  same  to  Milwaukee  as  to  Chicago  at  all  tiujes  over  his  lines. 
We  have  said  to  these  eastern  gentlemen.  If  you  will  make  us  the  same  rate  on  Hour, 
etc.,  from  Chicago,  that  is  made  from  Milwaukee  by  the  Detroit  and  Milwaukee  Rail- 
way, you  can  have  this  business.     They  refused  to  do  it." 

He  said  further,  with  reference  to  his  efforts  to  bring  business  here,  or  through 
liere,  for  the  East,  as  to  eastern  lines  : 

"I  don't  ask  any  eastern  line  for  anything  ;  to  be  frank  about  it,  I  have  told  them 
so.  I  have  exhausted  myself  on  them  ;  I  don't  choose  any  more  to  ask  them  for  help  ;' 
I  have  got  through.  If  there  is  any  business  I  want,  I  must  take  it  without  consult- 
ing them,  because  I  have  not  been  able  to  get  any  concession  out  of  them." 

We  will  now  proceed  to  give  some  specific  instances  of  the  discriminations  prac- 
ticed against  Chicago  at  vai'ious  points  which  will  serve  to  illustrate  the  whole 
scheme. 

MILWAUKEE,    WIS. 

Grain  from  Milwaukee  is  being  shipped,  via  Detroit  and  Milwaukee  Railway,  to 
New  York  at  37^  cents  per  hundred  and  Hour  at  75  cents  per  barrel,  while  the  rates 
on  like  property  from  Chicago  are  45  cents  per  hundred  and  90  cents  per  barrel. 

The  pooled  lines  leading  east  from  Chicago  are  takiug  business  from  Milwaukee 
through  Chicago  at  same  rates  as  from  Chicago,  jiaymg  the  Chicago  an«l  Northwest- 
ern or  the  Milwaukee  and  St.  Paul  Railway  Company  an  "  arbitrary"  of  4  cents  per 
hundred  on  grain  and  8  cents  per  barrel  on  flour,  for  the  haul  of  85  miles  that  Mil- 
waukee is  further  distant  via  these  lines  to  the  seaboard,  thus  accepting  a  net  rate 
of  41  cents  per  hundred  on  grain  and  S2  cents  per  barrel  on  flour  from  Milwaukee, 
while  they  steadfastly  refuse  to  haul  like  property  from  Chicago  at  less  than  45  cents 
and  90  cents,  respectively. 

This  system  api)lies  to  other  property  than  flour  and  grain,  and  to  all  other  termi- 
nal points  east.  Large  amounts  of  flour  have  been  sold  iu  Chicago  recently  and 
shipped  east  (from  Chicago)  via  Milwaukee,  and  the  freight  between  the  two  mar- 
kets has  necessarily  been  deducted  from  the  price  (at  Chicago)  in  order  to  equalize 
values. 

The  ])roduct  of  many  mills,  making  thousands  of  barrels  of  flour  monthly,  that 
usually  has,  and  naturally  would,  come  to  Chicago,  has  been  diverted  to  Milwaukee 
because  of  the  lower  rate  of  freight  to  the  East  prevailing  there.  The  extra  tax  of 
15  cents  per  barrel,  imposed  at  Chicago  by  the  pooled  lines,  above  the  Milwaukee 
rate  to  the  East,  has  lost  the  business  to  Chicago. 

MINNEAPOLIS,    MINN. 

From  this  point  and  others  in  Minnesota  and  Wisconsin  flour  is  being  shipped 
through  Chicago  to  all  points  east,  over  the  pooled  lines,  at  10  cents  per  barrel  less 
for  their  proportion  than  the  same  lines  will  carry  flour  from  Chicago,  if  manufact- 
ured here,  or  offered  them  by  our  merchants. 

Flour  so  shipped  from  Minnesota  and  Wisconsin  points  pays  local  rates  to  Chicago, 
and  this  fact  establishes  a  plain,  unwarranted,  unvarnished  discrimination  against 
Chicago  of  10  cents  per  barrel.  It  is  probable  that  a  like  discrimination  applies  to 
grain  and  other  propertj'. 

DAVENPORT,   IOWA, 

is  located  183  miles  west  of  Chicago,  on  the  Chicago,  Rock  Island  and  Pacific  Rail- 
way, but  eujoys  the  privilege  of  a  net  rate  on  pork  products  to  New  York,  2^  cents 
per  hundred  less  than  the  rate  from  Chicago.  The  Rockford  and  Rock  Island  Rail- 
way takes  the  property  from  Davenport,  hauls  it  a  short  distance  to  connect  with  the 
Toledo,  Peoria  and  Warsaw  Railway,  thence  the  property  goes  to  the  lines  in  the 
Chicago  pool,  or  lines  connecting  with  them.  The  rates  made  by  the  Rockford  and 
Rock  Island  are  accepted  by  the  eastern  connecting  lines  and  they  pro  rate  with 


THE  United  states  And  cAnada.  615 

them.  Tbe  total  tlistauce  to  New  York  by  the  route  taken  is  some  '240  miles  fnrtlier 
thau  tbe  distance  from  Cbioajio.  Giain  is  also  soi"i?  ^rom  Daven[)ort  to  Heardstown, 
thenceover  lines  controlled  l)y  tlie  llaltimorenud  Obio  Railroad  to  ]5altiiiion^,  at  same 
rates  as  from  Cbicago,  tbe  mileage  l)eiug  mnch  greater.  A  certain  line  leading  from 
Cbicago  to  Baltimore  bas  ottV-rtd  to  take  grain  from  Davenport  to  Baltimore  tbrougll 
Chicago  at  30  cents  per  bundred  as  their  share  of  the  ibroauh  rate,  whih-  the  sante 
line  demands  and  insists  on  :{;»  cents  per  hundred  on  like  shipments  from  Cbicago. 
Much  tbe  same  may  be  said  of  rales  made  from  Davenport  to  other  eastern  cities. 

l'I<X)HIA,  ILL. 

From  this  point,  140  miles  further  distant  from  New  England  and  about  100  miles 
further  from  New  Yoik,  tbe  rate  is  supposed  to  be  f)  cents  per  hundred  above  tho 
Cbicago  rate  to  tbe  seaboard  cities.  The  fact  is,  shipments  front  I'eoria  to  the  East 
do  not  as  a  rule  pay  more  than  the  rate  from  Cbicago,  notwithstanding  ihe  increased 
distance.  Indeed,  they  are  frequently  carried  at  rates,  not  only  to  the  southeast!  rn 
cities,  but  to  points  in  New  England  also,  lower  than  can  b(>  ohtaiued  on  like  ship- 
ments from  Cbicago.  During  the  tall  months  grain  was  taken  from  Peoria  to  Port- 
land, Me.,  at  25  cents  per  hnndred,  all  rail,  over  lines  not  bankrupt,  when  the  rale 
from  Cbicago  was  ',ib  cents  per  hnndred.  The  distance  by  the  route  taken  fioni  Peo- 
ria was  340  miles  greater  than  from  Cbicago.  Nearly  as  great  an  advantage  was 
given  Peoria  for  weeks  on  business  for  New  York.  These  were  rates  that  it  was  difh- 
cult  to  compete  with,  even  by  water  routes  from  Chicago. 

Tbe  Cbicago  and  Alton  Railway  Company  now  otters  to  haul  ))roi)erty  from  points 
on  its  western  division  to  Chicago  at^  cent  ]ter  hnndred  more  than  the  rate  that  must 
be  paid  to  reiVcb  Peoria.  By  the  published  taritls  the  total  rate  east  would  be4i  cents 
per  hnndred  less  via  Cbicago  from  these  points,  hut  tbe  elasticity  of  tbe  Peoria  rate 
to  the  East  is  shown  by  the  fact  that  the  property  referred  to  goes  east  by  the  way  of 
Peoria. 

The  general  freight  agents  of  the  lines  centering  at  Peoria  i-ecently  met  in  ocmven- 
tion  here  to  establish  publicly  (what  they  probably  knew  existed  privately)  ecpial 
rates  for  Peoria,  with  Chicago,  to  all  points  east.  In  this  they  were  opposed  by  om* 
solitary  voice,  and  that  the;  representative  of  the  Chicago,  Rock  Island  and  Paeifu! 
Railroad. 

Grain,  corn  particularly,  has  been  recently  and  is  now  being  otlVred  by  Peoria 
houses,  some  of  whom  have  branch  oltices  at  Portland  and  Jinston,  at  lower  prices 
than  can  possibly  be  made  from  Chicago,  whose  shipi)ersmust  pay  tbe  full  arbitrary 
pool  rates  from  here,  where  the  mysteries  of  uuderbilling  are  neither  studied  nor  en- 
couraged. 

Your  committee  would  call  particular  attention  to  this  fact:  A  more  westerly  and 
southerly  point  is  beating  us  in  a  field  northeast  oif  us,  where  they  could  not  possi- 
bly compete  with  us  but  for  the  unjust  discrimination  made  against  us  in  freights. 

The  Peoria  shipments  to  that  latitude  must  go  largely  over  the  very  lines  (or  tbe  lines 
of  their  masters)  that  are  so  determined  to  strangle  Chicago  and  so  ready  to  cut  at  any 
other  point.  Grain  from  several  points  in  the  northern  half  of  Illinois  is  actually 
being  shipped  west  to  Peoria,  to  avail  of  the  special  advantages  olfered  there,  for 
reshipment  east. 

Under  date  January  27,  1876,  a  prominent  eastern  grain  dealer  writes  to  his  Chicago 
correspondent  as  follows : 

"The  agent  of &  Co.,  of  Peoria,  called  on  mo  last  week  offering  to  deliver 

corn  here  as  per  inclosed  card  (of  prices).     I  askedhim  bow  he  could  do  it.      He  said 
from  most  points  they  had  low  rates  of  freight,  and  from  others  they  could  underbill 
and  thus  get  low  freights.     How  can  I  order  corn  from  you  ?     I  never  had  a  car  of 
grain  from  you  underbilled,  therefore  can  not  compete  with  others  (here)  and  buy  in 
your  market." 

It  has  been  stated  to  your  committee  that  from  many  jioints  in  Illinois  on  ship- 
ments east  (not  via  Chicago)  this  corrupt  system  of  nnderbilling  is  freely  practiced 
and  is  winked  at  by  the  railway  agents,  if  not  indeed  encouraged  by  them. 

INDIAXAPOI.I8,    IND., 

is  73  miles  nearer  New  England  points  than  Chicago.  On  mileage  to  New  York 
points  a  like  dilference,  or  perhaps  10  miles  more,  is  shown  to  exist,  tor  this  small 
difference  in  mileage,  a  ditferencc  in  rate  of  5  cents  per  hundred  on  gram,  etc.,  la 
granted  Indianapolis  in  the  tariff  tables.  Notwithstanding  this  favor  tbe  testimony 
made  before  your  committee  is  that  a  rate  is  made  to  large  shippers  from  Indianapolis 
10  cents  per  bun<lied  below  tbe  Cbicago  rate.  ,    ■      i  -ir 

On  business  to  Portland  a  like  difference  of  5  cents  per  bundred  is  made  in  the  taritt 
in  favor  of  Indianapolis,  while  the  mileage  is  uomiually  the  same  as  from  Cbicago. 


616  TRANSPORTATION  INTERESTS  OF 

Fioiii  our  city  the  Micbigaii  Central  and  the  Michij^an  Soutliern  Railroads  liavo  direct 
lines  to  Detroit  Junction  (where  connection  is  made  with  the  Grand  Trunk),  but, 
being  in  the  pool,  these  lines  are  estopped  from  charging  less  than  50  cents  per  hun- 
dred on  grain  from  Chicago  to  Portland,  while  Indiauai)oli8  shipments  reach  Detroit 
Junction  by  a  much  less  direct  route  over  three  different  roads  at  a  rate  of  45  cents 
per  hundred  to  Portland;  and  it  is  noticeable  that  the  Michigan  Southern,  which  in- 
sists on  to  cents  from  Chicago  to  Portland  as  the  rate  for  itself  and  for  the  Michigan 
Central,  gets  a  haul  of  116  miles  of  the  route  between  Indianapolis  and  Detroit  Junc- 
tion on  the  lesser  through  rate.  It  is  not  improbable  that  the  Michigan  Southern  is 
willing  to  see  the  Michigan  Central  robbed  by  the  higher  tariff  of  the  large  Portland 
business  it  has  heretofore  done,  provided  its  lines  shall  continue  to  have  so  important 
a  share  of  the  immense  Portland  and  Grand  Trunk  business  thus  almost  wholly  di- 
verted by  the  way  of  Indianapolis.  Much  could  be  said  of  the  volume  of  New  York 
and  New  England  business  lost  to  us  because  of  the  more  favorable  and  more  elastic 
rates  unjustly  made  from  Indianapolis;  but  attention  is  particularly  called  to  the 
Portland  business  because  there  is  no  advantage  of  mileage,  and  the  injustice  done 
Chicago  is  unwarranted  and  outrageous.  At  Indianapolis  no  charge  is  made  for 
switching  cars  to  the  elevators,  nor  for  "trimmiug"  cars  when  loading.  These 
charges  should  be  abated  by  the  western  lines  at  Chicago,  by  whom  the  elevators  are 
chiefly  owned.  This  tax  imposed  by  the  western  roads  at  Chicago  upon  the  eastern 
lines  is  an  additional  and  unwise  barrier  to  business  being  done  through  the  ware- 
houses, and  into  which  they  should  endeavor  to  invite  it. 

CINCINNATI,  OHIO. 

In  the  tariff  tables  Cincinnati  demands  and  secures  a  rate  10  cents  per  hundred 
lower  on  grain,  etc.,  to  all  points  east  than  is  made  from  Chicago.  This  difference  is 
widened  on  shipments  to  Baltimore  and  Philadelphia,  without  equity;  but  the  man- 
ner in  which  Chicago  is  wronged  by  such  a  favoritism  toward  Cincinnati  in  the  gen- 
eral tariff  is  particularly  shown  by  the  comparison  of  Cincinnati  rates  and  mileage 
with  those  of  Chicago  on  New  England  and  Grand  Trunk  business. 

From  Chicago  to  Boston  the  mileage  is  111  miles,  or  say  11  per  cent,  greater  than 
from  Cincinnati,  but  Chicago  must  pay  a  25  per  cent,  higher  rate.  It  is  again  notice- 
able that  the  Michigan  Southern  Railway,  so  ready  to  exact  the  higher  late  from 
Chicago,  eagerly  accepts  its  proportion  of  the  lesser  rate  from  Cincinnati  on  its  share 
of  the  haul  from  Cleveland  to  Buffalo. 

But  we  must  look  to  the  Portland  (and  other  Grand  Trunk)  rates  from  Cincinnati 
for  the  crowning  comparison.  The  diffeience  in  mileage  is  nominal— only  17  miles 
less  than  from  Chicago,  scarcely  equal  to  H  pt*r  cent,  of  the  whole — but  Chicago  must 
pay  25  per  cent,  more  tariff.  On  about  this  equal  mileage  Cincinnati  shipments  of 
grain  are  taken  at  40  cents  to  Portland,  while  Chicago  shipments  must  pay  50  cents 
per  hundred. 

Now  mark  the  result !  An  immense  volume  of  grain  has  recently  been  diverted 
from  all  northern  and  central  Illinois,  and  from  Iowa,  to  Portland  and  other  Grand 
Trunk  points  by  the  way  of  Cincinnati.  Hundreds  of  cars  weekly  have  gone  from 
one  road — the  Gilmau,  Clinton  and  Springfield.  This  grain  has  traveled  an  extra 
mileage  of  250  to  3.50  miles  to  reach  Detroit  Junction  through  Cincinnati,  at  a  total 
rate  of  5  cents  per  hundred  less  than  could  be  made  by  the  absolutely  direct  route 
through  Chicago.  Some  of  this  property  starting  at  points  in  Ford  County,  111., 
within  90  miles  of  Chicago,  though  billed  due  northeast  to  Portland,  has  traveled 
first  97  miles  due  southwest  to  avail  of  the  connection  of  the  Baltimore  and  Ohio 
Railroad  for  Cincinnati,  and  thence  north  to  Detroit  Junction,  a  total  of  716  miles 
to  reach  the  latter  point,  and  save  5  cents  per  hundred  in  freight.  The  direct  haul 
through  Chicago  between  the  points  would  have  been  340  miles  less,  or  a  total  of  376 
miles  only.  Thus  it  is  that  Chicago  is  being  robbed  of  business  from  almost  under 
her  very  eaves. 

It  would  seem  that  further  citations,  numerous  as  they  might  be,  of  the  workings 
of  this  discriminative  tariff  are  unnecessary,  though  we  reluctantly  forbear  furnish- 
ing them. 

The  five  great  trunk-lines  tapping  this  business  and  leading  to  Chicago  must  lose 
it,  because  the  higher  tariff  east  from  Chicago  drives  it  away.  It  would  be  folly  to 
say  that  the  Grand  Trunk  Railway  is,  or  woiud  be,  willing  to  make  any  more  favor- 
able rate  from  Detroit  Junction  for  its  pro  rate  on  Cincinnati  business  than  on 
business  from  Chicago. 

The  points  are  so  numerous  in  the  West  from  which  property  is  being  carried  at 
rates  relatively  much  lower  than  from  Chicago  that  to  enumerate  them  all  in  detail 
would  be  monotonous;  but,  perhaps,  the  injustice  done  Chicago  is  the  more  aggra- 
vating from  the  fact  that  from  comparatively  small  and  unimportant  places  in  the 
West  Chicago  rates  to  the  East  are  given,  though  the  mileage  is  much  greater.  We 
can  but  hint  at  a  few  of  them. 


THE   UNITED   STATES   AND   CANADA.  Cl7 

JULIET,    ILL., 

with  greater  mileage,  has  Chicago  rates.  Some  of  the  line.s  in  i\u:  Chicago  pool  are 
hauling  property  over  the  Chicago,  Rock  Island  and  Pacific,  or  the  Chicago  and  At- 
lantic Railway  to  reach  Chicago,  and  pay  these  roads  for  their  local  haul,  and  thence 
haul  it  east  through  Chicago  at  Chicago  rates,  without  extra  charge  for  the  40  miles 
extra  haul. 

SPRINGFIELD,    ILL., 

has  same  rate  as  Chicago  to  all  points  east,  with  a  greater  mileage.  On  husiness  for 
Grand  Trunk  points,  the  extra  mileage,  hy  the  route  tlu^  .Si)ringfield  shipments  take, 
is  33^}  miles. 

BEARDSTOWN,    ILL. 

From  this  point  property  is  heing  shipped  at  Chicago  rates,  and  th<'  town  is  an  out- 
let for  a  large  volume  of  business,  drawn  by  the  Rocktbrd  and  Rock  Island  road  away 
from  the  Chicago,  Burlington  and  Quincy" Railroad,  the  Chicago  and  Atlantic  Rail- 
road, and  the  Chicago,  Rock  Island  and  Pacitic  Railroad  to  avail  of  the  low  rato 
offered  via  Beardstown  to  the  east;  the  disparity  of  mileage  is  greater  than  from 
Springtield,  111.,  just  quoted. 

Burlington,  Quincy,  Decatur,  Keokuk,  Keokuk  Junction,  Lincoln,  111.,  Mason 
City,  111.,  etc.,  all  have  lower  rates  relatively  than  Chicago. 

KANSAS   CITY,    MO. 

From  this  point,  it  is  believed  by  prominent  Chicago  railway  ofificials,  meats  are 
being  hauled  to  New  York,  through  Chicago,  at  the  same  rate  as  from  Chicago.  The 
extra  mileage  by  this  route  (over  Chicago)  is  only  489  miles. 

You  have  uow  before  you  some  of  the  facts  that  your  conunittee  have  been  able  to 
collate  after  careful  and  protracted  investigation.  There  can  be  but  one  conclusion 
as  to  their  effect.  Their  cause  and  the  remedy  to  be  applied  are  matters  lor  serious 
deliberation.  We  have  already  advanced  our  own  theory  of  the  can.se,  viz,  the  pur- 
l)Ose  of  two  of  the  Eastern  trunk  lines  to  direct  the  drift  of  the  West's  and  North- 
west's shi]iping  trade  to  the  south  of  Chicago  in  their  own  seltish  interest.  The 
purpose  of  the  other  trunk-lines  in  consenting  to  such  an  arrangement  is  not  so  clear. 

The  Michigan  Central  Railroad,  with  its  tuai>niticent  equipments,  unrivaled  facili- 
ties, and  its  popular  resident  otiticers,  is  essentially  a  Chicago  road.  Its  principal 
terminus  is  here,  and  its  strength  in  the  past  has  come  from  the  growt  li  and  prosperity 
of  Chicago.  The  present  management  of  this  hue  appear  to  ignore  this  fact,  and 
adopt  the  policy  of  their  rivals,  which  is  undoubtedly  to  divert  trade  from  this  city, 
and  by  turning  the  tide  of  commerce  southward,  make  it  directly  tributary  to  those 
lines  having  their  Eastern  termini  in  Philadelphia  and  Baltimore,  by  making  arbi- 
trarj',  prohibiloiy  rates  from  here,  while  all  interior  points  are  favored  with  a  tariff 
elastic  enough  to  draw  the  business  that  way.  We  have  iicrc  the  spect.icle  of  that 
line  which  should  be  our  natural  champion  and  ally,  holding  the  trade  of  this  city  by 
the  throat,  while  the  Southern  lines  are  emptying  our  pockets.  We  can  not  reconcile 
this  course  with  a  desire  to  do  justice  to  this  city,  or  to  the  stockholders  ot  tlie  Mi(thi- 
gan  Central  Railroad.  We  speak  particularly  of  this  line  as  it  is  the  greaiest  loser, 
and  in  no  case  a  gainer,  by  the  diversion  of  trade;  from  this  city  ;  but  the  same  re- 
marks will  apply  to  other  of  the  "  pool-lines."  This  aristocratic  and  arbilr.iry  combi- 
nation would  have  us  think  them  above  competing  witli  "  l)ankni|)t  roads",  but  the 
latter  are  doing  a  thriving  business,  and  learning  in  their  pl(!biau  way  Millicient  to 
enable  them  to  improve  their  tracks  and  equipments,  besides  promptly  paying  their 
cunent  expenses,  and  the  prospect  of  dividends  from  them  is  as  promising  as  from 
some  of  their  more  pretentious  neighbors.  But  refusal  to  compete  wiih  Itankrupt 
roads  appears  to  be  mainly  a  pretense;  for  we  find  that  (he  eastern  counectKUis  of  the 
80  called  "pool  lines"  from  Chicago  accept  their  pri)itorlions  of  the  through  rates 
■;made  by  the  net-work  of  bankrupt  roads  on  the  south  of  ns,  while  they  ho  d  to  the 
arbitrary  rates  that  are  always  llxed  first  from  Chicago,  and  from  whence  they  are 
t  he  last  to  be  reduced. 

In  devising  a  remedy  for  the  pernicious  state  of  things  we  have  been  called  upon 
to  describe  we  can  only  hope  to  make  suggestions  that  ii:ay  assist  the  Board  of  Trade 
and  the  commercial  public  generally  in  solving  the  lu-obleni.  As  a  means  to  that 
end  we  would  suggest  keeping  wellin  mind  the  fact  that  the  grain  belt  is  enlarging 
with  t!very  year;  and  that,  while  Chicago  is  the  natural  center,  it  will  liud  more 
competitors  as  the  area  increases,  and  it  must  put  forth  new  elVorts  to  retain  all  of 
its  advantages.  The  geographical  advantage  of  Chicago  has  served  in  the  past  to 
render  it  comparatively  independent  of  all  combinations;  and  it  has  been  more  sought 


618  tRANSPORTATION    INTERESTS    OF 

for  than  seeking  in  railroad  connections.  Now,  however,  as  competition  increases  and 
other  interests  assert  themselves,  it  mast  put  forth  some  of  its  strength  which  has  been 
largely  the  growth  of  the  willing  co-operation  of  foreign  capital;  it  must  defend  its 
rights  and  insist  npon  fair  and  just  treatment  at  the  hands  of  those  who  have  been 
friendly  heretofore  for  selfish  purposes.  It  has  now  sufiScient  population,  business,  and 
capital  to  help  itself  in  any  antagonism  thatmay  arise.  In  its  relations  with  railroatls 
it  can  iifford  to  be  liberal,  but  it  can  also  afford  to  be  exacting  when  its  rights  are 
threatened.  With  harmoriy  of  purpose  and  unity  of  action,  the  merchants  and  the 
Board  of  Trade  of  Chicago  can  struggle  successfully  with  any  combination  that  could 
be  made  against  them  if  it  comes  to  atrial  of  strength.  Meanwhile  we  would  advise 
tlie  encouragement  by  every  fair  means  of  all  new  railway  projects  tributary  to  Chi- 
cago. We  would  suggest  that  all  railroads  centering  in  Chicago  and  forming  new 
connections  with  Chicago  should  receive  ample  facilities  as  to  right  of  way,  depot 
grounds,  and  fair  treatment.  Chicago  is  even  prepared  to  put  forth  capital  for  the 
purpose  of  providing  new  railroad  extensions  and  connections.  It  is  in  this  spirit 
that  we  commend  to  the  attention  of  this  board  and  the  business  men  of  Chicago  the 
following  iinal  suggestion. 

Wo  think  every  encouragement  should  be  given  to  the  increase  of  our  facilities  for 
reaching  tide- water  and  the  eastern  markets,  and  recommend  the  early  completion  of 
the  Grand  Trunk  Railway  to  this  city  and  the  immediate  establishing  of  a  steam-ship 
line  from  here  to  connect  with  the  Detroit  and  Milwaukee  Railroad  at  Grand  Haven. 
The  completion  of  46  mi'les  of  road  and  connection  with  the  Chicago  and  Lake  Huron 
Railroad  appe.irs  feasible  for  the  former,  and  a  sufidcient  offering  of  freight  is  all  that 
is  required  to  accomplish  the  latter.  But  those  remedies  are  not  expected  to  cure  the 
evils.  We  believe  the  best  practical  results  can  only  come  from  united  action  on  the 
part  of  shippers  and  business  men,  and  to  this  end  we  recommend  the  immediate  or- 
ganization of  an  association,  which  may  be  done  under  the  auspices  of  the  board  of 
trade,  for  the  mutual  protection  of  all  our  citizens  doing  business  with  railroad  or 
transportation  companies.  Let  the  association  appoint  an  executive  committee  of 
three  of  its  members,  who  shall  hold  regular  stated  meetings,  to  hear  grievances  and 
take  such  measures  as  they  may  think  proper  to  secure  justice  to  shippers  of  property. 
Such  an  association,  backed  as  it  would  be  by  the  moral  influence  and  support  of  this 
board  and  the  community,  though  possessed  of  no  special  powers  from  the  State, 
would  approximate  in  its  results  those  attained  by  the  railroad  commissioners  of 
Massachusetts,  where  the  gravest  abuses  have  been  corrected,  mainly  by  the  force  of 
public  opinion  as  guided  by  three  honest,  energetic  men.  Asimilar  association  has  suc- 
ceeded in  doing  efficient  work  in  New  York  city  ;  and  we  make  the  recommendation 
now  in  a  general  way,  leaving  the  details  of  its  organization  for  such  future  con- 
sideration as  the  board  of  trade  may  determine  to  give  it.    Respectfully  submitted. 

E.  B.  Stevens, 
Wm.  T.  Baker, 
W.  J.  Pope, 
JosiAH  Stiles, 
P.  W.  Dater, 

Comviittee. 

REGULATION   OF  THE   CANADIAN  ROADS.    . 

The  Chairman.  Some  of  the  railroads  in  the  United  States  complain 
that  tliey  are  at  a  disadvantage  by  reason  of  being  regulated  by  tbe 
interstate  commerce  act  and  by  State  laws,  while  the  Canadian  roads 
in  competition  with  them  are  not.  Do  you  know  any  reason  why,  if  it 
could  be  done,  the  same  regulations  should  not  be  applied  to  the 
Canadian  roads  as  now  exist  in  reference  to  American  roads  ? 

Mr.  Stone.  I  think  the  report  of  the  committee  recommends  that  the 
Canadian  lines  operating  wholly  in  the  United  States  should  observe 
the  provisions  of  the  interstate  commerce  act. 

The  Chairman.  "Lines  operating  wholly  in  the  United  States  " ;  but 
that  practically  makes  an  American  road  in  the  sense  that  it  is  within 
the  jurisdiction  of  the  United  States.  But  take  the  Chicago  and  Grand 
Trunk,  for  instance.  Its  connection  is  with  the  Grand  Trunk  of  Canada, 
and  by  the  connections  of  the  two  you  do  a  business  with  New  England 
and  other  points  east,  as  you  say.  Now,  while  the  Chicago  and  Grand 
Trunk  is  under  the  jurisdiction  of  the  United  States  the  Grand  Trunk 
of  Canada  is  not,  only  inasmuch  as  they  regard  the  interstate  com- 
merce act  in  force  over  them  touching  the  United  States,  or  in  connec- 


THfi    UNITED   STATlES    AND    CANADA.  619 

tiou  with  fieiglit  taken  from  here.  Is  there  any  objection,  therefore, 
that  you  gentlemen  know  of,  to  placing  the  Canadian  lines  under  the 
same  regulations  as  the  American  roads,  if  it  can  be  done,  in  view  of 
the  roads  of  this  country  being  at  a  disadvantage  on  account  of  our  re- 
strictions^ I  am  not  saying  whether  or  not  our  roads  are  at  a  disad- 
vantage in  competition  with  the  Canadian  roads,  but  if  the  situation  is 
such  that  the  Canadian  roads  get  an  advantage  because  of  our  regula- 
tions, is  there  any  objection  to  placing  the  Canadian  roads  nnder  the 
same  rules  and  regulations  as  our  own  roads  are  subject  to'^ 

Mr.  Stone.  I  do  not  know,  Mr.  Chairman,  of  any  reason  why  tliey 
should  not  be  subject  to  a  uniform  treatment  with  the  laws  and  regula- 
tions which  apply  to  the  roads  of  the  United  States  in  the  transporta- 
tion of  American  products. 

The  Chairman.  You  have  shown  that  a  large  amount  of  business  is 
done  by  the  Chicago  and  Grand  Trunk  in  connection  with  the  Grand 
Trunk  of  Canada.  You  have  shown  the  proportion,  and  shown  that 
having  the  advantage  of  that  road  has  been  of  great  service  to  the  busi- 
ness of  Chicago,  the  West,  the  Southwest,  and  the  Northwest.  Granting 
that  is  so,  which  in  my  judgment  is  undoubtedly  true,  is  there  any  reason 
why,  if  there  be  a  disadvantage  now  under  the  operation  of  the  inter- 
state commerce  act,  or  any  law,  State  or  national,  to  roads  in  the  United 
States,  there  should  not  be  something  done  to  put  the  American  and 
Canadian  roads  on  the  same  level  as  to  regulation  and  control,  either  by 
legislation  that  will  reach  the  Canadian  roads  doing  busine"ss  in  the 
United  States,  or  some  modification  of  the  laws  of  the  United  States 
that  control  the  American  roads? 

Mr.  Stone.  I  see  no  reason  why,  Mr.  Chairman.  I  do  not  under- 
stand that  the  Grand  Trunk  roads  or  the  Canadian  lines  desire  to  com- 
pete on  any  other  than  equitable  principles  and  an  equitable  basis  for 
the  business  of  the  West  and  Northwest. 

The  Chairman.  Of  course  there  is  no  purpose  on  the  part  of  any- 
body, so  far  as  I  know,  to  build  up  a  wall  between  the  United  States 
and  Canada,  or  to  interfere  with  these  roads  doing  business  in  the  United 
States,  provided  they  do  business  under  the  same  restrictions  that  are 
placed  over  American  roads.  That  is  one  of  the  purposes  of  this  in- 
qniry — to  ascertain,  in  the  lirst  i)lace,  whether  the  American  roads  are 
at  a  disadvantage,  and  if  they  are,  whether  anything  can  or  ought  to 
be  done  to  change  the  condition  on  that  score. 

Mr.  Stone.  I  understand  that  the  business  of  the  Canadian  railways 
which  has  been  obtained  from  the  West  and  Northwest  and  from  Chi- 
cago pre  eminently,  has  been  obtained  by  virtue  of  the  increased  facili- 
ties which  those  roads  offer  for  the  transportation  of  i)roducts  of  the 
West  and  Northwest  and  by  reason  of  their  attitude  of  accommodating 
themselves  to  the  conditions  of  commerce,  and  not  only  their  attitude 
to  these  conditions,  but  also  their  ever  ready  and  cheerful  attitude  to 
the  legitimate  demands  of  trade  with  respect  to  transi)ortation. 

The  Chairman.  As  an  observer  of  the  commerce  of  this  city  and  sur- 
rounding country  and  its  transportation  interests,  is  it  your  judgment 
or  not  that  the  American  roads  have  really  suffered  in  competition  with 
Canadian  roads  on  account  of  the  enforcem  Hit  of  the  interstate  com- 
merce act  ? 

Mr.  Stone.  It  is  my  judgment  that  they  huxv:  not. 

The  Chairman.  And  whatever  increase  of  trade  the  Canadian  rail- 
roads have  secured  has  been  the  result  of  these  cheerful  compliances 
with  the  condition  of  affairs,  etc.,  here,  which  made  them  popular  with 
the  business  community ;  is  that  your  idea  ? 


620  TRANSPORTATION   INTERESTS    OF 

Mr.  Stone.  Yes,  sir.  One  of  the  special  points  made  by  our  oom- 
mittee  is  that  the  northern  New  Engrhind  trade  lias  been  reached  and 
is  reached  by  the  Canadian  railways  in  a  Duieli  more  direct  and  eco- 
nomical manner  than  is  possible  to  be  obtained  by  the  American  rail- 
way lines. 

The  Chairman,  Why  is  that "? 

Mr.  Stone.  The  route  is  a  more  direct  one. 

The  Chairman.  Is  it  a  shorter  route  from  here  to  Boston  than  upon 
any  of  these  other  roads  *? 

Mr.  Stone.  It  is  to  points  in  northern  Ne^v  England.  I  think  we 
have  mentioned  some  of  those  points  in  the  report.  The  exact  distance 
I  am  not  prepared  to  state. 

POOLING   AND   THE   TRAFFIC   ASSOCIATION. 

Senator  HtscoCK.  As  I  understand  the  report  of  the  Board  of 
Trade,  you  pronounce  or  express  your  opinion  against  traffic  associa- 
tions and  pooling,  and  I  suppose  against  differential  rates  1 

Mr.  Stone.  Yes. 

Senator  HiscocK.  You  do  not  thinlj  those  are  wise? 

Mr.  Stone.  We  do  not  think  they  are  wise. 

Senator  Hiscock.  Formerly  there  were  pools  between  competing 
trunk  lines  which  are  now  prohibited  by  the  interstate  commerce  act. 
Is  there  any  doubt  but  what  all  the  trunk  lines,  including  the  Canadian 
trunk  line,  have  agreed  upon  differential  rates  on  all  westbound  and 
east-bound  freight "? 

Mr.  Stone.  As  I  understand  the  interrogatories,  it  is  not  the  pur- 
pose of  the  committee  to  oppose  any  rates  that  are  agreed  upon — 
any  agreed  rates — in  regard  to  such  a  phase  of  the  matter;  but  we  op- 
pose the  formation  of  these  associations  like  those  mentioned  in  the 
report — the  Central  Traffic  Association  being  one  of  them — which  have 
the  effect  of  interfering  with  the  free  action  of  the  provisions  of  the 
interstate  commerce  law. 

Senator  Hiscock.  How  do  they,  Mr.  Stone? 

Mr.  Stone.  Well,  I  do  not  know  that  I  could  in  very  great  detail 
state  how  they  do.  I  would  only  say  at  this  time  that  it  is  the  opinion 
of  the  Board  of  Trade. 

Senator  Hiscocic.  What  is  the  purpose  of  the  Central  Traffic  Asso- 
ciation I 

Mr.  Stone.  The  Central  Traffic  Association  is  an  asscciation  of  roads 
which  does  not  include,  as  I  understand  it,  all  of  the  railway  lines. 

Senator  Hiscock.  What  lines  does  it  not  include? 

Mi\  Stone.  I  am  not  prepared  to  say  how  many  roads  are  iuclu(le<l 
in  that  association.     I  do  not  know. 

The  Chairman.  Mr.  Stone  is  the  secretary  of  the  Board  of  Trade, 
and  he  I'ose  to  read  the  report  of  the  boar<l.  There  are  i)resent  other 
members  of  the  special  committee,  who,  1  take  it,  would  like  to  be 
heard  in  reference  to  this  question. 

Mr.  Stone.  They  are  more  familiar  with  these  questions  than  I  am. 

Mr.  Wright.  We  pi-efer,  in  regard  to  this  matter,  that  you  examine 
some  members  of  the  committee  who  have  made  more  of  a  studj'  of  the 
subject  than  Mr.  Stone;  Mr.  Clark  has  examined  Ihi.s  subject  as  fully 
as  any  of  the  members  of  the  committee  I  can  think  of. 


THE    UNITED    STATES    AND    CANADA.  621 


STATEMENT  OF  GEORGE  CLARK. 

Mr.  George  Clark,  a  member  of  the  committee  of  the  Board  of 
Trade,  appeared. 

Seoator  Hiscock.  Can  you  tell  me  what  the  Truuk  Line  Associa- 
tion is  ? 

Mr.  Clark.  If  I  understand  it  rightly,  it  is  a  combination  of  lines 
consisting-  of  the  jS"ew  York  Central,  the  Pennsylvania,  the  Baltimore 
and  Ohio,  the  Grand  Trunk,  the  Delaware  and  Lackawanna,  and  all 
lines  running  east  of  the  termini  of  Toronto,  Buffalo,  and  Pittsburgh. 

Senator  lIiscoGK.  Well,  it  is  a  combination  of  all  of  these  lines,  as 
you  understand  it,  including  the  Canadian  lines  ? 

Mr.  Clark.  I  am  not  sure  whether  the  Canadian  Pacific  belongs  to 
it  or  not,  but  I  am  aware  that  the  Grand  Trunk  does. 

Senator  Hiscock.  And  what  do  you  understand  its  purposes  are t 
Mr.  Clark.  The  purpose,  as  I  understand  it,  is  the  collection  of  sta- 
tistics ;  but  I  think  they  go  beyond  that. 

Senator  IIiscocK.  Do  you  know  that  they  do  I 

Mr.  Clark.  Unless  I  am  wrongly  informed  they  have  a  classification 
committee,  and  a  great  many  of  their  classifications  are  made  largely 
in  the  interest  of  their  earnings  and  to  the  detriment  of  tJie  business 
interests  of  this  country. 
Senator  Hiscock.  You  mean  a  classification  of  the  freight'^ 
Mr.  Clark.  Yes,  sir. 

Senator  Hiscock.  In  other  words,  as  you  understand  it,  they  agree 
on  rates  ? 
]\Ir.  Clark.  Yes,  sir. 

Senator  Hiscock.  The  Central  Traffic  Association  has  been  men- 
tioned Jiere.     Is  its  purpose  the  same? 
Mr.  Clark.  Yes  ;  as  I  understand  it. 

Senator  Hiscock.  In  other  words,  you  understand  that  all  of  these 
avssociations  you  have  mentioned  are  organized  for  tlie  purpose  of  reach- 
ing some  sort  of  agreement  as  to  the  rates  of  transportation  ? 
Mr.  Clark.  Yes,  sir. 

Senator  Hiscock.  That  is  they  will  adopt  the  same  classification  of 
freight  and  the  same  rate  on  the  goods  ? 
Mr.  Clark.  Yes,  sir. 

Senator  Hiscock.  And  all  of  that  is  practically  one  step  further  in 
the  direction  of  pooling  rates  between  the  trunk  lines? 

]\Ir.  Clark.  I  am  aware  that  there  has  been  some  agreement  in  re- 
gard to  differential  rates. 

Senator  Hiscock.  There  is  a  differential  rate  on  all  west-bound 
freight  over  the  Grand  Trunk  of  5  cents  a  hundred,  is  there  not  ? 

Mr.  Clark.  I  can  not  tell  you  in  regard  to  that.  I  am  not  as  famil- 
iar with  the  west  as  with  the  east  bound  traflic. 

Senator  Hiscock.  I  think  there  is  also  a  differential  over  the  Grand 
Trunk  on  all  east-bound  freight  if  they  think  they  are  justified  in  avail- 
ing themselves  of  it ;  but  of  that  I  am  not  sure. 

Mr.  Clark.  I  think  there  is  a  differential  east  on  dressed  beef,  but 
I  do  not  think  there  is  on  any  other  business.  Mr.  Ileeve  can  answer 
that  question. 

Senator  Hiscock.  We  had  him  before  us.  Now  do  I  understand  that 
you  are  opposed  to  differential  rates  ?  All  these  associations  are  simply 
associations  for  the  purpose  of  agreeing  upon  differentials,  as  I  under- 
stand it, 


622  TRANSPORTATION    INTERESTS    OF 

Mr.  Clark.  Do  they  not  go  a  step  further  ? 

Senator  Hiscock.  No,  they  do  not  go  a  step  further.  In  other  words, 
all  the  trunk  lines,  as  I  understand  it,  are  in  associations  for  the  pur- 
pose of  maintaining'  rates.  These  organizations  have  ibr  tlit'ir  object  the 
preventing  of  unsteady  and  fluctuating  rates.  The  interstate  com- 
merce law  was  intended  to  prevent  the  variableness  of  tarift's  at  differ- 
ent points,  and  the  policy  of  the  trunk  lines,  as  I  nnderstand  it,  has 
been  to  agree  upon  some  traffic  rate  as  between  each  other,  giving  one 
line  the  benefit  of  charging  less  that  it  may  get  its  share  of  the  busi- 
ness, and  in  that  way  to  insure  peinianeut  rates.  Many  commercial 
bodies  say  that  there  is  nothing  so  injurious  to  commerce  as  the  cutting 
of  rates  and  having  them  uncertain,  up  to-day  and  down  to-morrow. 
The  policy  of  the  railroads  is,  that  instead  of  cutting  rates  and  one  road 
trying  to  ruin  another,  to  go  into  an  association  and  maintain  tariffs. 
These  have  been  the  two  great  policies  of  railroads;  one,  as  I  have 
stated,  was  to  agree  among  themselves  upon  what  was  just  and  equit- 
able, and  agree  upon  such  rates  between  themselves  as  would  equitably 
divide  the  business  and  not  allow  others  to  go  in  the  market  and  com- 
pete, very  much  to  the  destruction  of  railroad  systems  and  embarrass- 
ment in  the  way  of  fluctuating  rates,  and  injury  to  intermediate  points. 
The  other  policy  was  that  they  should  agree  among  themselves  upon 
what  were  fair  and  just  rates,  and  give  diflerentials  to  weak  roads,  so 
that  instead  of  weeding  out  the  weak  road  it  might  get  business  and 
live.  Now  as  I  understand  your  resolution  it  is  iu  favor  of  the  old  sys- 
tem, against  cutting  of  rates  and  against  these  differential  rates.  I 
want  to  know  if  that  is  your  judgment. 

Mr.  Clark.  These  associations  have  not  been  very  successful  iu  the 
direction  you  hav^e  outlined. 

Senator  Hiscock.  Are  you  sure  of  that? 

Mr.  Clark,  It  would  seem  with  the  wrangling  going  on  at  present 
that  they  are  not. 

Senator  Hiscock.  What  wrangling  is  going  on  now  ? 

]\Ir.  Clark.  You  probably  know  it  all.  The  Jialtimore  and  Ohio  not 
long  ago  made  a  commodity  rate  on  corn  and  wheat,  aii<!  the  question 
then  came  up  when  the  Chicago  and  Grand  Trunk  asked  them  if  they 
would  not  put  that  rate  back.  The  trunk  line  i)residents  met  in  New 
York  and  had  a  session  that  lasted  a  week,  and  if  they  are  reported 
correctly  they  put  up  the  wheat  rate  and  refused  to  ])ut  u|)  the  corn  rate. 
Since  1  have  been  in  the  business  i  have  never  known  the  products  of 
corn,  wheat,  and  oats  to  go  at  any  different  rate  from  the  original  grain. 
They  refused  to  put  up  the  corn  rate,  and  the  Grand  Trunk  then 
opened  uj)  the  rate  from  Chicago  on  grain  and  all  its  products,  which 
takes  effect  to-morrow  morning. 

Senator  Hiscock.  Well  1 

Mr.  Clakk.  Now  it  seems  to  me  that  they  have  not  got  any  nearer 
this  point. 

Senator  Hiscock.  That  illustrates  one  ]>hasc  of  this  <%ise.  At  the 
])resent  time  differential  rates  are  allowed  between  the  trunk  lines,  and 
while  it  is  not  recognized  in  the  law  as  legal,  it  is  adopted  and  prac- 
ticed. As  I  understand  it,  all  these  associations  are  simply  methods  to 
reach  that  end.  As  you  have  stated,  notwithstanding  all  these  things, 
notwithstanding  these  associations,  etc.,  and  the  unanimity  between  the 
roads,  this  competition  has  not  been  i)revented,  for  the  Baltimore  and 
Ohio  put  down  the  rate  of  corn  and  wheat,  and  put  it  down  under  the 
interstate  commerce  law,  and  can  not  increase  it  again  outside  of  a 
certain  time.  The  tendency  is  to  lower  rates,  but  not  spasmodically  so 
that  the  public  will  get  caught  iu  a  corner. 


THE    UNITED    STATES    AND    CANADA.  623 

Mr.  Clark.  All  the  differeutials  1  kuow  of  east-bouml  from  here  are 
on  dressed  beef,  by  the  Chicago  aud  Graud  Tnmk. 

Senator  Hiscock.  That  is  au  illu.st ration  of  what  I  state.  Other 
railroad  companies  say  that  "  we  recognize  that  you  can  not  charge  for 
dressed  beef  the  same  i)rice  we  charge  and  get  your  share  of  the  busi- 
ness. Therefore  we  will  allow  you  to  cut  uuder\is  to  a  certain  extent 
with  a  view  to  your  getting  a  share  of  the  business."  Xow,  does  that 
injure  the  dressed- beef  traffic ! 

Mr.  Clakk.  That  was  the  arrangement  in  1887.  In  1888  the  other 
lines  out  of  Chicago  thought  they  would  wipe  out  this  ditterential. 
They  commenced  a  war  for  the  possession  of  that  business  and  they 
got  it  down  to  a  point  where  there  was  nothing  in  it.  They  carried  the 
business  and  carried  it  until  they  became  tiVed  of  it,  and  then  they 
came  around  and  still  allowed  the  Chicago  and  Grand  Trunk  their  dif 
ferential,  aud  it  has  carried  the  business  from  that  time  up  to  this. 

Senator  Hiscock.  oS'^ow  I  ask  you  whether,  for  permanency  of  busi- 
ness and  trade,  war  was  better  than  to  have  had  some  sort  of  arrange- 
ment between  the  lines,  by  which  the  Grand  Trunk  should  take  the 
larger  share  of  that  traffic  and  that  all  the  lines  out  of  Chicago  might 
be  supported  or  maintained  ? 

Mr.  Clark.  If  these  associations  are  doing  the  good  you  say  they 
are,  these  things  should  not  have  occurred. 

Senator  Hiscock.  I  am  not  arguing  it.  Do  not  understand  me  as 
taking  any  position  on  this  question.  I  am  simply  a  seeker  after  light, 
and  that  is  all  there  is  about  it.  The  policy  of  ditierentials  and  pooling, 
if  it  were  adopted,  would  tend  to  sustain  the  weak  roads,  as  it  is  claimed 
by  a  great  many  chambers  of  commerce  and  a  great  many  transporters, 
forwarders,  and  merchants,  by  giving  them  their  share  of  the  business 
and  keeping  them  in  the  field  as  competitors. 

The  Chairman.  And  the  Grand  Trunk  being  regarded  as  the  weak 
road  would  therefore  get  this  differential. 

Senator  Hiscock.  Yes,  and  this  wholesale  censure  by  this  Board  of 
Trade  surprised  me,  because  the  Boston  people  were  in  favor  of  it,  and 
their  interests  appear  to  be  identical  with  yours. 

Mr.  Clark.  We  have  thought  the  contrary. 

Senator  Hiscock.  I  should  like  to  have  you  gentlemen  consider  this 
question  again,  for  it  is  very  important.  This  thing  has  been  urged  not 
by  railroad  men,  but  by  merchants  and  transporters,  who  s;iy  that  what 
the  interstate  commerce  law  ought  to  do  is  this:  To  legalize  pooling, 
and  that  the  rates  agreed  upon  shall  be  approved  by  the  Interstate 
Commerce  Commission.  There  are  many  very  strong  advocates  of 
that.  It  is  not  limited  by  any  means  to  railroad  men.  Ihey  say  it 
is  for  the  interest  of  merchants  that  the  weak  lines  be  maintained  for 
the  purpose  of  supporting  competition,  aud  that  if  pooling  could  be 
legalized,  the  rates  always  to  be  submitted  and  subject  to  the  approval 
of  the  Interstate  Commerce  Commission,  and  they  to  hear  comi)laintsin 
reference  to  the  rates,  on  the  part  of  all  portions  of  the  country,  it  would 
be  one  of  the  wisest  things  in  the  world  in  railroad  management,  and 
that  it  would  give  stability  of  rates  and  lower  rates. 

Mr.  ClArk.  Why  not  go  a  step  further  and  do  away  with  pooling  en- 
tirely, aud  let  the  Government  make  the  rate  f 

Senator  Hi>:coCK.  That  is  about  the  same  thing. 

Mr.  Clark.  Do  you  mean  by  pooling  that  the  pools  are  to  be  what 
they  were  in  the  past,  and  that  they  are  to  pay  over  any  surplus  * 

Senator  Hiscock.  It  means  one  of  two  things;  it  means  pooling  as  in 
the  past  or  pooling  as  is  contemplated  here  ;  that  when  a  railroad  does 


624  TRANSPORTATION    INTERESTS    OF 

more  than  its  share  of  the  business  it  settles  with  the  other  road  or  roads 
m  reference  to  it;  or  that  there  be  an  absolute  division  of  freight  be- 
tween the  trunk  lines. 

Mr.  Clark.  lam  afraid  that  any  pooling  system,  unless  the  Govern- 
ment itself  would  make  the  rate,  would  increase  the  rates  from  here  to 
the  East  very  largely. 

Senator  HiscoCK.  1  know  that  has  been  the  idea;  that  has  been 
the  argument  that  has  been  used  against  it.  Pooling  is  prohibited  by 
the  interstate  commerce  law. 

Mr.  Clark.  I  auderstand  that. 

Senator  HiscoCK.  Differentials  are  not ;  the  Erie  road  has  differen- 
tials. 

The  Chairman.  It  was  stated  that  before  the  interstate  commerce 
act  took  effect  the  Erie  got  $500,000  a  year  under  the  ]>ooling  system. 

Senator  Hiscock.  Yes;  and  it  has  a  differential  now.  These  differ- 
entials are  now  allowed  as  between  the  trunk  lines,  and,  as  I  said,  th(  j^ 
are  allowed  on  all  west-bound  freight,  and  agreed  on  as  to  a  part  of  the 
east-bound  freight  with  respect  to  the  Grand  Trunk.  Notwithstanding 
that,  you  cite  this  instance  of  the  Baltimore  and  Ohio,  and  it  is  a  mani- 
fest fact  that  freight  rates  since  the  interstate  commerce  law  has  gone 
into  effect  have  gradually  depreciated.  They  are  lower  now  than  before 
the  passage  of  the  interstate  commerce  bill. 

Mr.  Clark.  I  tbink  not. 

The  Chairman.  How  are  the  rates  as  to  through  freight  ? 

Mr.  Clark.  I  think  they  have  averaged  relatively  highet  since  the 
interstate  commerce  law  went  into  effect  than  betore. 

Senator  Hiscock.  The  freight  agents  generally  have  all  told  us  that 
they  are  lower  as  a  rule. 

Mr.  Clark.  That  may  be,  Senator;  but  there  are  some  classes  of 
freight  that  have  been  put  into  the  classification,  especially  dairy  prod- 
ucts, and  the  rate  increased  thereby.  While  the  rate  on  certain 
classes  of  goods  may  be  lower  they  have  put  them  into  a  higher  classi- 
fication and  made  the  rate  higher. 

Senator  Hiscock.  That  may  be  so.  I  was  not  aware  of  that,  and 
so  far  as  I  was  concerned  no  witness  was  interrogated  on  that  point. 
But  all  ot  the  freight  agents  and  freight  officials  have  told  us  in  gen- 
eral terms  that  since  the  adoption  of  the  interstate  commerce  law  there 
had  been  a  gradual  depreciation  of  freight  rates  on  all  traffic. 

The  Chairman.  Both  as  to  local  and  through  freight — especially  local. 

Mr.  Clark.  I  think  on  freight  west  of  Chicago  the  rates  have  been 
lowered,  but  I  think  from  Chicago  east-bound  the  rates  are  higher  than 
they  were  before  the  interstate  commerce  law  went  into  effect.  I  speak 
relatively.  I  am  not  talking  of  their  tariff"  rates,  but  what  w^as  actually 
paid. 

The  Chairman.  What  are  the  through  rates  on  wheat  and  corn  be- 
tween here  and  the  sea-board  on  the  trunk  lines  I 

Mr.  Clark.  Twenty-five  cents. 

The  Chairman.  What  were  they  four  years  ago,  if  you  know  ? 

Mr.  Clark.  Anywhere  from  15  to  20  cents. 

The  Chairman.  According  to  the  private  bargain  that  could  be 
made "? 

Mr.  Clark.  That  is  it,  sir. 

The  Chairman.  Do  you  remember  what  the  rates  were  f 

Mr.  Clark.  I  could  tell  by  referring  to  my  books. 

Senator  Hiscock.  Was  not  this  true,  tliat  at  that  time  they  were 
fluctuating  and  have  been  steadier  since  the  interstate  corowerce  act 
went  into  force  ? 


THE    UNITED    STATES    AND    CANADA.  625 

IMr.  Claek.  I  admit  that  they  have  been  much  steadier. 

Senator  HiscocK.  And  that  is  one  of  the  reasons  urged  by  these 
people  in  fovor  of  these  differentials,  because  while  they  do  not  prevent 
competition  and  do  not  go  to  that  extent,  the  effect  is  to  give  a  steadier 
rate  of  freight  to  the  i)eople. 

Mr.  Clark.  You  mean  the  effect  of  the  interstate  commerce  act  ? 
'      Senator  Hiscock.  No ;  the  effect  of  allowing  these  differentials. 

Mr.  Clark.  I  can  hardly  say  that  that  is  so.  If  one  road  once  in  a 
while  thinks  it  can  wipe  out  that  differential  it  makes  rates  accordingly. 

The  Chairman.  How  does  it  happen  that  the  Grand  Trunk  reduces 
its  rates  on  all  freight? 

Mr.  Clark.  They  go  upon  the  theory,  as  I  understand,  that  grain 
and  all  its  products  should  go  at  one  rate. 

The  Chairman.  You  say  its  change  of  rates  takes  effect  to-morrow  ? 

Mr.  Clauk.  Yes,  sir. 

Senator  HisooCK.  In  that  case  I  fancy  they  are  all  within  some  one 
or  more  of  these  organizations  that  you  speak  of,  and  the  result  is  that 
the  lowering  of  rates  on  the  Baltimore  and  Ohio  forces  the  Grand  Trunk 
to  lower  its  rates. 

Mr.  Clark.  The  Pennsylvania  issued  a  tariff  that  reduced  the  rate 
on  wheat  and  corn,  but  nothing  else. 

Senitor  Hiscock.  Notwithstanding  that  these  great  trunk  lines  say 
♦'  we  will  bring  down  these  rates;"  and  the  result  of  it  is  that  the  Grand 
Trunk  road  instantly  has  to  follow  suit.  But  under  this  sj'stera  of  dif- 
ferentials, and  under  these  organizations  that  the  roads  have,  you  are 
not  embarrassed  by  rates  that  are  put  down  to-day  and  put  up  tomor- 
row. I  do  not  want  it  understood  that  I  have  any  opinion  on  the  ques- 
tion, and  simply  desire  to  get  facts  in  reference  to  the  matter  under 
consideration  and  the  opinions  of  gentlemen  who  are  engaged  in  com- 
merce. 

The  Chairman.  What  road  started  the  reduction  of  rates  on  through 
*  freight  from  here  to  the  East  ? 

Mr.  Clark.  You  mean  on  this  matter  ? 

The  Chairman.  Yes. 

Mr.  Clark,  The  Baltimore  and  Ohio. 

The  Chairman.  So  that  the  American  roads  really  began  the  move- 
ment for  the  reduction  of  rates  between  Chicago  and  New  York  ? 

Mr.  Clark.  They  did  in  this  instance. 

The  Chairman.  Has  it  been  a  fact  heretofore  that  these  Canadian 
lines  inaugurated  reductions  to  a  greater  extent  than  the  American 
lines  ? 

Mr.  Clark.  In  some  cases  perhaps  they  have,  but  as  far  as  the  re- 
duction of  rates  is  concerned  I  think  probably  the  American  lines  have 
reduced  the  rates  as  fast  as  the  Canadian  lines  have. 

The  Chairiman.  As  a  matter  of  fact  they  generally  co  operate  with 
each  other,  whether  upon  the  basis  of  differentials  or  not ;  they  have 
generally  gone  along  and  charged  the  public  the  same  rates  between 
here  and  New  York  and  Boston^ 

Mr.  Clark.  Yes. 

The  Chairman.  One  road  has  charged  the  same  as  another  ? 

Mr.  Clark.  As  a  general  thing,  sir. 

THE  EXPORTATION  OF   GRAIN. 

The  Chairman.  You  are  a  shipper? 

Mr.  Clark.  Yes,  sir. 

The  Chairman.  What  do  you  ship  ? 

6543 40 


626  TRANSPORTATION    INTERESTS    OF 

Mr.  Clark.  Grain. 

The  Chairman.  Are  you  a  commission  merchant  ? 

Mr.  Clark.  Yes,  sir. 

The  Chairman.  Over  what  road  do  you  ship? 

Mr.  Clark.  Over  all  the  roads. 

The  Chairman.  Depending-  on  the  circumstances? 

Mr.  Clark.  Yes,  sir. 

The  Chairman.  Do  you  ship  ^raiu  largely  for  export? 

Mr.  Clark.  In  some  cases  I  do  ;  but  I  do  nothing  on  the  other  side. 

The  Chairman.  Do  you  not  ship  on  through  bills  of  lading  from 
Chicago  to  Liverpool? 

Mr.  Clark.  Yes,  sir;  I  buy  property  and  ship  it  on  through  bills  of 
lading ;  but  1  do  it  for  parties  in  ihis  country  and  not  for  parties  on 
the  other  side. 

The  Chairman.  ]S"ot  for  Liverpool  purchasers  ? 

Mr.  Clark.  No,  sir. 

The  Chairman.  Over  what  route  do  you  send  grain  for  export? 

Mr.  Clark.  I  have  used  most  all  the  lines  at  different  times. 

The  Chairman.  Do  you  do  your  own  correspondence  with  the  steam- 
ship companies  to  ascertain  what  rate  they  will  give  you  ? 

Mr.  Clark.  No,  sir. 

The  Chairman.  Who  does  ? 

Mr.  Clark.  The  rate  is  quoted  here  generally,  but  in, some  cases  we 
do  considerable  export  business  by  way  of  Boston,  upon  which  the  rate 
is  obtained  there  and  we  are  notified,  and  the  parties  there  make  their 
own  rate  with  the  steamship  company. 

The  Chairman.  When  you  ship  over  the  Canadian  Pacific  do  you 
ever  find  that  for  the  portion  of  the  charge  for  the  transportation  of  the 
grain  on  the  wate^r  you  get  a  better  rate  bj'  shipping  over  the  Grand 
Trunk  than  by  the  American  line  ?  I  will  tell  you  why  I  ask  that  ques- 
tion. One  witness  whom  we  had  before  us  in  Detroit  stated  that  he 
was  a  shipper  of  lumber,  and  that  he  could  get  an  advantage  of  $1.25 
a  thousand  by  shipping  over  the  Grand  Trunk  on  the  water  transporta- 
tion from  New  York  to  Liverpool  or  Loudon,  or  to  wherever  he  shipped ; 
that  he  could  get  $1.25  per  thousand  less  ocean  rate  by  shipping  over  the 
Grand  Trunk  to  the  point  of  export  than  he  could  by  shipping  over  the 
American  line  to  New  York  and  then  exporting. 

Mr.  Clark.  I  did  not  know  of  anything  of  that  kind  being  done.  On 
all  the  i)roperty  I  have  shipped  for  export  by  way  of  Montreal  the 
ocean  rate  has  been  named  by  Montreal  agents. 

The  Chairman,  You  ship  at  published  rates  on  the  railroad  for  the 
inland  shipment,  do  you  not  ? 

Mr.  Clark.  I  can  not  tell  you.  It  has  always  been,  as  I  understand 
it,  that  they  have  used  the  basis  of  the  New  York  rate  on  their  ship- 
ments. 

The  Chairman.  You  know  that  heretofore  you  would  get  a  rate  from 
here  to  Liverpool,  for  instance,  and  the  railroad  would  make  you  that 
rate  without  informing  you  or  letting  the  country  know  what  propor- 
tion of  it  was  the  inland  charge.  The  Commission  has  decided  that  the 
railroad  must  publish  its  inland  rates  and  adhere  to  them,  and  that  the 
rate  on  the  water  must  be  a  separate  and  distinct  rate.  You  do  not 
know  anything  about  how  that  is  divided  ? 

Mr.  Clark.  I  have  not  since  the  Commission  made  the  decision  to 
which  you  refer.  I  shipj)ed  all  last  winter  by  way  of  Portland,  and 
some  by  way  of  Boston. 

The  Chairman.  You  gentlemen  are  in  favor  of  keeping  open  these 


THE    UNITED    STATES    AND    CANADA.  627 

avenues  of  commerce  by  way  of  the  Chicago  and  Grand  Trunk  and  the 
Grand  Trunk  proper  to  the  Eastern  markets  ?  , 

Mr.  Clark.  Yes,  sir. 

REGULATION   OF   THE   CANADIAN   ROADS. 

The  Chairman.  Suppose  it  should  be  ascertained  definitely  that 
under  the  interstate  commerce  law,  which  is  now  in  force  in  the  iTuited 
States  the  American  roads  were  at  a  disadvantage  in  comi)etitioii  with 
the  Canadian  roads,  have  you  any  objection  to  or  do  you  know  of  any 
reason  why  the  Canadian  roads  should  not  be  placed  under  the  same 
regulations,  if  they  do  business  in  this  country,  as  the  American  roads 
aie  placed  under t 

Mr.  Clark.  To  divide  my  answer  to  that  question,  Mr.  Chairman,  I 
can  not  see  where  the  American  roads  are  placed  at  any  disadvantage. 

The  Chairman.  You  do  not  believe  they  are ;  but  suppose  t'.iey  are? 

Mr.  Clark.  Then  beyond  that,  if  you  will  allow  me  to  say  it,  it  seems 
to  me  that  if  under  the  interstate  commerce  law  all  the  roads  running 
in  connection  with  the  Canadian  roads  are  amenable  to  that  law,  it  is 
an  international  question. 

The  Chairman.  Suppose  it  is  an  international  question ;  that  does 
not  make  any  difference. 

Mr.  Clark.  If  it  can  be  arranged  by  any  treaty  or  by  any  arrange- 
ment otherwise  made,  I  see  no  objection,  so  far  as  carrying  American 
products  is  concerned,  why  the  law  should  not  cover  the  Canadifiu 
roads. 

The  Chairman.  That  the  two  systems— the  American  and  Canadian 
systems  of  railroads — should  be  put  ou  the  same  level,  so  far  as  Gov- 
ernment regulations  are  concerned  ?. 

Mr.  Clark.  If  it  can  be  carried  out  by  any  treaty  or  any  other  arrange- 
ment. 

The  Chairman.  I  am  not  »saying  whether  it  can  or  can  not  be  done, 
or  whether  it  is  necessary  to  do  anything;  but  I  want  to  know  from 
you,  as  a  business  man  of  Chicago,  if  you  see  any  reason  why  the  same 
regulations  should  not  prevail  in  Canada  and  in  this  country,  if  it  seems 
necessary  to  do  so,  in  order  to  put  the  two  systems  of  railroads  on  an 
equality. 

Mr.  Clark.  I  do  not  see  any  objection  to  it. 

The  Chairman.  That  is  the  point  I  wanted  to  get  at. 

THE   OBJECT   OF   TRAFFIC   ASSOCIATIONS. 

Senator  Eeagan.  What  do  you  understand  to  be  the  object  of  the 
formation  of  the  associations  referred  to  in  the  fifth  answer  of  the  Board 
of  Trade? 

Mr.  Clark.  As  I  stated  to  Senator  Hiscock,  my  idea  is  that  they 
hold  forth  for  the  purpose  of  gathering  statistical  information.  That 
is  the  object  for  which  they  were  first  started,  as  I  understand  it. 

Senator  Reagan.  Is  not  the  object  to  regulate  rates  and  to  prevent 
com  petition  ? 

Mr.  Clark.  If  that  is  so  they  have  not  been  very  successful.    • 

Senator  Reaga-N.  I  do  not  assume  any  thing  about  it ;  1  am  just  ask- 
ing your  opinion  whether  they  are  not  formed  for  the  purpose  of  regu- 
lating rates  and  preventing  competition. 

Mr.  Clark.  That  is  their  tendency  in  my  judgment. 


628  TRANSPOETATION    INTERESTS    OF 

Senator  Reagan.  Is  not  that  the  reason  why  your  committee  in  its 
written  report  says  : 

Such  associations  tend  to  destroy  competition  and  to  oppose  or  evade  the  enforce- 
ment of  the  interstate  commerce  law. 

Mr.  Clark.  Yes,  sir. 

Senator  Eeagan.  Is  there,  in  fact,  any  difference  in  the  effect  of  the 
present  associations  and  what  we  formerly  understood  as  pooling  *? 

Mr.  Clark.  Yes,  sir  ;  there  is  some  difference. 

Senator  Reagan.  In  what  does  that  difference  consist  ? 

Mr.  Clark.  There  is  no  money  paid  over  for  any  extra  tonnage  car- 
ried, while  before  the  law  was  passed  under  the  old  pooling  system 
money  was  paid  over  for  extra  tonnage  carried. 

Senator  Reagan.  Differentials,  as  they  are  called,  are  substituted  for 
pooling.  What  is  the  difference  in  fact  between  differentials  and  turn- 
ing over  the  money  in  excess  of  the  tonnage  a  road  is  entitled  to  carry  ? 

Mr.  Clark.  There  is  considerable  difference.  I  do  not  kuow,  as  I 
stated  to  Senator  Hlseock,  of  any  differential  on  east-bound  property ; 
only  on  west-bound. 

Senator  Reagan.  I  was  not  inquiring  about  that. 

Mr.  Clark.  And  while  the  money  pool  before  the  law  was  passed, 
applied  to  all  tonnage,  the  differential,  as  I  understand  it,  now  applies 
only  to  dressed  beef. 

Senator  Reagan.  Do  you  regard  it  as  wise  public  policy  to  compel 
the  roads  that  do  the  larger  business  to  surrender  the  right  to  do  that 
business  in  order  that  other  roads  may  do  it '? 

Mr.  Clark.  I  do  not  quite  comprehend  your  question.  Senator,  as 
you  put  it,  though  I  think  I  know  what  you  mean. 

Senator  Reagan.  Do  you  regard  it  as  good  public  policy  to  compel 
the  roads  that  are  able  to  do  the  larger  business  to  concede  the  right 
to  roads  doing  the  smaller  business  to  charge  the  lesser  rate?  In  other 
words,  is  the  policy  of  differentials  a  wise  policy"? 

Mr.  Clark.  It  might  be  a  wise  policy,  so  far  as  the  roads  are  con- 
cerned.    It  might  prevent  a  rate  war  or  something  of  that  kind. 

Senator  Reagan.  Is  not  the  effect  of  it  to  increase  freight  rates  to 
the  people  who  ship  and  those  who  consume  ? 

Mr.  Clark.  It  might  in  some  cases. 

Senator  HiscocK.  Let  me  put  this  question  to  you :  You  take  the 
United  States  trunk  lines  and  the  Canadian  trunk  lines,  and  the 
United  States  trunk  lines,  one  of  them,  at  least,  and  I  do  not  know  but 
that  there  are  two,  have  by  far  an  easier  grade;  they  all  go  tbrough 
densely  populated  country,  as  compared  with  the  Canadian  trunk  lines; 
their  local  freight  and  local  passenger  traffic  are  immensely  larger  on 
each  of  them  than  on  the  Canadian  trunk  lines.  Now  I  submit  to  you 
as  a  commercial  man  whether  it  would  be  better  to  have  a  war  of  rates 
between  the  American  trunk  lines  and  the  Canadian  trunk  lines,  which 
of  course  might  temporarily  embarrass  all  the  roads,  and  unless  the 
Canadian  trunk  lines  are  supported  as  political  necessities  by  Canada, 
would  embarrass  them  more  than  all  the  rest — would  it  be  better  for 
Chicago  to  have  an  arrangement  by  which  differentials  were  given  the 
Canadian  trunk  lines  so  that  they  could  have  their  share  of  the  busi- 
ness or  to  have  this  rate  war  ? 

Mr.  Clark.  In  answer  to  that  question  I  will  tell  you  candidly  that 
as  respects  traffic  outside  of  the  dressed  beet  business  in  the  commod- 
ities in  which  I  deal,  on  even  rates  the  Grand  Trunk  line  will  get  more 
business  out  of  this  town  to-day  than  the  system  you  speak  of. 


THE    UNITED    STATES   AND    CANADA.  629 

Senator  HiscocK.  On  even  rates,  very  likely ;  bat  supposing  it  were 
a  question  of  cutting  rates,  suppose  the  question  came  up  which  one  of 
these  roads  could  do  business  cheapest  and  quickest — say  there  were  two 
comjietiug  lines,  one  of  which  could  do  business  cheaper  or  had  the 
sh'orter  line  and  had  facilities  superior  to  those  of  the  other  road — would 
it  be  better  for  the  trunk  line  that  had  such  facilities  to  surrender  a 
share  of  the  business  to  the  weaker  line  or  go  in  and  wipe  out  the  weaker 
line  .'  That  is  a  question  of  railroad  policy  that  is  being  discussed  by 
commercial  men  and  railroad  men  ail  over  the  United  States,  and  it  is  a 
serious  problem.  It  is  fair  to  say  that  the  general  tendency  for  the  last 
live  or  six  years,  or  seven  years,  has  been  in  favor  of  giving  the  weaker 
line  a.  share  of  the  business. 

Mr.  Claek.  I  am  aware  of  that  fact. 

Senator  Hiscock.  I  do  not  know  but  what  that  has  been  the  general 
opinion  for  ten  years.  What  I  wanted  to  know  was  whether  this  lan- 
guage here  in  tiie  report  went  in  as  a  deliberate  judgment  against  that 
policy  or  rather  as  a  rhetorical  expression  ?  Since  1  have  been  here 
one  of  the  largest  shippers  in  Chicago  expressed  to  me  the  opinion  un- 
•qualitiedly  tbat  if,  under  the  interstate  commerce  law,  pooling  could  be 
adoiJted  which  would  be  under  the  supervision  of  the  Interstate  Com- 
meice  Commission  it  would  give  stability  to  rates  and  in  the  end  tend 
to  reduce  rates.  I  do  not  care  to  mention  his  name,  but  that  was  his 
opinion. 

Mr.  Clark.  If  the  Government  could  make  the  rates  without  the  pool 
I  think  we  would  be  better  off. 

Senator  Hiscock.  The  Government  would  practically  make  the  rates 
between  these  other  trunk  lines  and  the  Grand  Trunk  line. 

STATEMENT  OF  WILLIAM  J.  POPE. 

Mr.  William  J.  Pope,  a  member  of  the  committee  of  the  Board  of 
Trade,  appeared. 

The  Chairman.  What  is  your  name,  sir  ? 

Mr.  Pope.  William  J.  Pope. 

The  Chairman.  Proceed  to  make  whatever  statement  seems  pertinent 
to  this  inquiry.  Mr.  Pope. 

Mr.  Pope.  Mr.  Chairman  and  gentlemen,  the  line  of  examination  has 
taken  an  entirely  different  drift  from  what  I  expected  when  I  came 
before  you. 

The  Chairman.  It  has  been  a  little  bit  on  the  side  track. 

Mr.  Pope.  There  is  nothing  in  the  resolutions  which  were  sub- 
initted  to  ira  that  touches  the  question  of  pooling. 

The  Chairman.  That  question  does  not  especially  belong  to  this  in- 
vestigation. 

Mr.  Pope.  And  therefore,  while  I  am  greatly  interested  in  the  sub- 
ject, I  am  here  without  special  preparation. 

The  Chairman.  The  committee  does  not  expect  you  to  talk  about 
pooling  unless  you  choose  to  do  so. 

THE   QUESTION   OF  POOLING. 

Mr.  Pope.  I  would  like  to  say  a  word  about  pooling  from  practical  ex- 
perience, and  tell  you  why  I  am  opposed  to  it. 

The  Chairman.  I  remember  when  you  gave  your  testimony  before 
this  committee  a  few  years  ago  you  expressed  yourself  as  opposed  to 
pooling. 


630  TRANSPORTATION    INTERESTS    OF 

Mr.  Pope.  I  am  opposed  to  poolina:  because  it  is  utterly  and  wholly 
un- American.  I  think  it  begets  indifference  on  the  part  of  the  railroads 
to  the  wants  and  wishes  of  the  trade. ,  That  sort  of  indifference  begets 
indolence,  and  not  infrequently  indolence  begets  insolence.  I  will  re- 
cite to  you  an  experience  I  had  of  that  sort ;  and,  by  the  way,  it  occurred 
only  recently  before  the  meeting  of  your  committee  on  its  former  trip. 

We  had  an  extremely  high-priced  corn  market  here  in  1884;  corn  was 
selling  at  something  like  70  cents  per  bushel.  We  have  an  extensive 
trade  through  the  West.  One  of  our  customers,  living  at  Arkansas 
City,  as  I  remember,  had  one  hundred  and  fifty  cars  of  corn  that  he 
ordered  us  vo  sell  for  arrival  here,  provided  we  could  secure  for  him  its 
prompt  shipment.  I  called  immediately  on  the  general  freight  agent  of 
the  Chicago,  Eock  Island  and  Pacific,  and  the  Chicago,  Burbngtou  and 
Quincy,  and  arranged  for  the  transportation  of  the  corn.  On  the  arrival 
of  the  property  at  Kansas  City  the  pool  commissioner  there  put  in  his 
oar  and  insisted  upon  the  diversion  of  that  property  to  the  Wabash 
system.  oSTow,  the  Wabash  was  a  hne  which  at  that  time-was  not  solv- 
ent; its  equipment  was  in  a  wretched  condition;  its  road-bed  was  in 
still  worse  condition,  and  had  my  property  been  ditched  in  transit — in 
the  first  place  it  was  not  at  all  probable  that  the  Wabash  had  the  mo- 
tive 130 wer  to  get  it  herein  time — I  would  perhaps  have  been  whistling 
even  to-day  for  the  pay  for  it;  that  is  under  the  old  management  of  the 
Wabash.  It  was  only  by  the  greatest  eftbrt  that  my  property  was  saved 
from  that  sort  of  diversion. 

I  must  say  that  I  should  have  regarded  that  treatment  of  diverting 
my  property  from  two  lines  selected  by  myself,  good  and  responsible 
lines,  to  a  line  which  I  would  not  have  chosen,  as  ulijust.  I  can  not  help 
but  think  it  approaches  insolence,  and  therefore  I  have  used  the  word 
advisedly. 

It  would  be  equal  to  this :  This  committee  knows  that  the  Grand 
Pacific  is  a  first-class  hotel,  and  it  engages  rooms  here.  Now,  suppose 
there  was  a  hotel  i^ool,  and  after  you  had  engaged  your  rooms  at  the 
Grand  Pacific,  on  arriving  here  you  should  be  giveu  rooms  on  Clark 
street,  in  some  inferior  house.     It  is  entirely  un-American. 

The  railroad  lines  flourish  and  have  flourished  for  some  time.  I  have 
lived  here  for  thirty  odd  years,  and  have  been  a  patron  of  all  the  lines,, 
and  they  have  flourished  without  the  pooling  system. 

So  far  as  respects  this  question  at  the  close  of  our  report,  which  I  did 
not  consider  very  fully,  I  concede  a  great  deal  can  be  said.  I  think  the 
questions  put  by  Senator  Hiscock  are  very  imj)ortant.  Something  can 
be  said  on  both  sides,  however.  The  most  stalwart  friends  I  have 
among  the  railroad  people  are  large  holders  of  railroad  securities,  and 
I  would  not  like  to  see  them  injured  materially  or  wronged,  or  even 
damaged  in  pocket;  but  there  are  the  great  people  of  this  country,  and 
their  rights  are  something  as  well  as  those  of  the  stockholders  of  the 
railroad  lines. 

I  am  opposed  to  these  associations,  not  so  much  as  to  what  they  are, 
but  as  to  what  they  are  drifting  to.  It  means  a  great  pool,  with  just 
that  sort  of  indifference  to  the  wants  of  the  people,  just  that  sort  of  in- 
dolence, I  think  we  should  avoid. 

But  a  few  years  ago — I  am  going  to  speak  from  experience,  because 
I  think  that  is  a  little  better  than  theory — there  was  a  pool  of  the 
three  lines  which  have  been  named  going  out  of  Chicago — the  principal 
lines  out  of  Chicago — the  Michigan  Central,  the  Michigan  Southern, 
and  the  Pennsylvania  system.  They  exacted  45  cents  on  freight  to  New 
York  and  50  cents  to  New  England,  and  there  was  no  power  in  this 


THE    UNITED    STATES    AND    CANADA.  631 

town,  no  supplications,  no  appeals,  no  prayers,  that  could  move  them  on 
that  point. 

A  gentleman  who  said  that  his  average  haul  was  fourteen  cars  a  day 
stated  that  unless  the  pool  was  broken  up  his  company  would  be  ruined. 
Property  billed  for  Porthiud,  Me.,  started  90  miles  below  Chicago, 
although  Chicago  is  on  a  direct  line,  and  took  a  southeasterly  course, 
then  to  Springfield,  from  Springfield  to  Flora,  then  to  Cincinnati, 
and  then  over  the  Hamilton  and  Dayton  system  to  Detroit,  there  to 
take  the  Grand  Trunk  road  to  Portland.  This  was  owing  to  the  bill- 
ing system  adhered  to  here  with  great  tenacity.  Property  ran  around 
three  sides  of  a  square,  and  I  lost  money  on  some  of  tiaat  proi)erty, 
while  the  pool  sat  here  with  indifference  and  refused  to  change  that 
condition  of  affairs.  By  running  those  extra  miles  5  cents  a  hundred 
was  saved.  As  a  boy  brought  up  in  Chicago,  where  there  is  a  chance 
for  all  and  fair  treatment  all  around,  you  see  I  have  the  wrong  educa- 
tion to  believe  in  pools.  I  heard  the  Senator  ask  the  question  if  the 
making  of  a  pool  did  not  benefit  the  weaker  line  and  thereby  create 
competition  and  maintain  competition. 

Senator  HrscocK.  I  do  not  know  that  I  did  in  connection  with  the 
pool;  I  may  have  in  connection  with  the  differential. 

Mr.  Pope.  This  is  a  digression,  but  I  am  clear  about  what  I  say  in 
regard  to  losses  on  that  business  and  other  business. 

The  Chairman.  While  yon  are  on  this  subject,  which  is  somewhat 
outside  of  our  inquiry,  please  state  what  is  the  situation  now  under  the 
interstate  commerce  act? 

Mr.  Pope.  I  thitik  the  situation  now  is  very  much  a  question  of 
management  on  the  part  of  the  railway  people — a  question  of  good 
management.  You  are  somewhat  familiar  with  the  condition'  of  the 
Wabash  road  in  this  State.  There  was  a  property  running  through  an 
excellent  territory,  with  large  crops  usually,  and  yet  the  previous  man- 
agement of  that  road  allowed  its  first-mortgage  bonds  to  be  defaulted 
npon  in  interest.  Those  bonds  were  taken  here  largely  by  trust  asso- 
ciations, and  widows  and  orphans  took  them,  and  they  declined  to  some- 
thing like  60  cents  on  the  dollar.  These  people  holding  these  bonds 
went  to  our  distinguished  court,  and  Judge  Gresham  appointed  a  re- 
ceiv^er,  and  arf  efficient  receiver,  yet  when  that  road  was  given  to  the 
receiver  it  was  not  calculated  to  earn  money.  For  two  years  we  had 
from  one-half  to  three-fourths  of  a  crop.  Under  the  administration  of 
that  man,  however,  who  had  no  experience  in  pools,  he  established  an 
esprit  de  corps,  stood  here  to  serve  the  people  and  not  to  punish  them, 
and  in  a  short  while  paid  the  defaulted  interest,  the  bonds  went  to  par, 
and  finally  he  tuined  over  the  property  with  everybody  in  love  with  it, 
the  road-bed  in  fine  order  and  the  equipment  in  first-class  condition. 
So  management  has  something  to  do  with  it.  He  could  not  stay  some- 
times in  Europe,  sometimes  in  Washington,  and  at  all  times  in  politico, 
and  do  that  sort  of  thing  with  a  road. 

The  Chairman.  What  I  thought  was  that  this  practice  of  having 
grain  travel  three  sides  of  a  square  and  finally  going  east  bad  ceased 
sometime  ago  and  had  not  been  the  case  since  the  enactment  of  the 
interstate  commerce  law.     That  sort  of  thing  is  not  going  on  now, 

is  \ti 

Mr.  Pot^E.  No,  sir ;  it  is  not  going  on  to  any  great  extent  at  the 
present  time ;  there  has  been  diversion. 

There  is  another  thing  I  shall  speak  of  briefly.  The  Baltimore  and 
Ohio  made  a  20-cent  rate  on  corn  but  maintained  a  25cent  rate  on 
wheat,  and  the  presidents'  association  of  the  trunk  lines,  meeting  in 


632  TRANSPORTATION    INTERESTS    OF 

Xew  York,  ratitied  that  heresy.  Grain  lias  always  gone  at  a  uniform 
rate.  Oats  are  of  less  value  tban  corn,  and  if  any  discrimination  slioiild 
be  made  in  favor  of  any  grain  it  should  be  with  respect  to  oats,  I  do  not 
think  the  Interstate  Commerce  Commission  or  this  committee  would 
ratify  that  sort  of  humbug,  and  yet  the  trunk-line  ]>residents  meet  in 
Xew  York  and  say  it  is  all  right.  They  say  "  Punish  wheat  and  oaLs 
all  you  can."  That  is  the  outcome  when  men's  hands  are  tie«l  by  rate 
associations,  etc.  They  do  not  go  into  the  channel  where  they  will  le^irn 
the  wants  of  the  people.  I  think  that  action  alone  is  one  of  the  most 
remarkable  I  have  ever  known  of,  and  a  remarkable  fruit  of  the  class 
of  associations  1  have  been  trying  to  describe  to  you. 

The  Chairman.  The  volume  of  corn  to  be  moved  is  much  the  larger, 
I  take  it. 

Mr.  Pope.  Yes,  sir;  the  larger  portion. 

The  Chairman.  I  suppose  they  took  that  into  justification,  as  far  as 
it  goes,  in  this  discrimination  between  corn  and  oats? 

Mr.  Pope.  Yes,  sir. 

Senator  Hiscock.  ,What  difference  did  they  maintain  betwten  corn 
and  wheat '? 

Mr.  Pope.  The  wheat  and  corn  rate  are  the  same,  but  they  allow  the 
reduction  on  corn. 

Senator  Hiscock   Reduced  corn  below  wheat  ? 

Mr.  Pope.  Yes,  sir,  and  below  oats.  There  might  be  some  justifica- 
tion if  the  reduction  was  on  the  grain  of  lesser  value. 

The  Chairman.  As  a  shipper  and  business  man  here,  I  will  ask  you 
if  the  interstate  commerce  act  is  obeyed  or  not,  as  far  as  you  know  ? 

Mr.  Pope.  I  think  It  is  very  generally  obeyed.  There  was  a  recent 
action  taken  here  by  one  of  these  associations  — I  think  it  is  called  the 
Interstate  Commerce  Association — in  regard  to  rates  at  competing 
points  in  the  Northwest.  But  I  think  the  law  is  very  generally  obeyed. 
The  law  is  very  poi)ular  in  the  United  States,  1  take  it. 

Senator  Hiscock.  Do  you  carry  your  argument  against  pooling  to 
the  same  extent  against  differentials  ? 

Mr.  Pope.  ISTo,  sir ;  I  do  not.  I  concede  that  where  these  differen- 
tials are  agreed  upon  between  different  lines  of  railway  they  are  help- 
ful. I  think  the  roads  should  keep  their  agreements,  but  of  course  rail- 
way men  do  not  keep  their  agreements  with  each  other. 

The  Chairman.  Do  you  perceive  very  much  difference  between  the 
principle  of  allowing  differentials  between  railroads,  which  means  the 
helping  of  the  weak  by  the  stronger,  and  the  ordinary  pooling  arrange- 
ment, by  which  freights  are  divided  and  profits  are  divided "? 

Mr.  Pope.  I  think  they  are  wholly  and  totally  dissimilar;  absolutely 
dissimilar.  Xo  one  charges  the  Pennsylvania  system,  I  fancy,  with  vio- 
lation of  the  interstate  commerce  act  by  cutting  mtes.  Previous  to 
the  Johnstown  disaster  it  did  the  largest  passenger  busniess  out  of  this 
city.  And  why  ?  Because  it  makes  the  quickest  time,  furnishes  the 
best  character  of  road-bed,  and  has  better  accommodations.  If  some 
other  road  that  runs  around  Eobin  Hood's  barn  chooses  to  make  $1.50 
or  $2  less  rate,  it  is  no  concern  of  the  Pennsylvania.  They  do  not 
do  it  by  consent  of  the  Pennsylvania,  but  of  necessity. 

The  Chairman.  When  the'  Pennsylvania  and  the  other  roads  are 
being  interfered  with  more  or  less  by  traffic  being  taken  by  a  round- 
about road  that  you  refer  to,  they  get  together  and  say:  "This  will  not 
do;  they  are  takiug  our  business  from  us,  and  to  stop  that  we  must  give 
them  a  differential,  and  publish  their  rates." 

Mr.  Pope.  Tliat  is  ditferent  from  the  pooling  system. 


THE  UNITED  STATES  AND  CANADA.  633 

The  Chairman.  Take  the  Chicago  and  Grand  Trunk  in  connection 
■with  the  Grand  Trunk  of  Canada,  and  they  say,  "We  will  carry  this, 
that,  and  the  other  at  a  given  rate,"  which  is  very  much  below  tiie  rate 
at  which  the  other  roads  carry  the  same  thing.  Then  these  other  roads 
say,  "We  can  not  allow  this;  it  will  ruin  us,"  and  they  state  to  the 
Grand  Trunk  "If  you  do  not  do  that  we  will  give  you  a  5  cent  difieren- 
tial."    That  is  a  sort  of  a  pooling,  is  it  not? 

Mr.  Pope.  I  do  not  think  itany  kin  whatever  to  the  pool.  If  1  thought 
it  was  I  would  not  have  answered  as  I  have.  These  wars  of  rates  have 
occurred  before,  and  the  roads  have  adjusted  them.  I  am  not  one  who 
desires  to  see  them,  but  if  thev  are  an  evil,  they  are  a  lesser  evil  than 
that  which  would  follow  anything  like  a  legalization  of  the  pooling  sys- 
tem in  this  country. 

The  Chairman.  You  are  a  large  shipper! 

Mr.  Pope.  I  handle  a  great  deal  of  grain. 

The  Chairman.  What  roads  do  you  ship  over  to  the  east? 

Mr.  Pope.  We  do  not  confine  ourselves  to  any  particular  line.  At 
certain  seasons  of  the  year  we  like  the  New  York  Central  delivery. 
Our  Boston  grain  goes  largely  by  the  Grand  Trunk.  1  think  a  large 
proportion  of  this  business  going  to  New  England  goes  there  because  it 
does  not  have  the  canal  competition  in  the  distiibution  of  grain  that 
the  New  York  Central  system  has.  The  New  York  Central  system 
loses  a  large  amount  of  its  business  after  it  reaches  Buffalo  because  of 
the  canal.  While  these  percentages  show  a  large  volume  of  business 
in  the  New  England  trade  by  the  Grand  Trunk,  on  any  other  branch  of 
trade,  for  the  reasons  I  have  suggested,  the  Grand  Trunk  would  stand 
at  almost  ml  in  percentages. 

The  Chairman.  Do  you  ship  for  export  ? 

Mr.  Pope.  Sometimes. 

The  Chairman.  Are  you  familiar  with  the  inland  rates  as  well  as  the 
ocean  rates  ? 

JNIr.  Pope.  I  am  familiar  with  the  changed  system  under  the  inter- 
state-commerce law  as  compared  with  what  it  was  previously. 

The  Chairman.  You  get  a  published  rate  from  here  to  Boston  I 

Mr.  Pope.  Yes,  sir. 

The  Chairman.  And  then  you  make  the  best  bargain  you  can  at 
the  port  from  which  the  goods  are  shipped  across  the  ocean  for  the 
ocean  transportation  ? 

Mr.  Pope.  No,  sir  ;  the  eastern  consignee  makes  the  ocean  rate. 

The  Chairman.  Do  you  believe  that  the  American  railroads  under 
the  interstate-commerce  act  and  State  regulations  are  at  a  disadvan- 
tage in  competition  with  the  Canadian  roads  ? 

Mr.  Pope.  Well,  we  have  said  in  our  report  that  we  think  not.  That 
is  candidly  my  opinion. 

The  Chairman.  If  it  should  turn  out  that  you  are  mistaken  and  that 
they  are  at  a  disadvantage,  w^hat  would  you  favor  ?  Wouhl  you  favor 
placing  the  Canadian  roads,  if  there  is  any  power  to  do  it,  ui)on  thesame 
level,  or  would  you  want  to  change  the  laws  of  the  United  States  ? 

Mr.  Pope.  The  two  systems  of  roads  should  be  placed,  in  my  Judg- 
ment, on  the  same  level.  As  far  as  1  know,  the  Canadian  lines  compet- 
ing tor  business  here  can  not  be  reached,  i  think  the  Canadian  Pacific 
owns  and  operates  its  line  jn  Vermont  or  Maine.  There  is  no  difficulty 
about  reaching  the  Grand  Trunk  any  more  than  there  is  in  reaching  the 
Chicago  and  Grand  Trunk. 

The  Chairman.  Their  officers  testified  that  they  observe  the  inter- 
state commerce  act  fully  in  all  business  touching  the  United  States, 


634  TEANSPORTATION  INTERESTS  OF 

whether  it  goes  out  of  the  United  States  into  Canacta,  or  through  Can- 
ada into  the  United  States,  or  goes  through  Canada  for  exportation  at 
Montreal,  or  comes  through  Canada  into  the  United  States.  They  in- 
sist that  they  obey  the  interstate  commerce  act  as  to  such  shipments. 
Our  raih'oad  ofQcials  insist  that  the  Canadian  roads  can  recoup  and 
make  themselves  whole  upon  their  own  people  in  their  local  traffic, 
with  which,  of  course,  we  have  no  right  to  interfere. 

Mr.  Pope.  As  far  as  my  observation  goes  from  reading  the  testimony 
given  at  your  interesting  sessions  in  other  cities  and  here,  the  only  com- 
plaint is  from  attorneys  of  lines  in  direct  competition  with  the  Canadian 
lines.  I  have  yet  to  find  the  first  merchant  in  this  city  who  finds  any 
such  fault.  While  the  intelligent  and  honorable  gentlemen  who  are  the 
traffic  managers  of  this  line,  and  who  ought  to  know  all  about  it,  say 
they  do  obey  the  law,  some  attorney,  who  knows  nothing  whatever 
about  their  traffic  business,  says  they  do  not.  Now  I  say  between  the 
two  the  preponderance  should  be  with  the  man  who  knows  with  respect 
to  the  business  and  not  the  man  who  does  not. 

Senator  Hiscock.' Going  back  to  this  other  question  that  I  say  you 
have  interjected  in  here— did  I  understand  that  you  are  in  favor  of  dif- 
ferentials but  not  in  favor  of  pooling  ! 

Mr.  Pope.  To  answer  the  question  fairly  I  will  say  this :  I  see  no  ob- 
jection whatever  to  any  agreement  that  the  managers  of  the  railways 
may  make  among  themselves  for  the  allowance  of  a  differential.  I  do 
not  desire  to  go  u])on  record  as  saying  that  I  would  like  to  see  that 
thing  legalized,  or  any  further  steps  taken  than  the  interstate  commerce 
act  does  in  that  respect.  For  the  peace  and  harmony  and  goo^  man- 
agement of  the  roads,  and  the  interest  of  their  stockholders,  I  can  see 
how  the  allowance  of  these  differentials  at  times  may  be  wise  and  proper. 
I  hope  I  am  not  a  crank  on  the  subject. 

Senator  Hiscock.  I  hope  you  do  not  think  I  am  insinuating  anything 
of  that  kind. 

STATEMENT  OF  A.  M.  WRIGHT. 

Mr.  A.  M.  Wright,  a  member  of  the  committee  of  the  Board  of  Trade, 
appeared. 

The  Chairman.  This  report,  I  suppose,  represents  the  feeling  of  the 
Board  of  Trade,  Mr.  Wright. 

Mr.  Wright.  1  think  so.  I  think  there  is  no  attempt  at  rhetoric  in 
the  report,  and  1  hope  the  committee  will  not  think  that  anything  is 
put  in  it  for  the  purpose  of  pointing  off'  sentences.  1  think  the  report 
repTesents  the  sentiments  of  the  Board  of  Trade.  Of  course  it  has  been 
formulated  by  only  a  small  number  of  the  board,  but  I  would  say  in  a 
general  way  "that  the  commercial  world  of  the  West  will  view  with  a 
great  deal  of  apprehension  any  experimental  legislation.  We  think  we 
are  getting  along  well  with  Canada,  and  the  trade  that  goes  through 
Canada,  and  the  Canadian  trade,  and  the  merchants  of  the  West  and 
the  producers  and  farmers  of  the  West,  I  think,  would  view  with  alarm 
any  experiments  undertaken  for  the  purpose  of  remedying  a  fancied 
evil,  unless  that  evil  is  very  plainly  shown  to  exist. 

The  Chairman.  This  committee,  as  you  well  understand,  is  simply 
charged  with  the  duty  of  inquiring  as  to  the  effect  of  Canadian  compe- 
tition, and  the  questions  affecting  and  bearing  upon  the  subject,  and 
have  no  expressed  0])inion  of  our  own,  certainly  ;  and  we  do  not  expect 
to  have  any  until  we  have  heard  substantially  all  the  facts  in  the  case. 


THE    UNITED    STATES    AND    CANADA.  635 

We  have  been  to  l^ew  York,  Boston,  and  Detroit,  and  thought  that 
after  hearing  you  gentlemen  in  Chicago  we  would  probably  have  cov- 
ered the  ground  sufficiently  to  know  wliether  we  should  do  anything 
except  report  the  facts  to  the  Senate  of  the  United  States. 

Mr.  Wright.  I  may  say  that  the  pool  has  always  operated  against 
Chicago. 

The  Chairman.  You  are  speaking  now  of  the  general  pooling  sys- 
tem ? 

Mr.  Wright.  Yes,  sir ;  as  it  existed  before  the  law  was  passed,  and 
we  do  not  know  that  it  will  ever  be  better.  I  may  say  it  has  always 
worked  to  the  disadvantage  of  Chicago. 


STATEMENT  OF  H.  F.  DOUSMAN. 

Mr.  H.  F.  DousMAN,  a  member  of  the  committee  of  the  Board  of 
Trade,  appeared. 

The  Chairman.  What  do  you  know  about  the  situation,  Mr.  Dous- 
man  ? 

Mr.  DousMAN.  I  know  that  in  February,  a  year  ago,  I  bought  two 
cars  of  corn  in  Atlantic,  Iowa.  I  shipped  one  car  direct  to  Baltimore, 
and  the  other  to  Chicago  and  then  to  Baltimore.  I  know  that  the  tariff 
on  the  car  coming  here  and  going  from  here  to  Baltimore  was  43^  cents, 
and  the  tariff  on  the  car  going  direct  to  Baltimore  was  28|  cents.  Both 
cars  were  loaded  with  the  same  property,  going  over  the  same  line,  to 
the  same  place,  and  to  the  same  party. 

Tlie  Chairman.  You  say  the  two  cars  went  over  the  same  line? 

Mr.  DousMAN.  Precisely ;  the  same  two  roads,  the  Chicago,  Rock 
Island  and  Pacific,  and  then  the  Baltimore  and  Ohio. 

Senator  Hisccck.  Did  it  change  in  bulk  here? 

Mr.  DouSMAN.  Yes,  sir ;  in  both  cases. 

The  Chairman.  How  do  you  explain  that? 

Mr.  DousMAN.  The  tariff  was  published  at  28^  cents  from  Atlantic, 
Iowa — from  all  Iowa,  points — to  Baltimore.  I  am  testing  that  case  be- 
fore the  Commission. 

The  Chairman.  At  the  present  time? 

Mr.  DousMAN.  Yes,  sir. 

The  Chairman.  If  the  tariff  was  published  and  you  were  shipping  to 
the  same  man  in  the  same  city  two  car-loads  of  the  same  freight  over 
the  same  road,  how  did  it  happen  that  you  paid  different  rates  on  the 
two  car-loads  ? 

Mr.  DousMAN.  The  railroad  claimed  that,  under  the  interstate  com- 
merce act,  as  long  as  the  total  rate  from  the  point  of  origin  was  greater 
than  the  rate  from  Chicago,  which  was  24.]-  cents,  they  were  entitled  to 
doit;  that  one  is  an  original  shipment  from  here  and  the  other  is  a 
through  shipment  from  the  other  place.     The  service  Was  the  same. 

The  Chairman.  I  do  not  quite  understand  how  it  was  an  original 
shipment  from  here. 

Senator  IIiscoCK.  There  was  a  break  in  the  bulk  here.  In  other 
words,  the  question  involved  was  this:  Whether  they  had  aright  to 
charge  more  from  Chicago  to  Baltimore  than  they  charged  from  Atlantic 
to  Baltimore.  ^^ 

The  (Chairman.  The  shipment  from  Atlantic  to  Chicago  was  under  a 
sort  of  arbitrary. 

Mr.  DousMAN.  Ko,  sir;  it  was  the  regular  rate.  Last  winter  prop- 
erty was  taken,  as  I  understand — and  I  have  it  very  straight — from 


636  TRANSPORTATION  INTERESTS  OF 

Iowa  points  to  Beardstowu,  111.,  aud  forwarded  from  there  to  Baltimore 
at  lower  rates  than  the  regular  agreed  rates. 

The  Chairman.  Yoa  claim  that  you  were  discriminated  against  and 
that  it  was  the  result  of  this  combination  traffic  system. 

Mr.  DousMAN.  The  combinations  pretend  to  regulate  rates,  but  they 
do  not. 

Senator  Reagan.  When  was  freight  taken  from  points  in  Iowa  to 
Beardstown,  in  this  State,  for  shipment  to  Baltimore  at  lower  rates  than 
the  rates  agreed  upon  by  the  roads  *? 

Mr.  DousMAN.  A  year  ago  ;  in  February,  1888. 

Senator  Reagan.  Was  the  matter  presented  to  the  Interstate  Com- 
merce Commission  "^ 

Mr.  DousMAN.  Jt  is  before  them  now.  The  papers  are  all  on  file. 
Mr.  Wicker's  road  at  that  time  made  a  tariff  from  Turner,  40  miles  from 
here,  providing  one  rate  if  it  went  ro  Baltimore,  another  if  it  went  to 
New  York,  another  if  it  went  to  Boston.  He  was  not  to  blame.  He 
had  to  do  it  to  get  any  freight.  He,  perhaps,  can  give  you  the  reasons 
for  it  better  than  1  can. 

Mr.  Wicker.  I  will  speak  of  them  when  I  get  on  the  stand. 


STATEMENT  OF   HENRY  C.  WICKER. 

Mr.  Henry  0.  Wicker,  traffic  manager  of  the  Chicago  and  North- 
western Railway  Company,  appeared. 

The  Chairman.  What  is  your  business? 

Mr.  Wicker.  I  am  traffic  manager  o'  the  Chicago  and  Northwestern 
Railway  Company. 

The  Chairman.  You  have  heard  the  statements  here  this  morning, 
and  you  may  go  on  in  your  own  way  and  tell  us  what  you  know  about 
the  subject-matter  before  us. 

Mr.  Wicker.  The  facts  in  reference  to  these  transactions  are  sub- 
stantially as  stated  by  the  gentleman  who  preceded  me.  In  order  to 
make  the  situation  plain  it  will,  perhaps,  be  necessary  to  state  some 
things  that  you  are  all  cognizant, of. 

The  system  of  making  rates  eastward  bound  is  a  system  that  starts 
with  Chicago  as  the  unit.  Say  the  rate  is  22  cents  from  Chicago  to 
Baltimore.  That  was  taken  as  100.  The  rates  from  Peoria,  Beards- 
town,  and  St.  Louis  and  other  towns  south  of  here  were  made  at  cer- 
tain j)ercentages  above  those  rates,  being  a  greater  distance  Irom  the 
sea-board.  The  rates  were  published  from  these  other  places  on  that 
scale,  but  the  lines  leading  from  Beardstown  more  especially,  and  I 
think  the  same  is  true  of  Peoria  disregarding  that  scale,  and  instead  of 
charging  25  cents  on  coru  from  Beardstown,  say  they  put  in  rates  in 
compliance  with  the  interstate  commerce  law  of  suppose  20  cents.  In 
other  words,  thtiy  refuse  to  abide  by  the  scale.  Being  an  interested 
party  controlling  about  2,500  miles  of  road  in  the  State  of  Nebraska, 
grain  was  being  taken  from  us  by  lines  leading  to  Beardstown,  etc.,  at 
this  reduced  rate.  We  appealed  in  vain  to  lines  running  into  Chicago 
to  meet  this  reduction.  We  said,  "  Either  bring  the  lines  south  of  here 
to  an  observance  of  the  scale  or  come  down  yourselves — give  us  an  out- 
let here.  We  have  no  roads  reaching  these  southern  outlets.  Our  out- 
let is  solely  by  way  of  Chicago."  They  failed  to  bring  these  lines  south 
of  here  to  an  observance  of  the  scale  and  declined  to  reduce  their  own 
rates. 


THE    UNITED    STATES    AND    CANADA.  637 

I  think  it  can  be  shown  very  plainly  why  they  did  not  reduce  the  rate 
from  here.  Their  situation  was  entirely  different,  as  it  will  be  noticed, 
from  these  lines  reaching  the  seaboard  from  Peoria  and  Beardstown. 
There  is  always  a  very  large  volume  of  traffic  in  Chicago.  The  ele- 
vators contain  more  or  less  grain,  and  the  large  manufacturing  interests 
of  various  sorts  constantly  afford  a  large  volume  of  business.  These 
points  sonth  of  here  are  nothing  but  junction  points.  Peoria  has  some 
little  traffic  it  may  call  its  own,  but  Beardstown  is  nothing  but  a  cross- 
ing. The  Chicago  lines  failed  to  get  the  southern  lines  to  meet  this 
situation,  because  nnder  the  interstate-commerce  act  they  wouhl  be 
compelled  to  reduce  their,  rates  on  a  large  volume  of  everyday  traffic 
here  if  they  reduced  their  rate  on  corn. 

I  see  why  they  were  loth  to  do  it.  They  said  to  themselves,  "  We  had 
better  lose  this  traffic  from  Nebraska  rather  than  rednce  onr  rates  on  the 
whole  volume  of  business."  But  we  did  effect  an  arrangement  with 
some  of  the  lines  for  billing  this  property  at  a  point  between  Chicago 
and  the  Mississippi  Eiver  at  a  rate  which  was  equivalent  to  the  rate 
from  Beardstown,  billing  our  Ireight  up  to  this  point.  The  point  was 
just  this  side  of  the  Mississippi  Kiver.  My  impression  is  that  it  was 
Sterling.  They  gave  us  exactly  the  same  rate  from  that  point  to  the 
sea  board  as  was  made  from  Beardstown,  and  we  took  it  and  arranged 
.  with  them  for  proportions  between  Chicago  and  that  point,  and  tacked 
on  our  rate  from  Nebraska  to  hold  oar  business. 

The  Chairman.  You  did  it,  did  you  ? 

Mr.  Wicker.  And  we  did  it  as  a  measure  of  self  defense.  Now  those 
are  the  facts. 

I  will  submit  data  hereaftei  showing  what  the  figures  were  in  refer- 
ence to  this  traffic. 

The  Chairman.  Are  you  the  traffic  manager  of  the  whole  system  ? 

Mr.  Wicker.  No,  sir, 

The  Chairman.  How  far  does  your  jurisdiction  extend  f 

IMr.  Wicker.  From  here  to  the  Missouri  Kiver,  Council  Bluffs. 

The  Chairman.  You  have  nothing  to  do  with  the  traffic  from  here 
here  to  St.  Paul  and  Minneapolis  ? 

Mr.  Wicker.  On  westward  bound,  yes,  sir. 

The  Chairman.  But  not  eastward  1 

Mr.  Wicker.  On  eastward  bound  the  rate-making  power  on  our 
line  remains  with  the  Chicago,  St.  Paul,  Minneapolis  and  Onmha  road. 

The  Chairman.  Are  you  in  charge  of  the  traffic  between  here  and 
St.  Paul,  or  between  here  and  Sioux  City;  or  have  you  a  line  to  Sioux 
City? 

Mr.  WinKER.  Yes,  sir,  we  have  a  line  to  Sioux  City. 

The  Chairman.  It  is  stated  that  you  send  goods  around  from  Chi- 
cago to  St.  Paid  and  then  down  to  Sioux  City  at  as  low,  if  not  lower, 
rate  than  you  send  the  same  through  directly  froui  here  to  Sioux  City. 

Mr.  Wicker.  I  presume  it  is  possible  that  with  the  extremely  low 
commodity  rates,  so  called,  put  in  force  on  the  5th  of  July  from  Chicago 
to  St.  Paul,  on  certain  freight  in  car  load  lots  as  against  Lake  Superior 
and  Canadian  Pacific  sompetition,  you  would  find  some  articles  in  that 
list  which,  with  the  current  rate  added  from  Chicago  to  Sioux  City, 
would  amount  to  less  than  by  the  direct  line.  This  fact  exists,  if  at  all, 
by  combination  of  rates. 

The  Chairman.  What  is  the  distance  from  here  to  St.  Paul  ? 

Mr. Wicker.  Four  hundred  miles. 

The  Chairman.  What  is  the  distance  from  St.  Paul  to  Sioux  City? 

Mr.  Wicker.  I  think  it  is  270  miles. 


638  TEANSPORTATION  INTERESTS  OF 

The  Chairman.  What  is  the  distance  from  bere  to  Sioux  City! 

Mr.  Wicker.  Five  Imudred  and  thirty-six  miles,  I  think. 

The  Chairman.  Making  a  difference  in  the  route  around  of  150  miles 
perliapsf 

Mr.  Wicker.  By  roads  which  we  own  or  control,  yes,  sir.  The  other 
lines  are  very  much  longer  to  St.  Paul  than  ours. 

The  Chairman.  Still  you  send  goods  around  cheaper  than  you  send 
them  across.     What  is  the  explanation  of  that? 

Mr.  Wicker.  It  is  not  done  by  any  published  tariff  from  Chicago 
via  St.  Paul  to  Sioux  City.  It  can  only  be  done  by  a  combination  of 
rates.  I  do  not  know  that  that  can  be  done,  but  it  would  not  surprise 
me  if  you  should  find  some  commodities  where  it  could  be  done. 

THE   COMPETITION   OF   CANADIAN   RAILROADS. 

The  Chairman.  Have  you  had  sufficient  experience  in  traffic  man- 
agement between  Chicago  and  St.  Paul  and  the  East  to  enable  you  to 
express  an  opinion, on  the  question  of  whether  Canadian  lines  have  any 
advantage  over  or  interfere  with  your  shipments  to  any  very  large  ex- 
tent? 

Mr.  Wicker.  I  think  they  have  a  decided  advantage  over  American 
railways. 

The  Chairman.  Why  ? 

Mr.  Wicker.  Because  they  are  not  restricted  in  their  charges  as  to 
intermediate  or  local  traffic. 

The  Chairman.  In  their  own  country? 

Mr.  Wicker.  In  their  own  country.  They  may  be  able  to  recoup 
themselves  partially  for  any  supposed  loss  on  through  traffic. 

The  Chairman,  tiave  you  any  evidence  that  they  do  ? 

Mr.  Wicker.  I  have  not  the  facts. 

The  Chairman.  Does  the  interstate  commerce  act  embarrass  you  in 
any  competition  with  them  ? 

Mr.  Wicker.  It  has  done  so  heretofore. 

The  Chairman.  In  what  way  ? 

Mr.  Wicker.  In  the  competition  between  the  Canadian  Pacific  work- 
ing via  Sault  Ste.  Mane  and  what  is  called  the  •'  Soo  "  line. 

The  Chairman.  Why  does  the  law  embarrass  you  ? 

Mr.  Wicker.  In  making  the  low  rates  from  the  sea-board  through, 
in  connection  with  these  lines  and  routes  with  lines  via  Chicago,  work- 
ing in  connection  with  eastern  lines,  we  are  not  to-day  meeting  them, 
although  arrangements  are  on  foot  to  meet  them.  A  committee  has 
been  appointed  to  confer  with  the  trunk-lines  to  meet  that  competition 
in  some  way. 

The  Chairman.  If  the  American  roads  are  at  a  disadvantage  on  ac- 
count of  the  interstate  commerce  act  in  competition  with  Canadian 
roads,  do  you  think  there  ought  to  be  anything  done  to  change  the  sit- 
uation ? 

Mr.  Wicker.  I  think  that  they  should  be  put  on  an  equality  and  be 
subject  to  the  same  restrictions  that  American  lines  are  subject  to,  and 
if  it  is  not  possible  to  do  that  my  opinion  is  that  that  fact  alone  would 
create  conclitions  which  would  be  dissimilar,  and  that  the  American 
lines  should  be  relieved  from  the  operation  of  the  provisions  of  the 
fourth  section  of  the  act  in  their  competition  with  these  foreign  lines. 

The  Chairman.  Is  there  anything  in  the  law  that  you  think  inter- 
feres with  your  competing  with  the  Canadian  roads,  excepting  the  fourth 
section  ? 


THE    UNITED    STATES    AND~  CANADA.  639 

Mr.  WiCKEK.  ISO,  sir;  I  kuow  of  nothing  more  tban  that  they  have 
absolute  control,  as  we  understand  it,  over  their  local  rates,  aside  from 
the  fact  that  the  Canadian  Pacific  is  a  subsidized  road.  1  do  not  see 
that  the  Grand  Trunk  would  have  any  advantage  in  that  respect.  The 
Canadian  Pacific  is  a  semi-official  road,  as  1  understand  it. 

THE   TRUNK  LINE  ASSOCIATION. 

Senator  Hiscoce:.  Tell  me  what  the  lYunk  Line  Association  is  ? 

Mr.  Wicker.  The  Trunk  Line  Association,  as  I  understand  it  to  be, 
is  an  association  of  railways  in  the  East,  reaching  from  tide- water,  con- 
necting with  their  western  termini,  ranging  Irom  tluntiugton  to  ]S  lagara 
Falls,  Suspension  Bridge,  aud  Toronto,  organized  for  the  purpose  nniinly 
of  securing  information  in  "the  establishment  of  rates  and  classitical  ion 
of  treight.  Their  compilation  of  statistics  is  merely  incidental,  and  is 
simply  made  that  they  may  have  a  knowledge  of  wLat  each  other  road 
is  doing. 

Senator  Hiscock.  Is  the  Grand  Trunk  in  it  ? 

Mr.  Wicker.  I  so  understand  it. 

Senator  Hiscock.  You  understand  that  the  association  covers  all  the 
trunk-lines.     iSTow  what  is  the  Central  Traffic  Association  ? 

Mr.  AViCKER.  It  is  composed  of  lines  commencing  at  the  western 
termini  of  the  lines  in  the  Trunk  Line  Association. 

Senator  Hiscock.  What  is  the  Interstate  Commerce  Eailway  Asso- 
ciation ? 

Mr.  Wicker.  The  Interstate  Commerce  Eailway  Association  is  an 
association  of  lines  westward  from  Chicago,  formed  for  similar  ])urposes. 
The  Trans-Continental  is  an  association  formed  of  lines  west  of  the  Mis- 
souri Eiver,  reaching  the  Pacific  coast.  They  are  all  formed  tor  sub- 
stantially the  same  purpose. 

Senator  Hiscock.  Are  they  separate  organizations  or  are  they  made 
up  of  representatives  of  these  several  organizations  which  are  in  them  ? 

Mr.  Wicker.  The  Trunk  Line  Association  aud  the  Central  Traffic 
Association  are  made  up  of  individual  lines.  The  Interstate  Com- 
merce Eailway  Association  is  composed  of  two  or  three  or  more  auxil- 
iary associations.     It  took  them  in. 

STATEMENT  OF  N.  G.  IGLEHAET. 

Mr.  l!f.  G.  lauEHART,  commissioner  of  the  Chicago  Freight  Bureau, 
appeared. 

The  Chairman.  What  is  your  position,  Mr.  Iglehart  ? 

Mr.  Iglehart.  I  am  commissioner  of  the  Chicago  Freight  Bureai  . 

The  Chairman.  Will  you  aud  your  representative  men  formulate 
your  views  in  respone  to  the  resolution  of  the  Senate  under  which  we 
are  acting  and  forward  the  same  to  me? 

Mr.  Iglehart.  I  shall  be  glad  to  do  so,  and  I  will  endeavor  to  see 
them  and  have  them  formulate  their  views. 

The  Chairman.  If  that  is  satisfactory  to  them  as  well  as  to  you,  it 
■will  answer  the  purpose.  As  those  other  gentlemen  are  not  present  we 
will  not  request  them  to  be  heard  in  person. 

Mr.  Iglehart.  All  right,  sir. 


340  TKANSPOETATION    INTERESTS    OP 


ADDITIONAL  STATESLEl^T  OF  H.  C.  WICKER. 

Mr.  Wicker.  On  the  question  of  recognizing  pooling,  wLile  I  regard 
;hat  as  somewhat  different  from  the  question  of  the  continuation  of 
;hese  associations,  I  think  it  is  apparent  that  if  the  doings  of  these 
issociations  were  subject  to  the  Interstate  Commerce  Commission,  and 
;he  Commission  had  supervision  over  them,  the  state  of  things  that  I 
dted  here  would  not  have  occurred. 

The  Chairman.  Your  judgment  is  that  if  contracts  or  arrangements 
ire  made  between  railroads  thej'  should  be  subject  to  the  Interstate 
Commerce  Commission,  to  be  approved  or  disapproved  as  in  their  judg- 
nent  is  proper  ? 

Mr.  Wicker.  Yes,  sir ;  and  the  Commission  to  have  power  to  enforce 
hem. 

The  Chairman.  I  have  received  several  communications  in  the  form 
)f  statements  from  various  individuals  bearing  on  the  subject  of  our 
nvestigatiou,  and  will  insei't  them  in  the  record  at  this  point. 

The  statements  are  as  follows: 

STATEMENT  OF  ADLACE  F.  WALKER. 

Mr.  Adlace  F.  Walker,  chairman  of  the  Interstate  Commerce  Eail- 
vay  Association,  submitted  the  following  statement: 

I  have  not  sufficiently  studied  the  subject  of  legislation  desirable  in 
,'iew  of  the  participation  in  our  interstate  commerce  by  Canadian  lines 
o  enable  me  to  feel  tliat  I  could  be  of  much  assistance  to  tlie  commit- 
ee.  The  question  is  too  wide  and  important  to  be  treated  hastily.  I 
hall  be  pleased,  however,  at  any  time  to  answer  all  inquiries  that  you 
nay  desii.e  to  make  in  respect  to  matters  of  fact  within  my  knowledge. 

In  respect  to  the  questions  contained  in  your  circular  letter,  I  would 
lay: 

Tbat,  in  my  opinion,  the  Canadian  lines  of  transportation  operating 
n  the  United  States  affect  the  commercial  (or  business)  interests  of 
jertain  parts  of  this  country  favorably;  especially  New  England  and 
some  other  sections  immediately  contiguous  to  the  border.  As  a  quite 
latural  corolhiry  they  affect  business  interests  in  other  parts  of  the 
iountry  to  some  extent  unfavorably.  Circumstances  which  add  to  the 
idvantages  of  competing  centers  of  trade  in  one  locality  naturally  do 
50  more  or  less  at  the  expense  of  rival  communities  elsewhere.  For 
example,  there  can  be  no  donbt  that  the  Grand  Trunk  Railway  and  the 
13anada  Southern  have  been  large  factors  in  the  development  of  Chicago; 
t  is  also  quite  })robable  that  the  influence  of  these  transportation  routes 
jas  diverted  tratlic  to  some  extent  from  St.  Louis  and  some  other 
svestern  cities  to  the  Chicago  gateway;  and  again,  the  usefulness  of 
[he  Canadian  roads  above  mentioned  to  the  merchants  and  traders  of 
oliicago  may  fairly  be  offset  by  the  injury  done  to  that  city  as  a  dis- 
tributing point  through  the  opening  of  the  "Soo"  line  to  Minneapolis 
and  St.  Paul,  that  route  operating  with  the  Canadian  Pacitic  to  the 
Atlantic  seaboard,  now  making  rates  which  very  largely  assist  the 
merchants  of  the  "  twin  cities"  at  the  expense  of  their  Chicago  rivals;  it 
is  likewise  undoubtedly  true  that  the  competition  of  the  Grand  Trunk 
lias  materially  aided  in  bringing  about  the  exceptionally  low  long- 
ilistance  rates  which  have  prevailed  for  the  past  few  years  ui)on  commod- 
ities transported  in  *)Oth  directions  between  the  Western  and  N^orth- 
western  States  and  the  Eastern  seaboard;  these  rates  have  very  largely 


THE    UNITED    STATES    AND    CANADA.  641 

promoted  the  development  of  many  States  and  Territories  in  tbe  West, 
but  in  order  to  aliord  this  resnlt  the  interests  of  the  agricultural  com- 
munities at  intermediate  localities,  and  to  some  extent  in  New  England, 
even,  have  correspondingly  suffered. 

These  illustrations,  which  might  be  multipied  indefinitely,  indicate 
some  of  the  ways  in  which  the  Canadian  lines  affect  commercial  inter- 
ests in  the  United  States ;  and  the  extent  of  their  influence  is  un- 
doubtedly very  considerable.  Whether  the  result  obtained  has  on  the 
whole  been  more  favorable  than  otherwise,  is  not  for  me  to  say.  In 
fact  it  hardly  seems  worth  while  to  adjust  the  balance;  the  Canadian 
railroads  are  in  existence;  commercial  conditions  have  become  iirndy 
settled  in  their  use,  and  they  are  rapidly  working  their  way  in  other 
directions.  It  is  obvious  that  their  relations  to  interstate  commerce 
in  the  United  States  can  by  no  possibility  be  entirely  eradicated. 

Traffic  originating  in  the  United  States  is  carried  ov^er  Canadian 
lines,  to  a  quite  large  extent,  to  other  ])oiuts  in  the  Union.  Whether 
this  is  a  traffic  which  would  "naturally  "be  carried  over  American  lines 
depends  upon  the  meaning  of  the  word  employed  by  the  committee. 
Some  of  the  Canadian  routes  geographically  are  perfectly  natural 
routes  ;  those,  for  example,  from  Detroit  to  Buffalo,  across  the  Province 
of  Ontario ;  even  the  line  of  the  Canadian  Pacitic  from  Sault  Ste. 
Marie  to  its  various  eastern  connections  in  the  United  States  is  a  rea- 
sonably direct  route.  Nevertheless,  in  these  cases,  if  the  Canadian 
lines  were  not  available  for  the  service,  it  would  be  i^racticable  for  the 
traffic  to  be  carried  by  lines  wholly  within  the  territory  of  the  United 
States;  and  in  other  cases,  for  example  from  San  Francisco  via  the 
Canadian  Pacific  to  Chicago  aad  the  East,  considerable  traffic  is  car- 
ried over  a  route  which  by  courtesy  only  can  be  called  a  natural  chan- 
nel. 

In  reference  to  the  inquiry  for  proposals  for  additional  legislation,  I 
am  not  one  of  those  who  consider  a  modification  of  the  short-haul  pro- 
vision, so  called,  of  the  interstate  commerce  law  important  by  reason 
of  any  fact  connected  with  Canadian  competition,  tor  the  reason  that 
where  Canadian  competition  exists  I  do  not  regard  the  short-haul  pro- 
vision as  applicable.  On  the  contrary,  to  my  apprehension  the  fact  of 
competition  of  Canadian  lines  which  are  not  subject  to  the  regulation 
of  the  act  appears  to  constitute  a  conspicuous  example  of  that  diversity 
of  circumstances  and  conditions  which  excepts  traffic  ui)on  American 
lines  from  the  application  of  the  rule.  This  I  understand  to  have  been 
the  practical  construction  given  to  the  short-haul  clause  hitherto.  So 
long  as  competition  by  the  Canadian  Pacific  was  active,  that  is,  during 
the  whole  of  the  year  1887,  no  attempt  was  made  to  enforce  the  section 
in  respect  to  the  competing  traffic  of  the  transcontinental  lines.  This 
situation  led  to  an  agreement  with  the  Canatlian  Pacific  for  an  advance 
of  the  through  transcontinental  rates  in  February,  1888;  in  the  adjust- 
ment the  Canadian  road  was  allowed  a  differential  or  a  somewhat  lower 
rate  than  the  American  lines  to  points  on  and  east  of  the  iMississippi 
liiver. 

To  Missouri  River  points  it  received  no  differential,  and  ])ractically 
retired  from  such  traffic.  Afterwards  the  Commission  ruled  that  the 
rate  from  San  Francisco  to  Denver  could  not  properly  exceed  the  rate 
from  San  Francisco  to  Kansas  City.  If  at  the  present  time,  a  fact  con- 
cerning which  I  know  nothing,  an  unreasonable  amount  of  tonnage 
moves  from  the  Pacific  coast  to  ixnnts  cast  of  the  ^Mississippi,  over  tiie 
Canadian  Pacific  line,  it  would  indicate  that  the  agreed  differentials  are 
too  high;  and  if  the  trauscoutiu<?Jital  lines  desire  tQ  metft  the  rates  of 

6543—41 


642  TRANSPORTATION   INTERESTS   OP 

the  Canadian  Pacific  to  or  from  such  points,  it  is  my  understanding 
that  the  fourth  section  of  the  law  does  not  constitute  an  obstacle  to 
their  doing  so.  In  like  manner,  if  the  lines  between  the  Atlantic  sea- 
board and  St.  Paul  via  Chicago  desire  to  meet  the  rates  established 
by  the  Canadian  Pacific  between  the  same  points,  as  I  understand  the 
matter  they  are  quite  at  liberty  to  do  so  without  regard  to  the  fact  that 
intermediate  rates  may  be  higher.  Por  this  reason  I  do  not  think  that 
any  new  legislation  in  respect  to  the  fourth  section  is  necessary.  If 
my  construction  of  the  statute  is  erroneous,  the  principle  stated  should 
certainly  be  incorporated  in  the  law. 

In  certain  other  respects  the  law  as  it  stands  is  absolute  upon  the 
American  lines,  while  the  restrictions  imposed  are  either  not  applicable 
to  the  Canadian  lines  or  are  so  difiticult  of  enforcement  as  to  be  prac- 
tically nugatory.  This  is  the  case  in  respect  to  the  provisions  forbid- 
ding the  obtaining  of  traffic  by  rebates  or  by  other  forms  of  concession 
to  favored  shippers  5  the  manipulation  of  rates ;  and  all  the  devices  by 
which  carriers  have  been  accustomed  to  secure  competitive  business 
from  each  other  by  the  use  of  considerations  in  money,  favor,  or  advan- 
tage. These  facilities  are  practically  still  open  to  the  lines  which  operate 
in  Canada,  as  to  portions  of  their  routes,  tbe  results  of  which  largely 
influence  the  aggregate  revenues ;  and  in  other  ways  the  law  bears  wnth 
less  rigor  upon  the  lines  in  Canada  than  upon  those  on  this  side  the 
border,  in  their  competition  for  similar  traffic. 

In  view  of  these  features  of  the  case,  it  apparently  would  not  be  un- 
just for  our  Government  to  require  from  Canadian  lines  which  are  em- 
ployed in  conducting  commerce  between  the  different  States  of  the 
Union  an  engagement  with  the  United  States  Government  in  some  ef- 
fectual form,  and,  if  necessary,  under  the  sanction  of  a  treaty,  provid- 
ing that  the  entire  traffic  of  the  roads  composing  the  several  routes  so 
used  shall  be  conducted  in  accordance  with  all  the  provisions  of  the  act 
to  regulate  commerce,  adding  suitable  arrangements  for  the  service  of 
process  and  the  enforcement  and  collection  of  penalties.  In  other 
words,  all  that  is  required  would  seem  to  be  some  provision  which  should 
put  the  Canadian  roads  upon  an  exact  parity  with  our  own  ;  that  being 
accomplished  our  roads  can  safely  be  left  to  fight  their  own  battles,  and 
those  communities  which  find  the  Canadian  roads  of  use  commercially 
can  continue  to  enjoy  the  iacilities  which  they  afltbrd. 

STATEMENT  OF  E.  P.  RIPLEY. 

Mr.  E.  P.  Ripley,  general  manager  of  the  Chicago,  Burlington  and 
Quincy  Eailroad,  submitted  the  following  statement: 

In  reply  to  questions  propounded  I  would  answer  as  follows: 
Question  1.  Do  Canadian  lines    of  transportation   operated  in  the 
United  States  aft'ect  the  commercial  interests  of  this  country  favorably 
or  unfavorably  ? 

Answer.  Probably  the  effect  is,  as  a  whole,  favorable,  in  so  far  as 
commerce  is  favorably  affected  by  having  open  to  it  as  many  channels 
of  communication  as  possible.  The  northern  portion  of  the  United 
States  is  so  situated  that  the  Canadian  lines,  both  water  and  rail,  offer 
a  short  and  expeditious  method  of  transportation  to  a  considerable  por- 
tion of  New  England,  northern  New  York,  and  Canada.  So  that  proba- 
bly the  commercial  interests  of  the  country,  taken  as  a  whole,  are  favor- 
ably affected  by  the  existence  of  these  Canadian  lines  rather  than  un- 
favorably. The  exception  to  this  is  the  railroad  interest,  which  is,  of 
course,  injuriously  affected,  especially  as  regards  certain  lines. 


THE    UNITED    STATES    AND    CANADA.  643 

Question  2.  In  wbat  manner  do  tliey  affect  such  interests,  and  to  what 
extent ! 

Answer.  This  question  is  partially  answered  in  the  answer  to  the 
previous  question.  The  amount  of  transportation  done  by  Canadian 
lines  between  points  in  the  United  States  is  very  large.  The  amount 
done  by  Canadian  lines  trom  points  in  the  United  States  to  points  in 
Canada  is  also  large,  and  it  can  not  be  held  that  injury  is  done  to  any 
Interest  except  to  United  States  riiilroads,  who  are  deprived  of  a  con- 
siderable portion  of  the  carrying  trade  by  the  Canadian  lines. 

.Question  3.  Is  traftic  originating  in  the  United  States,  and  which 
would  naturally  be  carried  over  American  lines,  diverted  from  them  to 
Canadian  lines  ;  and,  if  so,  to  what  extent  and  by  what  means  ? 

Answer.  Unquestionably  a  large  amount  of  traffic  originating  in  the 
United  States  and  destined  to  other  points  in  the  United  States  is  di- 
verted from  American  lines  to  Canadian  lines.  The  precise  extent  of 
this  I  am  unable  to  state,  nor  can  I  state  what  means  are  employed  to 
effect  this  result,  except  that,  as  is  doubtless  well  known  to  your  com- 
mittee, there  have  been  times  when  rates  by  the  Canadian  lines  have 
been  lower  than  by  United  States  roads. 

Question  4.  Do  you  consider  any  additional  legislation  expedient  or 
desirable  for  the  regulation  of  commerce  carried  on  by  railroad  or  water 
routes  between  the  United  States  and  Canada "?  If  so,  what  measures 
would  you  suggest  ? 

Answer.  I  am  unable  to  suggest  any  legislation  which  would  have 
the  effect  of  regulating  commerce  carried  on  by  railroad  or  water  routes 
between  the  United  States  and  Canada,  unless  the  carriage  of  American 
freight  by  Canadian  lines  be  prohibited,  which  I  am  not  prepared  to 
recommend.  I  am  unable,  at  this  wanting,  to  see  what  effective  addi- 
tional legislation  can  be  introduced  in  this  country  which  would,  at  the 
same  time,  preserve  to  our  IS^orthern  States  the  benefit  of  Canadian 
competition  and  do  justice  to  our  own  railroads  engaged  in  competition 
with  these  Canadian  lines. 

Question  5.  Is  any  legislation  necessary,  with  respect  to  the  opera- 
tion of  Canadian  lines  of  transportation,  in  order  to  promote  tlie  en- 
forcement of  the  interstate  commerce  act?  If  so,  what  would  you 
suggest'? 

Answer.  As  before  stated,  I  am  unable  to  see  how  tlie  United  States 
can  legislate  in  regard  to  Canadian  railroads  or  lines  of  water  transjmr- 
tation,  except  in  the  way  of  throwing  about  them  restrictions  which 
would  in  all  probability  have  the  effect  of  making  them  less  desirable 
to  the  people  of  the  United  States  as  competitors  for  the  carrying  trade 
in  which  this  country  is  rightly  interested.  At  the  same  time  it  is  un- 
deniable that  a  very  great  injustice  is  at  present  being  done  to  the 
American  lines;  in  fact,  the  "latter  are  tied  up  by  the  interstate  com- 
merce act,  and  are  unable  freely  to  meet  the  compi'tition  of  their  Cana- 
dian rivals.  Especially  is  this  the  case  in  view  of  the  enforcement  of 
the  so-called  long  and  short  haul  clause  of  the  interstate  comuu'rce  act, 
under  which  the  American  lines  are  precluded  from  entering  into  com- 
petition with  Canadian  roads,  except  at  the  expense  of  heavy  reduc- 
tions in  rates  to  intermediate  stations,  which  stations  are  in  nowise 
aflected  by  the  Canadian  competition,  while  Canadian  roads,  on  the 
other  hand,  are  subject  to  no  such  regulation  and  can  make  abnormally 
low  rates  from  one  point  in  the  United  States  to  another  point  in  tho 
United  States  without  interfering  either  with  their  local  Canadian  busi- 
ness or  with  their  business  from  points  in  Canada  to  points  in  the  United 
States. 


644  TRANSPORTATION  INTERESTS  OF 

It  seems  to  me  clear  enough  that  the  right  to  regulate  affairs  of  rail- 
road corporations  sliould  and  does  carry  with  it  the  duty  to  protect 
them,  but  the  preseut  national  policy  seems  to  be  to  protect  everything 
but  the  railroads. 

At  present,  foreign  railroad  corporations  have  more  privileges  in  the 
United  States  than  our  own  corporations  have,  because  the  latter  are 
burdened  with  restrictive  and  ill-advised  legislation. 

I  can  see  no  remedy  for  the  existing  state  of  things,  except  suspension 
of  the  long  and  short  haul  clause  of  the  interstate  commerce  law,  or 
the  repeal  of  the  law  as  a  whole.  I  favor  repeal  of  the  law,  because  it 
has  failed  wholly  to  benefit  any  considerable  class  of  the  community, 
while  it  has  in  many  cases  been  disastrous  to  railroad  interests;  and 
this  not  so  much  because  of  the  features  of  the  law  itself  as  because 
many  of  the  State  governments  have  sought  to  nullify  the  eti'ect  of  the 
national  law,  which  sought  to  wipe  out  distinctions  between  classes  and 
localities  by  class  legislation,  which  should  preserve  the  advantages 
Ijreviously  enjoyed. 

STATEMENT  OF  GUSTAVUS  F.  SWIFT. 

Mr.  Gustavus  F.  Swift,  president  of  Swift  &  Co.,  slaughterers  and 
shippers  of  beef,  mutton,  and  j)ork,  submitted  the  following  statement: 

My  name  is  Gustavus  F.  Swift;  resident  of  Chicago  for  past  fourteen 
years,  and  president  of  Swift  &  Co.,  slaughterers  and  shippers  of  dressed 
beef,  mutton,  and  pork,  and  have  been  in  said  business,  either  as  a  firm 
or  cori^oration,  since  November,  1S7S. 

The  average  shipments  of  dressed  meats  east  from  Chicago  by  our 
company  are  more  than  400  cars  per  week,  and  for  the  past  ten  years 
our  company  has  had  large  transactions  with  tlie  Grand  Trunk  Kailway 
of  Canada,  and  while  the  dressed-meat  industry  of  Chicago  has,  from 
many  of  the  trunk  lines,  been  persecuted  and  subjected  to  unjust  dis- 
crimination in  the  matter  of  freight  rates,  it  has,  from  the  Grand  Trunk 
Eailway  of  Canada,  generally  received  fair  treatment. 

1  inclose  you  circular  No.  0G6,  from  joint  executive  committee,  issued 
by  Albert  Fink,  chairman,  December  11,  1884.  You  will  please  notice 
the  last  paragraph, w^hich  reads  as  follows : 

It  was  also  agreed  that  wheu  difl'erent  classes  of  meats  were  loaded  iu  same  car, 
tbe  highest  I'ate  shall  apply  to  the  entire  car-load. 

Also  inclosed  please  find  joint  tarifi"  No.  17,  from  Chicago,  quoting 
dressed  beef  in  car  loads  of  20,000  pounds,  New  York  or  Boston,  70 
cents;  dressed  hogs  when  loaded  in  refrigerator  cars.  New  York,  55 
cents;  Boston,  60  cents;  dressed  sheep  in  refrigerator  cars.  New  York, 
90  cents;  Boston,  $1;  dressed  sheep  in  refrigerator  cars,  whether 
loaded  with  other  meat  or  not,  minimum  weight,  20,000  pounds;  by 
which  you  will  readily  see  were  we  to  load  in  refrigerator  car  12,500 
pounds  dressed  beef,  7,300  pounds  dressed  hogs,  and  200  pounds  dressed 
sheep,  consigned  to  Boston,  that,  though  the  rate  for  20,000  pounds  of 
dressed  beef  would  be  $140,  or  for  20,000  pounds  of  dressed  hogs,  -f  120, 
the  freight  on  the  one  car-load  of  dressed  beef,  dressed  hogs,  and  dressed 
sheep  (20,000  pounds)  to  Boston  would  be  $200,  thus  virtually  prohibit- 
ing Chicago  parties  in  the  dressed-meat  business  supplying  their  East- 
ern branch  houses  with  assortments  of  dressed  meats. 

This  move  was  not  supported  by  the  Grand  Trunk  Eailway  system 
of  Canada,  and  a  vigorous  protest  was  made  by  our  Live  Stock  Ex- 
cJjaugey  a  copy  of  wUiiJ|i  I  heyewitU  iwdp§e^  and  the  joint  executive  comt 


THE    UNITED    STATES    AND    CANADA.  645 

mittee  finding-  tlie  move  so  unpopular,  afterward  abandoned  the  posi- 
tion that  when  difierent  classes  of  meats  are  loaded  in  the  same  car,  the 
highest  rate  shall  apply  to  the  entire  car-load,  and  allowed  each  class 
of  meat  to  bear  its  respective  rate. 

It  was,  however,  their  rule  to  charge  a  much  higher  rate  on  dressed  sheep 
than  on  dressed  beef,  even  though  loaded  in  the  same  car,  which  rule, 
on  account  of  the  strong  protest  of  shippers,  and  aided  by  sympathy  from 
the  Grand  Trunk  Eailway  system  of  Canada,  was  abandoned  some  time 
in  1887. 

I  am  pleased  to  say  that  the  Grand  Trunk  Kailway  system  of  Canada 
was  the  first  and  best  champion  the  dressed-meat  trade  has  ever  had, 
and  except  for  the  sympathy  and  protection  of  the  Grand  Trunk  Kail- 
way  system  of  Canada  the  Western  dressed  beef  business  would  to-day, 
in  my  opinion,  be  in  its  infancy. 

I  think  not  only  the  New  England  States  have  received  great  benefits 
from  the  Grand  Trunk  Railway  system,  but  the  Western  States  have 
also  shared  its  benefits. 

Circular  No.  GGG— Joint  Executive  Committee. 

Office  of  the  Chairman, 
346  Broadway,  New  York,  December  11,  1884. 

RATES  ON  DRESSED  HOGS  AND  DRESSED  SHEEP. 

At  a  meeting  of  the  Staudiu*^  Committee  lield  this  day  the  following  recommenda- 
tion of  the  East-bound  Classification  Committee  was  adopted,  to  take  eflect  Monday, 
December  15,  1884: 

Dressed  hogs,  in  common  cars,  C.  L.,  5th  class. 

Dressed  hogs,  in  common  cars,  L.  C.  L.,  2d  class. 

Dressed  hogs,  in  refrigerator  cars,  C.  L.,  5  cents  per  hundred  pounds  above  rate  in 
common  cars. 

Dressed  hogs,  when  loaded  with  dressed  beef  and  forming  part  of  a  car-load,  same 
as  dressed  beef. 

It  was  also  agreed  that,  taking  effect  same  date,  the  rates  on  dressed  sheei)  will  be 
on  the  following  basis: 

Chicago  to  Neio  York. 

Dressed  sheep,  in  common  cars,  85  cents  per  100  pounds. 

Dressed  sliecp,  in  refrigerator  cars,  whether  loaded  with  other  meats  or  not,  C.  L., 
minimum  weight  20,000  pounds,  90  cents  per  100  pounds. 

The  rates  on  dressed  sheep  from  Buffalo,  Pittsburgh,  etc.,  to  New  York,  in  common 
cars,  will  be  42|  cents,  and  iu  refrigerator  cars,  C.  L.,  47^  cents  per  100  pounds. 

It.  was  also  agreed  that  when  different  classes  of  meats  are  loaded  in  same  car  the 
highest  rate  shall  ajiply  to  the  entire  car-load. 

Albert  Fink, 

Chainnan. 

C.    W.   BULLEN, 

Secretary. 


646 


TEANSPORTATION   INTERESTS    OF 


No.  17, — Joint  rates  of  transportation  from  Chicago,  talcing  effect  December  15,  1884. 

[Subject  to  ofHcial  classification  of  eastward  bound  freight,  and  rnles  and  regulations  as  printed  in 
bills  of  lading  of  the  respective  railway  lines.    Particular  attention  is  called  to  articles  taking 


special  rates.  1 


Class  and  quantity. 


Pirat  class,  per  100  pounds 

Second  class,  per  1 00  pounds 

Third  class,  per  100  pounds 

Fonrth  class,  per  100  pounds 

Fifth  class,  per  100  pounds 

Sixth  class,  per  100  pounds 

Seventh  class,  per  100  pounds 

Eighth  class,  per  100  pounds 

Kinth  class,  per  100  pounds 

Tenth  class,  ])er  100  pounds 

Dressed  beef,  in  car  loads  of  20,000  pounds,  per  100 
pounds 

Ale,  beer,  porter,  in  glass,  O.  II.  C.  L.,  and  same  in  wood, 
C.  L.  O.  K.  freezing,  leakage,  and  fermenting,  per  100 
pounds  

Tooacco,  unmanufactured,  and  tobacco  stems,  in  hogs- 
heads or  cases,  per  100  pounds    

Staves,  heading,  hoop-poles,  shocks,  hoops,  stave  bolts,  or 
rough  undressed  stone,  in  car  loads  t 

Special  t 

Highwines,  whisky,  alcohol,  and  domestic  spirits,  C.  L. 
of  24.000  pounds,  $20  valuation,  O.K.  leakage,  per  100 
pounds    

Dressed  hogs,  when  loaded  in  common  cars,  car  loads  ... 

Dressed  hogs,  less  than  car  loads 

Dressed  hogs,  when  loaded  in  refrigerator  cars,  car 
loads 


Dressed  sheep,  when  loaded  in  common  cars,  any  quan- 
tity  

Dressed  sheep,  in  refrigerator  cars,  whether  loaded 
with  other  meats  or  not,  minimum  weight,  20,000 
pounds  


Rates  from  Chicago  to- 


H  rs 


$1-00   $1.10 


.85 
.70 
.60 
.50 
.45 
.30 
.25 
.35 
.32 


.35 

.27J 


.95 
.75 
.65 
.55 
.50 
.35 
.30 
.40 
.37 

.70 


.40 
.  32.\- 


a 

6 

a 

M 

a 

A 

M 

i 

rs 

t> 

a  . 

a  t>. 

C3 

g 

P 

"3 

H 

H 

0 

Ph 

M 

< 

$0.98 

$0.  97 

$0.90 

.83 

.82 

.75 

.08 

.67 

.65 

.58 

.57 

.55 

.48 

.47 

.45 

.43 

.42 

.40 

.28 

.27 

.28 

.2.'r 

.22 

.24 

.33 

.32 

.32 

.30 

.29 

.29 

.60.^ 

.64J 

.56 

.33 

.32 

.32 

.2.5i 

.241 

.26 

.28 

.27 

.28 

.18 

.17 

.20 

.33 

..32 

.32 

.48 

.47 

.45 

.83 

.82 

.75 

.53 

.52 

.50 

.83 

.82 

.75 

.88 

.87 

.80 

S  o  2  «  « 


"     -»      t^  *^ 

■ "  C  -J  o  =3 


$0.  55 
.47i 
.37| 
.32| 
.27i 
.25" 
.17J 
.15 
.20 
.18J 

.39J 


.20 

.16 

.17* 
.12j 

.20 
.27i 
.47  J 

.30 

.47  J 

.50 


*  Denotes  change  since  last  issue. 

t  For  conditions  a])plying  to  lumber,  staves,  stone,  etc.,  see  lumber  tariff  No.  29. 

I  The  following  ai  tides  must  take  rates  as  quoted  in  special-ratu  column  :  Silver,  lead,  antimony,  or 
copper  ore ;  calamine  ;  co])per  residue  ;  copper  matte,  ingots,  cakes,  slabs  or  pigs,  base  bullion — value 
not  to  exceed  $100  per  net  ton ;  pig  lead,  car  loads.    See  classificatiop. 

Special  attention  is  called  to  the  rnlinji^  of  the  trunk  line  standing  committee 
"tliat  when  different  chisses  of  meats  are  loaded  in  the  same  car,  the  highest  rate 
shall  apply  to  the  entire  car  load." 

The  chiinge  in  the  hasis  of  Albany  r.ates  on  seventh  and  ninth  classes  is  made  as 
per  instructions  contained  in  Commissioner  Fink's  circulars,  Nos.  597  of  March  27, 
and  617  of  June  17,  1884. 

A.  P.  Bigelow,  General  Agent,  Baltimore  and  Ohio  R.  R. 
A.  S.  Crane,  General  Freight  Agent,  Chicago  and  Atlantic  Ry. 
Geo.  B.  Reeve,  Traffic  Manager,  Chicago  and  Grand  Trunk  Ry. 
D.  T.  McCahe,  General  Western  Freight  Agent,  Chicago,  St.  Louis  and  Pitts- 
burgh R.  R. 
C.  M.  Gray,  Assistant  General  Freight  Agent,  Lake  Shore  and  Michigan 

Soutliern  Ry. 
A.  Mackay,  General  Freight  Agent,  Michigan  Central  R.  R. 
N.  A.  Skinner,  Connnercial  Agent,  New  York,  Chicago  and  St.  Louis  By. 
Wm.  Borner,  General  Western  Freight  Agent,  Pennsjdvania  Company. 

Thos.  C.  Moore, 
CniCAGO,  December  15,  1884.  Joint  Agent, 


THE    UNITED    STATES    AND    CANADA  647 

Extract. 

[From  the  Chicago  Times,  Decemher  16,  1884.' 

shippers'  protest. 
The  Livestock  Exchange  declares  that  the  new  eafit-hound  rates  are  unjust. 

The  Live-stock  Exchange  held  a  meeting  iu  the  town  of  Lake  yesterday,  and  after 
the  discussion  of  varions  niiuor  matters,  the  following  resolutions  were  reported  and 
adopted : 

Whereas  the  east-bound  pool  of  railroads  ranning  from  Chicago  to  the  seaboard 
have  adopted  a  new  tarilf  ou  dressed  meats,  the  same  to  take  effect  this  day  (Decem- 
ber 15) ;  and, 

Whereas,  by  the  provisions  of  said  tariff,  rates  are  made  as  follows  from  Chicago : 
Dressed  hogs,  in  common  cars,  car-load  lots,  fiO  cents  i)er  100  pounds  to  New  York 
and  55  cents  per  lUO  pounds  to  Boston  ;  dressed  hogs,  in  common  cars,  less  than 
car-load  lots,  85  cents  per  100  pounds  to  New  York,  95  cents  per  100  ])()unds  to  Bos- 
ton ;  dressed  hogs,  in  refrigerator  cars,  car-load  lots,  55  cents  per  100  pounds  to  New 
York,  60  cents  per  100  pounds  to  Boston ;  dressed  sheep,  in  common  cars,  any  quantify, 
85  cents  per  100  poumis  to  New  York,  95  cents  per  100  pounds  to  Boston ;  dressed 
sheep,  in  refrigerator  cars,  alone  or  with  other  meats,  90  cents  per  100  pounds  to  New 
York,  $1  per  100  pounds  to  Boston ;  and. 

Whereas,  said  tariff  provides  that  when  different  classes  of  meats  are  loaded  in  the 
same  car  the  highest  rate  shall  apply  to  the  entire  car  load,  thus  compelling  a  car 
load  of  dressed  beef  which  contains  even  one  or  more  dressed  sheep  to  i)ay  the  sheep 
rate  of  90  cents  jier  100  pounds  to  New  York,  and  $1  per  100  pounds  to  Boston,  while 
the  rate  which  the  railroads  exact  for  dressed  beef  is  only  70  cents  per  100  pounds  to 
either  Boston  or  New  York,  and  thus,  also,  compelling  one  or  more  dressed  hogs 
loaded  iu  the  car  with  dressed  beef  to  pay  the  dressed-beef  rate  of  70  cents  per  100 
pounds,  while  the  railroad  companies'  rate  on  dressed  hogs  is  only  55  cents  to  New 
York,  or  CO  cents  to  Boston,  per  100  pounds;  be  it,  therefore — 

Resolved,  That  we  consider  the  rates  on  dressed  hogs  and  sheep,  as  fixed  by  the 
aforesaid  tariff',  as  excessive,  as  exorbitant,  and  calculated  to  injure  the  business  of 
this  market. 

Resolved,  That  we  hereby  most  emphatically  protest  against  such  action  by  the 
railroad  companies,  and  we  hereby  respectfully  ask  that  they  reconsider  said  tariff 
and  make  instead  such  rates  as  will  not  so  clearly  and  unjustly  discriminate  against 
this  market,  and  against  the  live-stock  interests  of  the  West. 

Resolved,  That  a  copy  of  these  resolutions  be  forwarded  to  the  managers  of  each  of 
the  railroads  running  east  from  Chicago. 

Signed  by  S.  E.  Wood,  chairman  ;  E.  R.  Price,  Thomas  Brown,  Jr.,  J.  M.  Robinson, 
and  B.  Hancock. 

The  Chairman.  If  tliere  is  no  gentleman  present  who  desires  to  be 
heard  the  committee  will  adjonrii. 

At  1  o'clock  and  fifteen  minntes  p.  m.  the  committee  adjourned. 


648  TRANSPORTATION  INTERESTS  OF 

The  following  statement  from  Mr.  Joseph  Nimmo,  jr.,  was  submitted 
at  the  request  of  the  committee : 

STATEMENT  OF  JOSEPH  NIMMO,  Jr. 

By  way  of  introduction  to  this  large  and  complex  subject,  I  would 
invite  the  attention  of  the  committee  to  the  important  fact  that  the 
Canadian  Government  differs  radically  from  the  Government  of  the 
United  States  with  respect  to  its  relation  to  the  subject  of  transporta- 
tion and  commerce.  For  the  last  fifty  years  the  Canadian  Government 
lias  been  closely  allied  to  the  transportation  interests  of  Canada,  and 
that  Government  is  to-day  not  only  a  large  owner  of  canals  and  rail- 
roads, but  it  also  exercises  a  control  over  the  operations  of  its  transpor- 
tation lines,  with  respect  not  only  to  commercial  but  to  political  objects. 

On  the  other  hand,  the  Government  of  the  United  States,  as  you  are 
well  aware,  has  confined  itself  almost  entirely  to  the  regulation  of  rail- 
roads, and  has  nevei;  become  an  owner  or  practical  manager  of  the  sub- 
ject of  transportation,  leaving  those  matters  to  the  interaction  of  com- 
mercial forces.  A  proper  appreciation  of  this  distinction,  is,  in  my 
opinion,  vital  to  a  correct  understanding  of  the  whole  subject  of  the 
relations  of  Canada  to  the  United  States.  And  now  I  will  proceed  to 
state  to  you  in  a  general  way  the  interests  which  the  Canadian  Govern- 
ment has  in  transportation. 

CANADA'S  INTEREST  IN  TRANSPORTATION. 

About  the  time  when  the  State  of  New  York  embarked  in  the  work 
of  constructing  the  Erie  Canal,  the  Dominion  of  Canada  began  the 
construction  of  its  system  of  canals  connecting  Lake  Erie  with  ocean 
navigation  at  the  port  of  Montreal.  This  was  accomplished  by  the 
construction  of  the  Welland  Canal,  which  overcomes  the  fall  between 
Lake  Erie  and  Lake  Ontario ;  and  the  system  of  St.  Lawrence  River 
canals  which  overcomes  the  rariids  in  the  St.  Lawrence  Eiver  between 
Kingston  and  Montreal. 

I  will  also  remark  here  that  from  the  beginning  the  Dominion  of 
Canada  and  Great  Britain  have  had  direct  interest  in  transportation 
lines  with  reference  to  military  objects.  While  the  systems  of  canals 
of  which  I  have  just  spoken  were  being  constructed,  an  interior  line  of 
navigation,  known  as  the  Ottawa  and  Eideau  canal  system,  was*  con- 
structed between  Montreal  and  Kingston,  mainly  for  military  purposes, 
as  the  St.  Lawrence  Canal  was  too  much  exposed  to  an  attack  from  the 
United  States. 

The  canal  system  of  Canada  cost  a  little  over  $52,000,000,  and  it  is 
still  owned  and  operated  by  the  Dominion  Government.  As  we  fol- 
low the  history  of  Canada  we  shall  discover  the  fact  that  her  Govern- 
ment is  as  much  a  commercial  and  transportation  corjjorationas  a  politi- 
cal corporation. 

That  is  an  important  fact  and  one  which  muet  be  kept  in  mind  all 
the  way  through.  In  my  opinion  it  is  the  most  important  characteristic 
of  the  Dominion  Government,  in  so  far  as  relates  to  the  question  of  the 
relations  of  Canada  to  the  United  States. 

CANADA'S  INTEREST   IN  RAILROADS. 

I  will  next  mention  to  you  the  interests  which  Canada  has  in  railroads. 

Up  to  the  year  1867  the  several  British  North  American  provinces 

were   entirely   independent  of   each   other.     The  political    bond   be- 


THE  UNITED  STATES  AND  CANADA.  649 

tween  tbem  was  their  common  relations  to  the  British  Government. 
During  the  civil  war  in  this  country  the  question  of  the  political 
union  of  these  provinces  and  the  project  of  connecting  them  bv  govern- 
ment railroads  was  agitated  both  in  Canada  and  in  Great  Britain,  and 
in  so  far  as  I  have  been  able  to  comprehend  the  subject,  it  has  seemed  to 
me  to  be  part  and  parcel  of  the  general  spirit  of  opposition  which  at 
that  critical  period  was  manifested  by  Great  Britain  and  Canada  toward 
the  maintenance  of  the  Union  of  the  States. 

By  an  act  of  the  British  Parliament  ol  March  29, 1867,  known  as  the 
British  North  American  act,  the  several  colonies,  excepting  Newfound- 
land and  Prince  Edward  Island,  became  united  as  the  Dominion  of 
Canada.  One  of  the  conditions  under  which  this  union  was  eftected 
was  that  a  railroad  should  be  built  by  the  Dominion  Government  con- 
necting the  provinces  of  Ontario,  Quebec,  Nova  Scotia,  and  New  Bruns- 
wick. This  road  was  accordingly  built  by  the  government.  Its  main 
line  extends  from  Point  Levis,  opposite  Quebec,  to  Halifax.  It  pursues 
quite  a  circuitous  route.  The  cost  of  the  intercolonial  railway  system 
was  about  $46,000,000.  That  system  is  still  owned  and  operated  by  the 
Dominion  Government.     Commercially  it  is  a  non-paying  enterprise. 

According  to  the  report  for  the  latest  year  the  cost  of  operating  the 
system  was  $232,106  in  excess  of  the  receipts. 

THE  CANADIAN  PACIFIC  RAILWAY. 

But  the  most  important  railroad  enterprise  in  which  the  Dominion 
Government  is  interested  is  the  Canadian  Pacific.  The  scheme  of  con- 
structing a  Canadian  railroad  across  the  continent  is  said  to  have  been 
first  suggested  thirty  or  forty  years  ago,  but  it  did  not  assume  a  practi- 
cal shape  until  during  our  civil  war.  The  definite  plans  for  construction 
were  finally  determined  upon  about  the  year  1867,  the  year  in  which  the 
Dominion  Government  was  inaugurated.  The  date  of  the  inaugura- 
tion of  that  Government  was  July  1,  1867.  That  day  is  celebrated 
every  year  in  Canada  as  "  Dominion  Day." 

The  construction  of  the  Canadian  Pacific  Railroad  is  so  closely  identi- 
fied with  the  present  administration  of  government  affairs  in  Canada 
that  1  will  turn  aside  here  to  make  a  general  statement  to  the  commit- 
tee in  regard  to  that  government. 

•    CONSTRUCTION  OF   THE   CANADIAN  PACIFIC  RAILWAY. 

Sir  John  A.  Macdonald,  the  present  Premier  of  Canada,  was  the  po- 
litical leader  of  the  plan  of  confederation,  which  embraced  not  only  the 
political  union  of  the  provinces,  but  their  commercial  union,  by  means 
of  railroad  construction.  As  before  remarked,  oneof  the  fundamental 
principles  of  this  scheme  was  the  construction  of  the  Intercolonial 
Railway  The  other  was  the  construction  of  the  Canadian  Pacific 
Railway.  The  Macdonald  party  saw  that  the  natural  affinities  of  trade 
of  all  the  colonies  were  with  the  United  States.  This  they  resolved  to 
overcome  by  means  of  railway  construction,  and  thus  tohohl  the  prov- 
inces in  their  allegiance  to  Great  Britain, 

Sir  John  Macdonald's  party  assumed  control  of  the  affairs  of  the  Do- 
minion at  the  time  of  the  inauguration  of  that  government.  July  1, 1867. 
The  Canadian  Pacific  Railway  was  soon  afterwards  begun  as  a  govern- 
ment road,  but  in  the  course  of  a  few  years  dilficulties  arose,  and  in 
consequence  of  a  public  scandal  concerning  the  financial  management 
of  the  enterprise,  Sir  John  Macdonald  was  driven  from  power  in  1873. 


G50  TRANSPORTATION  INTERESTS  OP 

But  in  1878  he  triuinpbantly  returned  to  power  upon  the  original  issue 
of  coustrnctiiig  the  Canadian  Pacific  Eailway,  and  his  ijarty  has  re- 
mained in  power  ever  since. 

In  consequence  of  public  prejudice  which  had  arisen  in  connection 
with  the  attempt  of  the  government  to  construct  the  road,  its  construc- 
tion was  assigned  to  a  private  cor])oratiou,  the  Canadian  Pacific  Railway 
Company,  whicli  corporation  in  all  things  touching  questions  of  commer- 
cial and  political  policy  has  been  and  still  is  the  alter  ego  of  the  Dominion 
Government.  All  that  had  been  done  in  the  way  of  construction  of 
the  road  was  at  once  turned  over  to  the  Canadian  Pacific  Railway  Com- 
pany as  a  gift.  The  portions  of  the  completed  line,  which  had  cost 
$35,000,000,  were  thus  donated  to  the  Canadian  Pacific. 

The  total  value  of  aids  of  various  sorts  extended  to  the  Canadian 
Pacific  by  Ihe  Dominion  Government  is  slated  in  the  following  table  : 

Eevised  eslimaieof  gifts  from  the  Dominion  Government  to  the  Canadian  Pacific  Railway 
Company,  and  securities  which  that  companji  has  been  enabled  to  float  (stock  and  bonds) 
as  the  result  of  the  Dominion  (juaraniyand  the  land  grant  of  25,i)00 ,000  acres  of  land. 

(1)  Cash  subsides  as  follows: 

(a)  Subsidy  of  $25,000,000  Mentioned  in  section  3  of  act  of  Febru- 

ary 13,  1881. 

(b)  714  mile.«f)f  railroad  constructed  by  the  Dominion  Government, 

costing  $35,000,000,  which  was  presented  to  the  Canadian 
Pacific  Company  as  a  gift,  with  interest,  to  June  30,  1887 
(see  public  accounts  of  Canada  for  1867) $61, 760, 785 

(2)  Capital  stock  originally  $100,000,000,  but  reduced  to  $05,000,000,  with 

a  niiiiiraum  dividend  of  3  jier  cent,  guarantied  for  ten  years 

(see  Poor's  Manual) 65,000,000 

(3)  During  the  session  of  Parliament  of  1884,  the  Dominion  Government 

authorized  a  loan  to  the  company  of  $29,880,912,  to  be  paid 
as  the  work  of  construction  progressed,  and  for  the  purpose 
of  expediting  coustruction.  This  consisted  of  $9,880,912 
secured  by  lieu  on  the  entire  road  and  land  grant,  subject  to 
the  then  outstanding  laud-grant  bonds;  also  Government 
bonds  to  the  amount  of  $20,000,000,  which  was  exchanged 
for  a  like  amount  of  the  company's  loan  of  $35,000,000,  which 
had  been  issued  in  the  place  of  the  $35,000,000  of  original 
stock  which  had  been  retired  (see  sec.  4,  act  20th  July, 
1885) 29,880.912 

(4)  Balance  of  $35,000,000  loan  after  deducting  $20,000,000  placed  in  the 

hands  of  the  Government  in  order  to  secure  the  $20,000,000 

bonds  above  mentioned 15, 000, 000 

(5)  Land-grant  bonds  issued  by  the  company  as  a  lien  upon  the  lands 

which  it  acquired  by  gift  of  the  Dominion 25,000,000 

(0)  Bonds,  interest  guarantied  by  the  Dominion  for  fifty  years  at  3|  per 
cent,  issued  to  the  company  for  the  purpose  of  remunerating 
it  for  thelossof  itsrelinqnishmentof  the  monopoly  ofrailroad 

building  in  Manitoba 15,000,000 

(7)  Subsidy  of  $186,000  a  year  for  twenty  years  for  a  line  through  the 

State  of  Maine 3,720,000 

Total 215,361,697 

Of  this  sum  about  $105,000,000  may  be  classed  as  cash  and  gifts 
available  as  cash,  and  $110,000,000  as  guaranties  of  securities. 

According  to  the  balance  sheet  of  the  company  for  December,  1888, 
the  total  cost  of  the  road,  and  its  equipment,  plant,  materials,  and  sup- 
plies was  $167,093,895.  The  total  stock,  bonded  debt,  and  current 
liabilities  of  the  company  on  the  same  day,  amounted  to  $131,350,019. 
From  this  it  appears  that  the  various  aids  received  from  the  Govern- 
ment at  their  par  value  were  $48,207,802  in  excess  of  the  cost  of  the 
road,  and  $84,011,078  in  excess  of  its  liabilities. 


THE    UNITED    STATES    AND    CANADA.  651 

DOMINION  AIDS  TO  THE  CANADIAN  PACIFIC  RAILWAY. 

lu  order  to  aire  jou  a  clear  idea  of  the  interest  which  the  Canadian 
Government  has  in  the  Canadian  Pacific  as  a  commercial  and  political 
enterprise,  I  have  prepared  for  you  the  following-  schedule  of  gifts, 
guaranties,  exemptions,  concessions,  and  franchises  granted  to  the 
company  by  the  Dominion  Government: 

(a)  Direct  gilts  of  money,  laud  errant,  and  other  privileges  which  have 

become  available  as  cash  assets  in  the  i^rocesses  of  funding,  as 

before  stated |105, 000, 000 

(b)  Bonds  and  stock  guarantied  by  the  Doraiuiou  Government  as  before 

stated 110,000,000 

(c)  Exemption  from  taxation  for  all  time.     As  the  taxes  on  both  the  Uu ion  Pacific 

and  Southern  Pacific  Companies  exceed  $1,000,000  a  year  (see  Poor's  Manual), 
I  assume  that  the  Cauadiau  Pacific  taxes  remitted  would  amount  to  at  lease 
$;C)00,000  a  year. 

(rf)  Remission  of  duties  on  rails  and  all  imported  material,  amounting  to 

at  least $7,000,000 

(c)  Protection  against  the  construction  of  competing  lines  for  twenty  years,  the 
value  of  which  concession  can  not  be  accurately  estimated.  To  an  American 
line  such  a  concession  would  constitute  a  guaranty  of  a  fair  rate  of  interest 
on  the  cost  of  the  road. 

(/)  The  Dominion  Government  has  granted  an  annual  subsidy  of  $180,000  to  the  por- 
tion of  the  line  of  the  Canadian  Pacific  Railway  which  extends  across  the 
State  of  Maine.  -The  obvious  effect  of  this  line  would  be  to  divert  American 
and  Canadian  commerce  from  Boston  and  Portland,  Me. 

COST   OF    CANALS   AND   RAILWAYS. 

In  the  construction  of  her  canals  and  railways,  Canada  has  expended 
in  cash  over  $200,000,000,  and  granted  exemptions  and  franchises  which 
nndoubtedlv  swell  the  total  value  of  governmental  aid  to  nearly  $300,- 
000,000. 

The  intimate  association  of  the  Government  of  Canada  with  the  trans- 
portation interests  of  the  Dominion  is  clearly  indicated  by  the  fact  that 
in  order  to  secure  the  commercial  and  political  union  of  the  Provinces, 
by  means  of  railroad  construction,  the  people  of  Canada' have  submitted 
to  a  burden  of  debt  equal,  in  proportion  to  population,  to  the  burden 
of  debt  which  was  assumed  by  the  people  of  the  United  States  in  order 
to  save  the  Union,  This  burden  has  been  willingly  borne  by  the  people, 
and  to-day  this  association  of  political  powers  with  the  control  of  the 
transportation  interests  of  the  Dominion  in  such  manner  as  to  aflect 
both  political  and  commercial  objects,  is  the  predominating  political 
sentiment  of  the  Dominion. 

It  is  my  firm  belief  that  if  the  present  administration  of  governmental 
aftairs  in  Canada  should  go  out  of  power,  by  the  death  of  Sir  John  Mac- 
donald  or  otherwise,  no  political  party  which  should  attempt  to  re- 
verse this  political  transportation  policy  of  the  Dominion  couhl  retain 
power  for  six  months,  so  intimately  has  this  policy  become  interwoven 
into  the  very  fabric  of  government. 

PUBLIC   DEBT   OF    CANADA. 

The  public  debt  of  Canada  increased  from  $93,000,000  in  1867,  the 
year  of  the  confederation,  to  $235,107,948  on  the  30th  of  Xovember, 
1889.  This  increase  in  the  Dominion  debt  since  the  confederation  has 
been  due  chiefly  to  the  construction  of  the  great  political  railroads  of 
Canada. 

When  we  consider  our  Canadian  relationships  we  must  remember 


652  TRANSPORTATION  INTERESTS  OP 

tliat  we  are  dealing  not  only  with  a  government  but  with  a  great  sys- 
tem of  transportation  sharply  competing  with  the  commercial  and  trans- 
portation interests  of  the  United  States.  If  the  Dominion  of  Canada 
were  as  completely  separated  from  actual  conduct  of  commerce  and 
transportation  as  is  the  United  States,  our  Canadian  relationships  would 
be  purely  of  a  political  character ;  but  the  difficulty  involved  in  the 
whole  matter  is  that  the  United  States  Government  in  its  foreign  policy 
is  ingenuously  political  while  the  Dominion  Government  is  shrewdly 
commercial  from  the  compulsion  of  proprietary  interests  and  financial 
obligations.  The  fact  that  the  ownership  and  control  of  railroads  is  a 
fundamental  part  of  its  policy  makes  it  commercially  aggressive.  The 
very  fact  of  its  ownership  of  canals  and  railroads  and  its  deep  interest 
in  commerce  and  transportation  for  political  purposes  subjects  it  to  a 
sort  of  public  responsibility  of  which  we  have  no  conception  in  this  coun- 
try. By  virtue  of  these  facts  the  Dominion  Government  is  necessarily 
aggressive.  The  very  fact  that  the  Dominion  Government  has  assumed 
responsibility  for  the  commercial  success  of  the  country  brings  to  bear 
upon  it  a  public  responsibility  which  compels  it  to  have  recourse  to  all 
the  sharp  expedients  of  transportation  and  of  trade.  So  we  see  the  Do- 
minion Government  doing  toward  the  transportation  lines  of  the  United 
States  just  as  one  great  railroad  company  is  doing  toward  another. 

This  fact  is  now  clearly  appreciated  by  the  Inter-State  Commerce 
Commission.  In  their  third  annual  report,  just  issued,  referring  to  the 
Canadian  railroads  generally,  the  Commission  say: 

They  are  practically  iiutler  no  restrictions  imposed  by  their  own  statutes  in  re- 
spect to  long  and  short  lianl  traffic,  but  are  at  liberty  to  charge  high  rates  on  local 
business  to  iudeninify  for  losses  on  through  or  international  business.  Their  man- 
agers deny,  with  more  or  less  emphasis,  that  their  local  traffic  is  subjected  to  higher 
rates,  but  when  the  liberty  to  make  such  charges  and  the  necessity  for  it  can  exist, 
the  inducement,  at  least,  is  strong.  The  provisions  of  the  Canadian  statute  on  this 
subject,  are  as  follows: 

''Sec.  226.  The  company  in  fixing  or  regulating  the  tolls  to  be  demanded  and  ta- 
ken for  the  transportation  of  goods,  shall,  except  in  respect  to  ihrotigh  traffic  to  or  from 
the  United  States,  adopt  and  conform  to  any  uniform  classification  of  freight  which 
the  governor  iu  council  on  the  report  of  the  minister,  from  time  to  time  prescribes. 

"  Sec.  232.  No  company  in  fixing  any  toll  or  rate  shall,  under  like  conditions  and 
circumstances,  make  any  unjust  or  partial  disjirimination  between  ditterent  localities, 
but  no  discrimination  between  localities,  tmich  hy  reason  of  competition  hi/  water  or 
railtvay,  it  is  necessary  to  make  to  secure  traffic,  shall  be  deemed  to  be  unjust  or  partial." 

These  enactments  give  all  traffic  carried  in  comijetiou  with  our  carriers  unlimited 
freedom. 

In  a  word,  the  Dominion  Government  in  the  conduct  of  its  railroad 
policy  is  doing  as  railroad  managers  are  doing  everywhere.  Eailroad 
managers  are  engaged  in  a  never  ending  fight.  That  is  a  characteristic 
of  competition.  The  Canadian  aggression  upon  American  interests  is 
therefore  a  natural  exi)ression  of  the  character  of  their  Government. 

That  fact  to  my  mind  is  a  very  important  one,  and  it  seems  to  me  to 
be  the  root  of  the  whole  matter.  Just  take  the  whole  case  in  review. 
First,  the  Canadian  ownershij)  of  canals,  which  cost  $52,000,000;  second, 
the  direct  ownership  and  management  of  the  intercolonial  system,  which 
cost  $40,000,000,  and  third,  the  interest  of  the  Dominion  Government  in 
the  Canadian  Pacific  llailway,  which  it  has  aided  in  various  ways  to  the 
amount  of  $215,000,000.  All  this  has  really  transformed  the  Dominion 
Government  from  a  political  organization  into  a  commercial  institution — 
an  aggressive  trans])ortation  system.  At  least  that  is  the  character 
it  assumes  towards  the  United  States  in  all  matters  of  international  re- 
lationships. 

A  man  gets  himself  into  a  certain  method  of  doing  business  and  he 
has  got  to  follow  up  that  line  of  policy  in  order  to  succeed.     Just  so  it 


THE  UNITED  STATES  AND  CANADA.  653 

is  with  a  government.  It  is  by  a  faithful  adherence  to  this  sort  of 
policy  that  the  present  Macdonald  government  has  become  so  firmly 
intrenched  in  power.  It  is  impossible  for  his  party  to  enter  into  any 
treaty  agreement  which  would  relieve  it  from  the  "necessity  of  having 
recourse  to  all  those  tactical  and  strategetical  expedients  with  which 
the  great  trunk  lines  of  the  country  are  continually  competing  with  each 
other.  So  I  liivor  reciprocal  legislation  with  Canada  in  preference  to 
commercial  treaties,  and  as  we  hold  the  advantage  over  Canada  all 
along  the  line  we  can  dictate  the  detail  of  our  Canadian  relationships. 
It  is  difficult  for  us  iu  the  United  States  to  appreciate  the  force  of 
public  sentiment  which  iu  Canada  has  created  a  vast  public  debt  for 
the  construction  of  railways  and  canals  and  which  compels  the  admin- 
istration of  the  Domiuiou  to  manage  those  enterprises  according  to 
the  dictates  of  apparent  commercial  need. 

THE      TRANSATLANTIC     AND     TRANSPACIFIC      STEAMER     LINES      AND 
CONNECTIONS   OF   THE   CANADIAN  PACIFIC   RAILWAY. 

Upon  the  completion  of  the  Canadian  Pacific  Kailway,  in  the  si)ring 
of  188G,  a  line  of  steamers  was  established  between  Vancouver,  British 
Columbia,  and  China  and  Japan.  Recently  the  preliminary  steps  have 
been  taken  for  the  establishment  of  a  British  steamer  line  from  Van- 
couver to  Australia  and  New  Zealand ;  also  for  the  establishment  of  a 
steamer  line  from  St.  Johns,  New  Brunswick,  and  Quebec,  to  Liver- 
pool. The  i)rovisions  of  law  for  the  establishment  of  the  British  lines 
iust  mentioned  are  embraced  iu  the  following  act  of  the  Domiuiou 
Government,  passed  at  its  late  session : 

AN  ACT  relating  to  ocean  steamship  subsidies. 

Her  Majesty,  by  and  wit li  the  advice  a  nd  conseut  of  the  Senate  and  I[oti.se  of  Com 
luous  of  Canada,  enaots  as  follows: 

1.  The  governor  iu  council  may  grant  to  any  individual  or  compauy  a  subsidy 
not  exceeding  the  sum  of  twenty-tive  tliousand  pounds  sterling  per  annum,  to  as«i»t 
in  establishing  an  efl'eetive  fortnightly  steam-ship  service  between  Britisli  Columbia 
and  the  Australian  colonies  and  New  Zealand,  or  such  proportion  thereof  as  is  decided 
upon  by  the  governor  in  council  to  assist  in  establishing  a  monthly  service  with  the 
said  countries,  such  subsidy  to  be  granted  for  such  term  of  years,  not  exceeding  ten, 
and  on  stich  conditions  as  the  governor  in  council  considers  expedient. 

2.  The  goverpor  in  council  may  grant  to  any  individual  or  company,  to  whom 
there  is  granted  by  the  Government  of  the  United  Kingdom  the  aid  hereinafter  men- 
tioned, a  subsidy  not  exceeding  the  sum  of  tifteen  thousand  pounils  sterling  ]>er  an- 
num for  a  monthly  steam-ship  service,  or  a  subsidy  not  exceeding  the  sum  of  twenty- 
tive  thousand  pounds  sterling  per  annum,  for  a  fortnightly  steam-ship  service  between 
British  Columbia  and  China  and  Japan,  such  subsidy  to  bo  granted  for  such  term  of 
years  and  on  snch  conditions  as  the  governor  in  council  considers  expedient :  Pro- 
vided ahvai/x,  That  during  such  term  the  Government  of  the  United  Kingdom  grants 
to  such  individual  or  company  a  subsidy  of  not  less  than  forty-live  thonsand  pounds 
sterlin,"-  per  annum  for  the  monthly  service,  or  of  not  loss  than  seventy-live  thousand 
pounds'sterling  per  annum  for  the  fortnightly  service  above  mewtioned. 

3.  The  governor  in  council  may  enter  into  a  contract  for  a  term  not  exceeding  ten 
years  with  any  individual  or  coinpany  for  the  performance  of  a  fast  weekly  steam- 
ship service  between  Canada  and  the  United  Kingdom,  making  connection  with  a 
French  port,  on  such  terms  and  conditions  as  to  the  carriage  of  mails  and  otlierwis(>_ 
as  the  governor  iu  council  deems  expedient,  for  a  subsidy  not  exceeding  the  sum  of 
five  hundred  thousand  dollars  a  year. 

This  act  provides  for  the  establishment  of  the  following  British  lines 
of  steamers: 

First.  A  fortnightly  line  from  Vancouver  to  Australia  ami  ^ew  Zeal- 
and, with  a  Canadian  subsidy  of  •■?  125,000  a  year,  elfort.s  In'/ng  made 
for  securing  an  additional  subsidy  iVom  Australia  and  New  Zealand. 

Secoutl,  A  Uue  from  Vaugouver  to  <-Mm\  iuul  Jupan,  with  n  subsidy 


654  TRANSPORTATION  INTER KSTS  OF 

of  about  $300,000  in  the  case  of  a  monthly  service,  and  of  about  $500,000 
in  the  case  of  a  fortnightly  service;  and 

Third.  A  British  line  of  steamers  from  St.  Johns,  New  Brunswick,  to 
Liverpool,  with  a  Canadian  subsidy  of  $500,000  a  year.  This  is  to  be 
supplemented,  I  understand,  by  a  British  subsidy,  the  amount  of  which 
is  not  known,  but  is  publicjly  stated  at  $300,000  a  year,  making  a  total 
subsidy  of  $800,000  a  year. 

The  steamers  of  the  Pacific  line  to  China  and  of  the  Atlantic  line  to 
England  are  to  be  so  constructed  as  to  be  readily  available  as  armed 
cruisers  in  the  military  navy  of  Great  Britain,  and  in  consideration 
thereof  they  are  to  receive  in  addition  to  the  sums  above  mentioned, 
certain  admiralty  or  navy  subsidies,  the  amount  of  which  is  not  pub- 
licly known.  It  is  understood,  however,  that  this  admiralty  subsidy 
consists  of  a  construction  bounty  and  subsequent  navigation  bounty, 
which  runs  for  a  term  of  years.  The  steamers  on  the  Atlantic  line  are 
to  be  of  large  size  and  great  speed.  This  scheme  has  been  delayed  by 
Canadian-Pacific  scheming  to  get  the  control  of  a  part  of  the  intercolo- 
nial railway  system,  but  there  can  be  little  doubt  of  the  final  consum- 
mation of  the  whole  plan  as  above  outlined. 

In  the  whole  history  of  commerce  there  is  nothing  in  the  nature  of 
governmental  promotion  which  can  be  compared  to  this  enormous 
scheme  of  subvention,  embracing  the  Canadian  Pacific  Railway  with 
its  enormous  grants,  privileges,  and  franchises,  and  its  connecting 
ocean  steamer  lines  receiving  enormous  commercial  and  naval  subsidies. 

The  object  of  this  scheme  is  not  alone  Canadian  union  and  Canadian 
commercial  and  })olitical  advancement;  it  goes  far  beyond  this.  It  is 
part  and  parcel  of  the  gigantic  political  scheme  of  imperial  confedera- 
tion. It  was  in  this  view  that  Lord  Lansdowne,  late  governor-general 
of  (Canada,  declared  that  "  without  the  Canadian  Pacific  Railwaj'^  the 
British  North  American  act  was  not  worth  the  paper  it  was  written 
upon." 

The  ruling  political  party  in  Canada  recognizes  this  fact,  and  the 
leaders  of  that  partj^  make  no  pretense  of  disguising  it.  The  "Hand 
Book  of  Canada,"  ])ublished  by  the  Dominion  Government,  states  that 
the  Canadian  Pacific  was  constructed  "in  the  interests  of  the  empire  at 
large,  as  well  as  those  of  Canada."  And  it  adds:  "Had  these  far-see- 
ing plans  been  taken  up  when  [first]  mooted  Canada  would  have  been  at 
least  two  generations  in  advance  of  her  present  position,  whilst  "  Greater 
Britain"  [i.  e.  British  imperial  confederation]  would  have  been  in  a  much 
higher  state  of  development  than  it  is."  This  significant  remark  also 
follows : 

It  was  a  singular  coincidence,  and  perhaps  a  proplietic  omen  of  the  futnre  imperial 
importance  of  this  railway,  that  the  first  hiaded  train  that  passed  over  its  entire  length 
from  ocean  to  ocean  was  freighted  with  naval  stores,  belonging  to  the  imperial  war 
department,  transferred  from  Quebec  to  Vancouver. 

This  shows  the  politico- commercial  aspect  of  the  Canadian  Pacific 
Railway,  in  a  way  which  forces  the  United  States  Government  to 
consider  the  question  as  to  whether  the  United  States  or  the  British 
Emi)ire  is  to  hold  tlie  commercial  supremacy  on  this  continent. 

These  facts  emphasize  and  more  clearly  bring  out  the  point  which  1 
have  before  stated,  namely,  that  the  United  States  is  confronted  at  the 
north  by  a  government  which  is  thoroughly  committed  to  a  political 
policy  involving  a  participation  in  commerce  which  is  essentially  aggress- 
ive toward  American  interests.  This  is  the  real  question  which  we 
have  to  meet,  and  it  must  be  determined  in  order  to  protect  American 
»}hips,  American  sea-ports,  and  American  transportation  lines. 


THE    UNITED    STATES   AND    CANADA.  655 

This  view  of  the  case  has  been  very  clearly  set  forth  in  the  recent  reso- 
lutions adopted  by  the  commercial  conference  on  the  Pacific  coast 
wherein  it  is  clearly  shown  that  this  Canadian  and  Ibitish  policy  of 
subsidized  steamer  lines  and  subsidized  railroads  across  ihe  conti- 
nent will  inevitably  break  down  American  steamer  navigation  on  the 
Pacihc  Ocean,  the  etiect  of  which  will  be  to  divert  commerce  from  the 
Pacihc  ports  and  from  our  own  lines  of  transportation  between  Pacific 
coast  ports  and  the  eastern  side  of  the  coutiueut. 

THE   UNITED   STATES  AND   CANADIAN  TRANSIT  TRADE. 

A  clear  understanding  of  our  Canadian  relationship  of  transportation 
involves  a  careful  consideration  of  what  is  commonly  known  as  "  the 
United  States  and  Canadian  transit  trade." 

The  United  States  and  Canadian  transit  trade  had  its  origin  in  an 
exercise  of  administrative  discretion.  About  the  year  IS4S  the  inference 
was  raised  that  if  under  our  laws  imported  goods^  held  in  a  government 
warehouse,  for  example,  in  New  York  City,  could  be  taken  out  of  the 
warehouse  and  transported  across  the  streets  of  New  York  to  a  sea- 
going vessel  and  re-exported  without  the  payment  of  duties,  it  might 
be  lawful  to  take  them  out  of  the  warehouse  in  New  York  and  place 
them  on  board  of  a  railroad  car  and  ship  them  across  the  United  States 
to  Canada  without  the  payment  of  duty.  This  was  done  and  con- 
stituted the  beginning  of  the  transit  trade.  At  the  same  time  the 
privilege  was  extended  to  Canadians  of  shipping  their  produce  across 
the  United  States  to  be  exported  from  New  York  or  from  Boston  to 
foreign  countries  without  exacting  duties  upon  them  in  the  United 
States.  This  latter  privilege  was  of  great  value  to  the  Canadians,  for  the 
reason  that  the  St.  Lawrence  River  is  closed  by  ice  and  fogs  about  six 
months  of  each  year,  during  which  period  they  are  practically  interior 
provinces.  At  tlie  same  time  tliis  traffic  brought  business  to  shipping 
at  the  port  of  New  York  and  to  American  transportation  lines,  and  it 
had  about  it  the  essential  elements  of  reciprocity. 

The  St.  Lawrence  system  of  canals  was  completed  about  the  year 
1848.  During  that  year  the  Canadian  Government  very  gladly  ex- 
tended to  the  people  of  the  United  States  the  privilege  of  importing 
and  exporting  goods  through  Montreal  without  the  ])ayment  of  duties 
in  Canada.  The  Canadian  Government  did  everything  it  could  to  en- 
courage this  traffic  because  it  tended  to  promote  the  commercial  inter- 
ests of  Canada.  At  the  same  time  it  afforded  to  the  people  of  our  West- 
ern and  Northwestern  States  the  competitive  advantage  of  an  alterna- 
tive route.  This  movement  also  had  about  it  the  essential  elements  of 
reciprocity. 

These  two  movements,  embracing  the  privilege  afforded  by  each 
country  of  exporting  or  iini)orting  goods  across,  the  territory  of  the 
other  without;  the  payment  of  duty,  I  shall  hereinafter  designate  as  ''  the 
foreign  transit  trade."  It  may  be  remarked  in  passing  that  the  ad- 
vantages which  the  foreign  transit  trade  affords  to  Canada  are  pro- 
Ijortionately  very  much  greater  than  those  afforded  to  the  United  States. 

THE  DOMESTIC   TRANSIT   TKADE. 

There  is  another  and  more  important  branch  of  the  United  States 
and  Canadian  transit  trade  to  which  I  would  more  i)articulaily  invite 
your  attention.     I  refer  to  the  transportation  of  merchandise  from  ouq 


British  Columbia 150,999 

Prince  Edward  Island 121,852 

Northwest  Territories 106,000 


t;56  TRANSPORTATION    INTERESTS    OF 

l^oint  in  the  United  States  to  another  jioint  in  the  United  States  across 
the  territory  of  Canada,  and  to  the  transportation  of  goods  from  one 
point  in  Canada  to  another  point  in  Canada  across  the  territory  of  the 
United  States,  in  both  cases  without  payment  of  duty.  This  I  desig- 
nate as  the  domestic  transit  trade.  This  branch  of  the  transit  trade 
had  its  origin  in  the  geographical  circumstance  that  east  of  Minnesota, 
where  the  parallel  of  49  degrees  is  the  international  boundary,  the  terri- 
tory of  the  two  countries  interject,  the  one  into  the  other,  through  a 
range  of  G  degrees,  or  about  400  miles  of  longitude. 

The  entire  settled  i)ortions  of  the  provinces  of  Ontario  and  Quebec 
are  situated  south  of  a  line  drawn  from  the  northern  boundary  of  Min- 
nesota to  the  northernmost  point  of  Maine. 

Just  73  per  cent,  of  the  total  poi)ulation  of  the  Dominion  of  Canada 
is  embraced  in  this  interjection  of  territory,  as  will  be  seen  from  the 
statement  of  population  recently  prepared  by  the  statistical  biireau  of 
Canada : 

Population.  Population. 

Ontario 2,189,107 

Quebec : 1,496,22(5 

Nova  Scotia  489,618 

New  Brunswick 348,568 

Mauitoba 146,545  Total 5,048,915 

On  the  other  hand,  the  State  of  Maine  almost  separates  the  province 
of  Quebec  from  the  province  of  New  Brunswick. 

Now,  I  beg  you  will  carefully  observe  the  fact  that  the  "  transit 
trade"  is  based  absolutely  upon  these  interjections  of  territory,  and 
upon  the  fact  that  navigation  on  the  St.  Lawrence  River  is  closed  for 
about  six  months  each  year.  But  for  these  physical  characteristics  of 
the  two  countries  on  tlie  east  side  of  the  continent,  there  never  would 
have  been  any  "  transit  trade." 

The  origin  of  the  domestic  "  transit  trade  "  was  as  follows  : 

About  the  1st  of  April,  1855,  the  railway  suspension  bridge  two 
miles  below  Niagara  Falls  was  completed.  By  this  means  the  New 
York  Central  Bailroad,  the  Great  Western  Railroad,  of  Canada,  and  the 
Michigan  Central  Railroad  formed  the  first  all-rail  line  from  New  York 
to  Chicago,  with  the  single  break  caused  by  the  Detroit  River,  which 
was  crossed  by  a  ferry.  A  large  freight  and  passenger  trafitic  at  once 
sprung  into  existence  over  this  line. 

The  question  arose  whether  American  goods  could  be  loaded  into  a 
foreign  railroad  car  at  Suspension  Bridge  and  carried  across  the  inter- 
jecting territory  of  Canada  to  Detroit  without  the  payment  of  duty. 
The  analogy  furnished  by  our  navigation  laws,  which  forbid  the  car- 
riage of  goods  from  one  point  in  the  United  States  to  another  point  in 
the  United  States  in  any  other  than  an  American  vessel,  was  set  aside. 
In  the  absence  of  any  specific  statute  on  the  subject,  the  authorities  at 
Washington  yielded  to  the  popular  demand,  and  thus  the  domestic 
transit  trade,*^  like  the  foreign  transit  trade,  had  its  origin  in  the  mere 
exercise  of  administrative  discretion.  The  Canadian  government  very 
freely  acceded  to  the  arrangement,  for  it  was  one  of  great  advantage 
to  the  traffic  interests  of  the  then  most  important  railroad  in  Canada, 
the  Great  Western  Railroad. 

Since  the  inauguration  of  the  domestic  transit  trade  over  the  Cana- 
dian route  just  mentioned,  the  relative  importance  of  that  route  has 
greatly  decreased  in  consequence  of  the  construction  of  the  several 
powerful  trunk  lines  south  of  Lake  Erie,  which  carry  the  §reat  bulk  of 
tU^  commerce  between  the  West  aud  tUe  se^-bpf^rdi 


THE    UNITED    STATES   AND    CANADA.  657 

TRANSIT   TRADE  LEGISLATION  AND   TREATY  STIPULATIONS. 

Both  branches  of  the  transit  trade  hereinbefore  described  and  desig- 
nated as  the  foreign  transit  trade  and  the  domestic  transit  trade,  existed 
from  the  time  of  their  inception  by  virtue  of  administrative  discretion, 
and  in  the  absence  of  any  specific  provisions  of  law  sanctioning  them, 
until  July  28,  1866,  when  the  following  act  of  Congress  was  passed 
(Revised  Statutes,  sections  3005  and  3006,  Chapter  CCXCVIII,  ap- 
proved July  28,  1866) : 

AN  ACT  to  protect  the  revenue  and  for  other  purposes. 

Sec.  5.  And  he  it  further  enacted,  That  from  and  after  the  passage  of  this  act,  all 
goods,  wares,  or  merchandise  arriving  at  the  ports  of  New  York.  Boston,  and  Port- 
land, or  any  other  port  of  the  United  States  which  may  be  specially  designated  by 
the  Secretary  of  the  Treasury,  and  destined  for  places  in  the  adjacent  British  Prov- 
inces, or  arriving  at  the  port  of  Point  Isabel,  Texas,  or  any  other  port  of  the  United 
States  which  may  be  specially  designated  by  the  Secretary  of  the  Treasury,  and  des- 
tined for  places  in  the  Republic  of  Mexico,  may  be  entered  at  the  custom-house  and 
conveyed,  in  transit,  through  the  territory  of  the  United  States,  without  the  pay- 
ment of  duties,  under  such  rules,  regulations,  and  conditions  for  the  protection  of  the 
revenue  as  the  Secretary  of  the  Treasury  may  prescribe. 

Sec.  6.  And  ie  it  fiu-ther  enacted,  That  imported  goods,  wares,  or  merchandise  in 
bond,  or  duty  paid,  and  products  or  manufactures  of  the  United  States,  may,  with 
the  consent  of  the  proper  authorities  of  the  provinces  or  republic  aforesaid,  be  trans- 
ported from  one  port  or  place  in  the  United  States  to  another  port  or  place  therein, 
over  the  territory  of  said  provinces  or  republic,  by  such  routes  and  under  such  rules 
regulations,  and  conditions  as  the  Secretary  of  the  Treasury  may  prescribe ;  and  the 
goods,  wares,  or  merchandise  so  transported  shall,  upon  arrival  in  the  United  States 
from  the  provinces  or  republic  aforesaid,  be  treated  in  regard  to  the  liability  to,  or 
exemption  from  duty  or  tax  as  if  the  transportation  had  taken  place  entirely  within 
the  limits  of  the  United  States. 

Section  5  of  the  act  above  quoted  in  terms  legalized  the  foreign 
transit  trade,  while  section  6  as  specifically  legalized  the  domestic 
transit  trade.  The  next  measure  in  the  order  of  time  having  reference  to 
the  establishment  of  the  United  States  and  Canadian  transit  trade  is 
found  in  the  twenty-ninth  article  of  the  treaty  of  Washington,  which 
was  concluded  May  8,  1871.    That  article  is  as  follows : 

Article  XXIX. 

It  is  agreed  that,  for  the  term  of  years  mentioned  in  Article  XXXIII  of  this  treaty, 
goods,  wares,  or  meuchandise  arriving  at  the  ports  of  New  York,  Boston,  and  Port- 
land, and  any  other  ports  in  the  United  States  which  have  been  or  may,  from  time 
to  time,  be  specially  designated  by  the  President  of  the  United  States,  and  destined 
for  Her  Britannic  Majesty's  possessions  in  North  America,  may  be  entered  at  the 
proper  custom-house  and  conveyed  in  transit,  without  the  payment  of  duties, 
through  the  territory  of  the  United  States,  under  such  rules,  regnlutioiis,  and  condi- 
tions for  the  protection  of  the  revenue  as  the  Government  of  the  United  States  may 
from  time  to  time  prescribe ;  and,  under  like  rules,  regulations,  and  conditions, 
goods,  wares,  or  merchandise  may  be  conveyed  in  transit,  without  the  payment  of 
duties,  from  such  possessions  through  the  territory  of  the  United  States  for  export 
from  the  said  ports  of  the  United  States. 

It  is  further  agreed  that,  for  the  like  period,  goods,  wares,  or  merchandise  arriving 
at  any  of  the  ports  of  Her  Britannic  Majesty's  possessions  in  North  America,  and 
destined  for  the  United  States,  may  be  entered  at  the  proper  cuslom-house  and  con- 
veyed in  transit,  without  the  payment  of  duties,  through  the  said  possessions  under 
such  rules  and  regulations  and  conditions  for  the  protection  of  the  revenue  as  the 
governments  of  the  said  possessions  may  from  time  to  time  prescribe ;  and,  undei 
like  rules,  regulations,  and  conditions,  goods,  wares,  or  merchandise  may  be  con- 
veyed in  transit,  without  payment  of  duties,  from  the  United  States  through  the  said 
possessions  to  other  places  in  the  United  States  or  for  export  from  ports  in  the  said 
possessions. 

This  treaty  of  .Washington  was  concluded  fifteen  years  before  the 
Canadian  Pacific  Railway  was  constructed,  and  only  two  years  after 
6543 42 


C58  TRANSPORTATION    INTERESTS    OF 

the  first  transcontinental  railroad  was  completed  in  this  country.  It 
is  absolutely  certain  that  it  never  would  have  been  signed  by  any  sane 
American  commissioner  nor  ratified  by  any  American  Congress  in  the 
presence  of  the  conditions  which  now  govern  the  transportation  inter- 
ests of  the  United  States  and  of  the  eftbrts  which  are  now  being  made 
by  the  Canadian  and  British  Governments  to  grasp  American  commerce 
and  to  exploit  British  imperial  confederation  on  this  continent. 

And  now  let  us  briefly  recapitulate  the  leading  facts  hereinbefore 
stated  in  legard  to  the  transit  trade. 

Both  branches  of  that  trade  were  inaugurated  by  administrative  dis- 
cretion. Subsequently  they  were  sanctioned  by  the  act  of  July  28, 
1866,  and  by  article  29  of  the  treaty  of  Washington.  All  this  was 
prompted  and  justified  by  the  particular  circumstances  of  interjecting 
territory,  by  the  disability  under  which  the  provinces  of  Quebec  and 
Ontario  labor  of  having  no  winter  sea-ports,  and  by  the  advantage  of 
competition  M'hich  the  St.  Lawrence  River  route  affords  to  our  Western 
and  Northwestern  States  during  the  season  of  navigation. 

On  the  western  side  of  the  continent  the  case  is  entirely  different. 

Not  one  of  the  conditions  which  justify  the  transit  trade  on  the  east- 
ern side  of  the  continent  exists  as  a  justification  of  the  extension  of  the 
privileges  of  that  trade  to  the  western  side  of  the  continent;  but,  not- 
withstanding this  obvious  and  most  important  characteristic  of  the 
commercial  life  of  the  country,  upon  the  completion  of  the  Canadian 
Pacific  Railway  to  the  Pacific  Ocean,  in  the  month  of  May,  1886,  the 
Secretary  of  the  Treasurj^  granted  to  the  Canadian  Pacific  Railway 
Company  the  privileges  of  the  transit  trade,  so  that  it  was  enabled  at 
once  to  enter  into  competition  with  the  American  lines  for  the  domestic 
traffic  of  the  United  States  across  the  continent,  and  also  of  competing, 
by  the  sheer  force  of  British  and  Canadian  governmental  subsidy,  with 
American  steamer  lines,  American  sea-ports,  and  American  railroads 
for  our  Asiatic  commerce. 

I  am  aware  of  the  fact  that  under  a  familiar  rule  of  construction,  a 
statute  of  a  general  nature,  although  in  its  form  permissive,  is  never- 
theless mandatory  upon  the  officers  of  the  Government  charged  with 
its  administration,  and  that  Sec.  6,  of  the  act  of  July  28,  1866,  may  be 
regarded  in  this  light.  There  is,  however,  a  question  as  to  whether  the 
Secretary  did  or  did  not  err  in  allowing  the  transit  trade  on  the  Pacific 
coast  to  be  conducted  in  part  by  vessel  and  in  part  by  rail,  embracing 
the  transfer  of  cargo  on  foreign  soil.  But  I  submit  to  the  committee 
that  the  historic  facts  which  alone  justified  the  enactment  of  that  law, 
and  the  questions  of  public  policy  which  now  confront  the  country  re- 
garding the  encroachment  of  the  Dominion  Government  upon  the  navi- 
gation, transportation,  and  commercial  interests  of  the  United  States 
clearly  demand  that  under  specific  statutory  i)rovision8,  the  "transit 
trade"  shall  be  limited  to  the  conditions  under  which  it  was  origi- 
nally established,  and  to  the  specific  purposes  which  it  still  subserves  on 
the  eastern  side  of  the  continent. 

I  maintain,  however,  that  in  a  certain  particular  the  "transit  trade" 
as  now  conducted  on  the  Pacific  coast  is  in  open  violation  of  our  laws 
for  the  protection  of  the  revenue  from  customs. 

THE  TKANSir  TRADE   ON  THE  EASTERN  AND   ON   THE  WESTERN  SIDE 

OF   THE   CONTINENT. 

Now,  what  are  the  real  differences  between  the  application  of  the 
transit  trade  on  the  eastern  side  of  the  continent  and  on  the  western 
side  ?    To  make  this  perfectly  clear  to  your  commfttee,  even  at  the 


THE    UNITED    STATES    AND    CANADA.  659 

risk  of  repeating:  what  has  already  been  said,  I  invite  yonr  attention  to 
the  followincj  statement,  showing  specifically  the  radical  differences 
which  exist  between  the  conditions  under  which  the  transist  trade  ex- 
ists on  the  eastern  and  on  the  western  side  of  the  continent. 

First.  The  eastern  transit  trade  is  across  interjecting  Canadian  ter- 
ritory, in  part  over  an  American  line,  the  Canada  Southern  Kailway. 
There  is  no  such  interjecting  territory  on  the  west  side  of  the  continent, 
and  the  exclusive  privileges  of  railway  construction  granted  to  the  Can- 
adian Pacific  do  not  tolerate  such  an  American  competitor  in  British 
Columbia. 

Second-  The  transit  across  this  interjecting  territory  at  the  east, 
while  enabling  some  of  the  principal  railroads  of  Canada  to  partici])ate 
in  our  domestic  traffic,  affords  the  reciprocal  advantage  to  American 
shippers  of  short  and  direct  lines  between  our  Northwestern  and  our 
New  England  States;  but  no  such  advantage  of  a  shorter  line  is  af- 
forded by  the  Canadian  Pacific  on  the  western  side  of  the  continent. 

Third.  The  most  populous  and  most  wealthy  portion  of  the  Dominion 
of  Canada  is  for  six  months  of  the  year  dependent  upon  transit  across 
the  territory  of  the  United  States  for  free  commercial  intercourse  with 
foreign  countries.  But  no  such  disat)ility  affects  British  Columbia.  In 
common  with  all  the  Pacific  coast  ports,  as  far  north  as  Sitka,  Alaska, 
the  ports  of  British  Columbia  are  open  all  the  year. 

Fourth.  The  eastern  transit  trade  lines  tend  to  bring  trade  to  Amer- 
ican sea-ports,  while  the  Canadian  Pacific  Railway,  with  its  British 
steamer  line  adjuncts,  operates  very  strongly  to  turn  American  com- 
merce from  American  sea-purts,  a  fact  which  has  created  great  alarm  on 
our  Pacific  coast  and  has  led  the  convention  of  commercial  and  indus- 
trial organizations  of  that  section  to  utter  an  earnest  and  entirely  non- 
partisan appeal  to  Congress  for  protection  against  the  aggressions  of 
the  Canadian  and  British  Governments. 

Fifth.  The  St.  Lawrence  Eiver  and  Canadian  canals  afford  the  com- 
petitive advantages  of  an  alternative  route  to  the  people  of  our  Western 
and  Northwestern  States  for  six  months  of  the  year ;  but  no  such  nat- 
ural advantages  of  water  transportation  through  Canada  exist  on  the 
western  side  of  the  continent.  We  have  no  need  to  cross  Canadian 
territory  there,  even  for  the  purpose  of  gaining  the  advantages  of  an 
alternative  route. 

Sixth.  The  railroads  of  Canada,  which  were  allowed  to  engage  in  the 
transit  trade  under  the  privileges  of  the  act  of  July  28,  IStKi,  and  of 
article  29  of  the  treaty  of  Washington,  were  all  constructed  as  com- 
mercial enterprises,  on  commercial  principles  and  to  subserve  merely 
commercial  purposes,  but  the  Canadian  Pacific  Railway,  as  I  have  be- 
fore shown,  was  constructed  by  the  Dominion  Government  for  political 
purposes  distasteful  to  and  in  a  measure  inimical  to  the  United  States. 

This  is  fully  evidenced  by  the  contribution  of  $215,000,000  in  gifts 
and  other  subventions  by  the  Dominion  Government  to  the  Canadian 
Pacific  Railway;  by  the  exemption  of  the  property  of  that  company 
from  taxation,  amounting  to  $600,000  a  year;  by  the  remission  of 
duties  on  rails  and  other  materials,  amounting  to  $7,000,000  upon  the 
basis  of  the  rates  of  duty  charged  in  the  United  States;  by  i)rotection 
against  the  construction  of  competing  lines,  and  by  the  subsidy  to  the 
Canadian  Pacific  lines  across  the  State  of  Maine,  amounting  to  $180,000 
a  year. 

Seventh.  The  Canadian  Pacific  Railway  has  as  adjuncts  a  steamer 
line  to  Asia  so  heavily  subsidized  by  the  Canadian  government  as  to 
threaten  the  ruin  of  American  steamer  lines  between  San  Francisco  and 


660  TRANSPORTATION    INTERESTS    OF 

ports  in  Asia,  and  to  divert  our  Asiatic  commerce  from  American  sea- 
ports to  tbe  Canadian  port  of  Vancouver.  The  Canadian  and  British 
Governments,  with  the  idea  of  the  imperial  confederation  of  the  British 
Empire  prominently  in  view,  are  now  planning  for  the  establishment  of 
a  heavily  subsidized  British  steamer  line  to  Australia  and  New  Zealand. 
This  will  ruin  our  American  line  to  these  islands  unless  we  adopt  meas- 
ures which  will  protect  it  against  the  efforts  of  the  Dominion  Govern- 
ment to  destroy  it. 

Those  governments  are  also  planning  for  a  heavily  subsidized  trans- 
Atlantic  steam,  r  line  from  !St.  John's  or  Halifax  to  Liverpool.  This  line 
would  tend  to  divert  commerce  from  New  York,  Boston,  and  Portland, 
Me.  But  no  schemes  for  diverting  commerce  from  American  ships, 
from  American  sea-ports,  and  from  American  transportation  lines  char- 
acterized the  railroads  which  were  authorized  to  engage  in  the  transit 
trade  by  the  act  of  July  28,  1866,  or  by  the  treaty  of  Washington  of 
1871.  As  I  have  before  remarked,  that  treaty  would  never  have  been 
signed  by  any  sane  commissioner  if  it  had  been  characterized  by  any 
such  feature  of  hostility  to  American  interests. 

Eighth.  The  Canadian  Pacific  Railway  is  closely  identified  with  mili- 
tary objects,  which  were  at  the  beginning  urged  with  effect  both  in  Can- 
ada and  Great  Britain  in  favor  of  the  construction  of  that  road.  This 
feature  of  the  enterprise  is  accentuated  by  the  formidable  fortress  and 
naval  station  at  Esquimault  on  the  Island  of  Vancouver,  and  it  is  also 
indicated  by  the  fact  already  noted  that  the  first  train  which  passed 
over  the  Canadian  Pacific  upon  its  completion  was  loaded  with  material 
of  war.  No  objectionable  feature  of  this  nature  characterized  the  tran- 
sit trade  authorized  by  the  act  of  July  28,  1866,  and  by  the  treaty  of 
Washington,  and  it  is  certain  that  the  privileges  of  the  transit  trade 
should  never  be  granted  to  any  railroad  which  is  characterized  by  any 
such  objectionable  features. 

THE   POSSIBILITY  OF   CANADIAN  RETALIATION. 

The  question  of  expediency  has  been  suggested  as  to  the  effect  which 
the  suspension  of  the  privileges  of  the  transit  trade  on  the  western  side 
of  the  continent  might  have  upon  American  interests  in  case  the  Cana- 
dian government  should  see  fit  to  retaliate  by  curtailing  the  privilege 
of  the  transit  trade  on  the  eastern  side  of  the  continent.  Nothing  could 
be  more  absurd  than  to  apprehend  evil  to  any  American  interests  from 
this  source.  In  the  whole  matter  of  the  transit  trade  from  New  Bruns- 
wick to  Vancouver  the  United  States  holds  an  overpowering  advantage 
over  Canada  at  every  point.  The  entire  suspension  of  this  trade  would 
be  of  comparatively  small  disadvantage  to  the  United  States,  whereas 
it  would  be  utterly  disastrous  to  Canada.  If  the  Dominion  Government 
should  forbid  the  transportation  of  Canadian  goods  in  bond  and  free  of 
duty  across  the  State  of  Maine  over  the  new  subsidized  Canadian  Pacific 
line,  or  should  forbid  the  transportation  of  goods  across  the  territory  of 
the  United  States  through  the  ports  of  New  York,  Boston,  and  Port- 
land, Me.,  in  the  conduct  of  the  foreign  commerce  of  Canada,  or  should 
forbid  the  carriage  of  American  merchandise  from  one  point  in  the 
United  States  to  another  point  in  the  United  States  across  the  inter- 
jecting territory  of  the  provinces  of  Ontario  and  Quebec,  or  should  for- 
bid the  Northwestern  States  from  carrying  on  foreign  commerce  through 
the  port  of  Montreal  except  upon  payment  of  duty,  such  action  would 
wreck  the  commercial,  industrial,  and  transportation  interests  of  Can- 
ada and  in  a  moment  dispel  the  cherished  dream  of  Canadian  commer- 
cial supremacy  upon  this  continent. 


THE    UNITED    STATES    AND    CANADA.  661 

To  assume  that  the  suspension  of  the  privileges  of  the  transit  trade 
on  the  western  side  of  the  continent,  where  there  is  no  justifiable  ex- 
cuse for  its  existence,  would  lead  the  Canadian  government  to  retali- 
ate by  any  interference  whatever  with  the  eastern  transit  trade  would 
be  to  impeach  the  common  sense  of  the  exceedingly  astute  and  able 
men  who  now  control  the  political  aflairs  of  Canada.  ISIothing  could 
be  more  puerile  than  such  an  assumption.  It  is  to-day  entirely  within 
the  discretion  of  the  Government  of  the  United  States  to  afford  ample 
protection  to  American  shipping  interests,  to  American  sea-ports,  and  to 
American  transportation  lines  against  Canadian  encroachment  on  the 
western  side  of  the  continent  without  the  slightest  ground  for  appre- 
hending any  sort  of  Canadian  retaliation  on  the  eastern  side  of  the 
continent. 

It  is  high  time  for  the  people  of  this  country  to  appreciate  the  fact 
that  their  national  Government  holds  a  preponderance  of  commercial 
power  on  this  continent  as  absolute  as  the  preponderance  of  its  mili- 
tary power,  and  to  demand  that  those  who  are  charged  with  the  affairs 
of  Government  shall  adopt  such  measures  as  shall  prevent  any  inter- 
ference by  a  foreign  power  with  the  course  of  the  development  of  our 
domestic  or  foreign  commerce. 

THE  LEGALITY  OF  THE  ARRANGEMENTS  UNDER  WHICH  THE  PRIVI- 
LEGES OF  THE  TRANSIT  TRADE  HAVE  BEEN  EXTENDED  TO  THE 
PACIFIC  OCEAN. 

The  legality  of  the  arrangement  whereby  the  privileges  of  the  do- 
mestic transit  trade  have  been  secured  by  the  Canadian  Pacific  Rail- 
way Company  is  subject  to  serious  doubt.  Such  privileges  have  been 
secured  by  forming  a  connection  with  an  American  steamer  line  plying 
between  Vancouver  and  ports  in  the  United  States  as  far  south  as  San 
Diego,  Cal.  The  abrogation  of  Article  XXX  of  the  treaty  of  Washington 
denied  this  privilege  to  foreign  vessels.  The  connection  made  by  the 
Canadian  Pacific  with  an  American  steamer  line  is,  however,  question- 
able as  to  its  legality.  Our  navigation  laws  confine  the  domestic  car- 
rying trade  exclusively  to  American  vessels.  Obviously  an  American 
vessel  can  not  take  a  cargo  of  domestic  goods  from  San  Francisco  to 
Valparaiso,  Chili,  and  there  ship  them  by  a  foreign  vessel  to  ^ew 
York,  but  American  vessels  are  carrying  goods  from  San  Francisco  to 
Vancouver,  British  Columbia,  there  to  be  shipped  to  New  York  by  the 
Canadian  Pacific  and  its  Eastern  railroad  connections,  under  conditions 
much  less  favorable  to  the  protection  of  our  revenues  from  customs  than 
in  the  former  case.  It  will  be  easy  for  the  committee  to  procure  in- 
formation from  the  law  officers  of  the  Government  ui)on  this  subject, 
and  I,  therefore,  leave  the  matter  with  the  simple  expression  of  my 
views  in  regard  to  it. 

There  is,  however,  a  feature  of  the  foreign  transit  trade  through 
Victoria  which  appears  to  be  openly  and  tiagrantly  in  violation  of  the 
letter  and  spirit  of  the  law.  Our  existing  laws  concerning  the  trans- 
portation of  dutiable  goods  from  seaports  of  the  United  States  to  inte- 
rior points  in  the  United  States,  say,  for  example,  imported  goods  from 
San  Francisco  to  Chicago,  require  that  a  consular  invoice  of  such  goods 
shall  be  delivered  to  the  customs  officer  at  San  Francisco  for  examina- 
tion;  that  entry  of  the  goods  shall  be  made  at  that  port;  that  the 
goods  shall  be  shipped  under  a  transportation  bond  for  the  security  cf 
the  duties ;  that  the  railroads  over  which  the  transportation  takes  place 
shall  also  be  bonded,  and  that  the  cars  in  which  they  are  carried  shall  be 


662  TRANSPORTATION  INTERESTS  OF 

sealed.  Bnt  at  the  present  time  foreign  goods  to  be  shipped  east  to  points 
in  the  United  States  are  received  by  an  inspector  of  customs  of  the  dis- 
trict of  Paget  Sound,  who,  as  I  am  informed,  has  been  made  a  consular 
agent  of  the  United  States.  He  simply  certifies  to  manifests  of  Amer- 
ican goods,  and  forwards  them  without  examining  or  certifying  to  the 
invoices,  and  the  Canadian  Pacific  being  a  foreign  corporation  can  not 
execute  a  bond  to  the  United  States  for  the  faithful  performance  of  any 
service  whatever.    The  whole  proceeding  appears  to  be  unwarranied. 

So,  without  any  authority  of  law  and  by  a  manifest  abrogation  of  law, 
Vancouver  is  exempted  from  important  requirements  which  apply  at  San 
Francisco.  Thus  the  administrative  branch  of  our  own  Government  is 
actually  aiding  the  great  politico-military  railroad  of  Canada  in  its 
work  of  deflecting  commerce  from  American  ships,  from  American  sea- 
ports, and  from  American  transportation  lines  by  the  sheer  force  of 
Canadian  and  British  subsidy. 

I  hesitate  not  to  characterize  this  as  disgraceful  to  the  Government 
of  the  United  States  and  a  matter  which  calls  for  immediate  rectifica- 
tion. 

THE  STEtiaGLE  MADE  BY  THE  CANADIAN  PACIFIC  RAILWAY  COMPANY 
FOR  THE  CONTROL  OF  AN  IMPORTANT  PART  OF  THE  INTERNAL  AND 
FOREIGN  COMMERCE  OF  THE  UNITED  STATES. 

The  Canadian  Pacific  Railway  was  open  for  traffic  in  the  month  of 
June,  1886.  With  a  phenomenal  audacity  the  Dominion  Government 
and  the  Canadian  Pacific  Railway  management  assumed  that  the  priv- 
ileges of  both  the  internal  and  the  foreign  transit  trade  of  the  United 
States  applied  to  transcontinental  traffic,  notwithstanding  the  historic 
fact  that  the  entire  transit  trade  was  originally  established  under  the 
peculiar  conditions  of  interjecting  territory  on  the  Eastern  side  of  the 
continent,  and  by  virtue  of  the  fact  that  the  Canadian  Provinces  of 
Ontario  and  Quebec  were  shut  off  from  foreign  commerce  by  ice  and 
fogs  during  six  months  of  the  year.  The  act  of  July  28,  18G6,  made  the 
extension  of  the  "transit  trade"  subject  to  the  discretion  lodged  with 
the  Secretary  of  the  Treasury  touching  the  protection  of  the  revenues 
from  customs,  and  the  twenty-ninth  article  of  the  treaty  of  Washington 
in  terms  granted  the  privileges  of  the  transit  trade  in  favor  of  th'e  par- 
ticular routes  on  the  East  side  of  the  continent  described  in  that  article, 
and  to  such  other  routes  as  might  be  "specially  designated  by  the  Presi- 
dent of  the  United  States." 

I  think  that  from  the  stand-point  of  national  interest  and  honor  it  is 
a  cause  for  regret  that  the  late  administration  should  have  uncondi- 
tionally extended  the  privileges  of  the  transit  trade  to  transcontinental 
traffic  and  tlius  have  aided  the  government  of  Canada  in  carrying  out 
a  line  of  policy  the  objects  of  which  are  inimical  to  the  commercial, 
navigation,  and  transportation  interests  of  this  country  and  in  a  polit- 
ical sense  offensive  to  the  United  States.  As  our  navigation  laws  for- 
bid that  any  foreign  vessel  shall  engage  in  our  domestic  commerce,  it 
was  necessary  that  an  American  line  of  steamers  should  form  the  con- 
nection with  tJje  Canadian  Pacific  Railway,  whereby  that  agency  of  the 
Dominion  Government  might  be  able  to  compete  with  the  transconti- 
nental and  eastern  trunk  lines  of  the  United  States  for  the  traffic  of  Cali- 
fornia, Oregon,  and  Washington  with  the  east  side  of  the  continent. 
Under  the  arrangement  which  was  made  for  carrying  that  object  into 
effect  the  Canadian  Pacific  Railway  at  once  began  a  bulldozing  policy  in 
regard  to  rates  with  the  object  plainly  in  view  of  wresting  from  the 


THE    UNITED    STATES    A^B    CANADA.  663 

American  lines  alarge  share  of  the  tlirongli  traffic.  Tliey  wanted  a  larjrer 
share  than  the  American  lines  could  afford  to  grant  without  iniDeriling 
their  own  interests.  Besides  it  was  seen  that  a  very  material  reduction 
of  through  rates,  in  order  to  ]n-event  traffic  diversion,  would  compromise 
the  American  lines  with  respect  to  an  equitable  adjustment  of  through 
and  local  rates  and  generally  with  respect  to  competing  and  non-com- 
peting rates.  This,  however,  would  inevitably  have  led  to  popular 
discontent  all  along  their  lines  and  the  blame  would  of  course  have 
fallen  immediately  upon  the  managers  of  the  American  lines.  The 
general  manager  of  one  of  these  lines  remarked  that  with  them  it  was 
a  question  of  "no  traffic  or  no  rates." 

Everything  seemed  to  favor  Canadian  aggression.  The  Treasury  De- 
partment had  given  the  whole  case  away  and  soon  after  the  interstate- 
commerce  act  took  effect.  For  months  the  managers  of  the  American 
transcontinental  railroads  were  in  a  demoralized  state,  while  Mr.  Col- 
lingwood  Schreiber,  chief  engineer  and  manager  of  the  government 
railways  of  Canada,  exultingly  reported  to  his  government,  under  date 
of  December  26, 1887,  that  "  already  notes  of  alarm  have  been  sounded 
by  the  American  press  at  the  manner  in  which  the  Canadian  Pacific 
Eailway  is  cutting  into  the  business  of  the  transcontinental  roads  of 
the  United  States."  The  Canadian  Pacific  Railway,  constructed  mainly 
by  the  gifts  and  aids  of  various  sorts  extended  by  the  Canadian  gov- 
ernment and  backed  up  by  that  government  in  every  act  of  aggression 
upon  American  interests,  was  fighting  a  set  of  American  lines  con- 
structed mainly  or  entirely  by  private  capital  with  large  financial  obli- 
gations and  confronted  by  a  jealous  and  somewhat  unfriendly  public 
sentiment  in  this  country  toward  the  railroads  generally.  The  situation 
seemed  to  illustrate  the  irony  of  fate. 

After  a  while  the  Interstate  Commerce  Commission  decided  that  the 
competition  of  the  Canadian  Pacific  Railroad  is  a  cause  for  de])artuie 
from  the  "  long  and  short  haul  rule."  This  was  a  great  relief  to  the 
transcontinental  railroads,  but  a  greater  relief  to  the  producing  indus- 
tries of  California,  which  depend  for  quick  markets  upon  that  portion 
of  the  United  States  situated  east  of  the  Missouri  River.  To  what  ex- 
tent the  long  and  short  haul  rule  may  be  departed  from  the  Commis- 
sion has  cautiously  refrained  from  saying,  and  the  country  is  still  at 
sea  upon  the  vitally  important  question  as  to  the  influence  which  shall 
be  exerted  in  the  determination  of  relative  rates  by  rival  commercial 
forces,  by  mountain  ranges  and  arid  wastes,  and  by  the  competition  of 
water  lines,  and  by  the  power  exerted  by  the  Dominion  Government 
through  its  alter  ego,  the  Canadian  Pacific  Railway  Company.  This  is 
the  emergent  question  of  our  railroad  problem,  which  must  finally  be 
settled  by  judicial  determination.  For  many  months  a  war  of  rates 
continued  between  the  Canadian  Pacific  and  the  American  linos,  and 
the  situation  today  is  in  the  nature  of  an  armistice.  The  plan  adopted 
for  keeping  the  peace  is  that  of  differential  rates.  By  this  concession 
the  Canadian  Pacific  is  allowed  to  charge  lower  rates  in  order  to  secure 
a  share  of  the  through  traffic,  a  virtual  concession  to  the  financial 
power  of  the  Dominion  Government  behind  the  Canadian  I'acific 

This  is  illustrated  by  the  following  table  showing  the  rates  which 
now  prevail  on  through  traffic  from  San  Francisco  to  Chicago  by  direct 
American  routes  and  by  the  Canadian  Pacific  route  by  steamer  to  Van- 
couver, and  thence  by  Canadian  Pacific  Railway  and  its  eastern  con- 
nections. 


664 


TRANSPORTATION   INTERESTS    OF 

Throuqh  rates  from  San  Francisco  to  Chicago. 


Merchandise  class. 

Direct 

American 

route. 

Canadian 
Pacific 
route. 

Differ- 
ential. 

Merchandise  class. 

Direct 

American 

route. 

Canadian 
Pacific 
route. 

DiflFer- 
ential. 

First 

$3.90 
3.40 
2.70 
2.10 
1.85 

$3.  72J 
3.25i 
2.58 
2.00 
1.75 

$0. 17J 

!l2 
.10 
.10 

A.. 

$1.90 
1.70 
1.35 
1.20 
1.10 

$1.«2 
1.62 
L28 
L15 
1.05 

$0.08 
.08 

Second . 

B 

Third 

C 

.07 

Fourth 

D 

.05 

Fifth 

E 

.05 

The  discrimination  in  passenger  traffic  is  illustrated  by  the  following 
statement  quoted  from  printed  schedule  showing  the  rates  in  force  on 
the  26th  of  December,  1889. 

Rates  from  St.  Paul,  Minn.,  to  Portland,  Oregon. 


Class. 

Via 

Northern 

Pacific. 

Via 

Canadian 

Pacific. 

Limited- 

$60 
35 

$50 
30 

Second  class . . .. . ... 

During  the  year  1888  the  Canadian  Pacific  in  its  fight  with  the  Amer- 
ican transcontinental  lines  secured  about  39  per  cent,  of  the  traffic 
between  San  Francisco  and  a  line  of  which  the  principal  eastern  points 
are  St.  Paul,  Milwaukee,  Chicago,  St.  Louis,  and  New  Orleans.  I 
have  not  been  able  to  procure  any  later  information  as  to  the  relative 
magnitude  of  this  movement. 

The  Interstate  Commerce  Commission,  in  their  recently  published 
report,  say: 

It  is  estimated  tliat  fully  oue-third  of  the  through  business  of  the  Canadian  Pacific, 
to  and  from  the  Pacific  coast  consists  of  trafSc  furnished  from  the  United  States. 


TRAFFIC    BETWEEN   THE    ATLANTIC    SEA-BOARD    STATES  AND   CHINA 
AND  JAPAN  OYER  THE   CANADIAN  PACIFIC    ROUTE. 

There  is  a  traffic  over  which  neither  the  Transcontinental  Railway 
Association  or  any  other  American  railway  organization  appears  to  ex- 
ercise any  sort  of  control.  I  refer  to  the  direct  traffic  between  points 
in  the  Atlantic  Sea-board  States  and  China  and  Japan,  over  the  Cana- 
dian Pacific  Railway  and  its  heavily  subsidized  ocean  steamer  line. 
This  commerce  is  being  deflected  from  American  steamer  lines  on  the 
Pacific  Ocean,  from  American  sea-ports  on  the  Pacific  coast,  and  from 
American  railroads  across  the  entire  continent,  by  the  sheer  force  of 
subventions  granted  by  the  Dominion  and  British  Governments. 
Through  rates  are  quoted  between  Atlantic  and  Pacific  coast  cities, 
but  there  is  no  supervision  over  such  traffic  such  as  that  which  is  exer- 
cised by  the  Transcontinental  Association  over  traffic  west  of  Chicago 
and  St.  Louis. 

The  following  tables  exhibit  respectively  the  kinds  and  weights  of 
commodities  exported  from  the  Atlantic  Sea-board  States  to  China  and 


THE    UNITED    STATES    AND    CANADA. 


665 


Japan  via  British  Columbia  by  the  Canadian  Pacific  Eailway  and  its 
heavily  subsidized  British  steamer  line  across  the  Pacific  Ocean  : 

No.  b9.—Statevietit  showing  the  kinds  and  weights  of  commodities,  the  production  of  the 
United  States,  exported  Jrom  the  United  States  through  British  Columbia,  via  the  Cana- 
dian Pacific  Bailway,  to  China  and  Japan  during  the  year  ending  June  30,  1888. 

[From  official  reports  by  the  TJnited  States  inspector  of  customs  at  Vancouver,  British  Columbia.) 


Articles. 

Weight. 

Articles. 

"Weight. 

Books 

Pounds. 

5,973 

910 

997 

4,  660, 168 

27,  410 

72,  696 

7,896 

678, 047 

31. 192 

21. 193 

Pounds. 
15,  570 
390 

Boots  and  shoes.  India-rubber 

Plumbago 

Clocks  aud  watches ,... 

395 

Cottons 

Talc 

2  080 

1  725 

Hoofs,  hoius,  and  bones 

45,000 
60 

Machinery 

Wire    .            

53,653 

Total     

Organs 

5,625,355 

No.  60. — Statement  showing  the  kinds  and  weights  of  commodities,  the  production  of  the 
United  States,  exported  from  the  United  States  through  British  Columbia,  via  the 
Canadian  Facific  Bailway,  to  China  and  Japan  during  the  year  ending  June  30,  1889. 

[From  official  report  by  the  United  States  inspector  of  customs  at  Vancouver,  British  Columbia.] 


Articles. 


Air-guns 

Apples 

Books,  stationery,  charts,  and  printed 

matter 

Boots,  India-rubber 

Carbons 

Cavtridces,  metallic 

Cases  of  wood 

Celluloid 

Clav  pipe 

Collars,  linen 

Copper  wire 

Cottons  

Cream  of  tartar 

Cresin 

Dry  goods,  not  specified 

Drugs,  not  specified 

Electric  fixtures 

Fire-works 

Gas-fixtures - 

Ginseng - 

Glassware 

Headl-ights  for  locomotives 

Hoofs  and  fertilizers 

Iron  and  steel : 

Castings 

Fire-arms 

Hardware 

Locomotive  springs 

Machinery,  not  specified 

Printing-presses 

Scales 

Type- writers 

V/'ire  rope - 


"Weight. 


Pounds. 
40 
310 

40,  588 
4,097 
4,140 
3,162 

300 
1,255 
2,861 

534 

19,  070 
11,  756,  504 

821 

564 

11,401 

8,080 

196,  451 

1.400 

2,119 

39,  933 

100 

450 

182,  780 

9,762 

361 

12, 411 

470 

328,  938 

1,819 

3,663 

200 

20,  040 


Articles. 


Lamps 

Leather,  belting 

Mica 

Milk,  conden.sed 

Merchandise,  not  specified 

Missiouarv  goods 

Musical  instruments: 

Organs  

Pianos 

Oils,  lubricating 

Oils  and  paints 

Paper 

Pencils,  of  lead 

Personal  etfects 

Phonographs  

Photographic  goods 

Pictures  

Sulphur 

Silk,  raw 

Skates,  roller 

Tea 

Telegraphic  wire 

Tobacco 

Cigarettes 

Tinware 

Varnish. 

Wood  manufactures: 

Boats 

One  show-case 

Wax-candle  stock -o.- 

Total 


Weight. 


Pounds. 

410 

1,713 

65 

1,896 

5,466 

70,460 

2,  720 

1,050 

18, 016 

1,150 

100 

880 

12,  085 

2,100 

714 

110 

274 

2, 002 

37,  700 

480 

3,420 

753 

3.792 

1,531 

1,764 


(*) 


2,340 
) 
7,786 


12,  834, 991 


*  No  weight  given. 


6GG 


TRANSPORTATION    INTERESTS    OP 


No.  61. — Statement  showing  the  kinds  and  weights  of  commodities  imported  into  the  United 
Stales  through  British  Columbia,  via  the  Canadian  Pacijic  liaihvay,  from  China  and 
Japan  during  the  calendar  year  188d,  and  the  eleven  months  ending  November  30,  1889. 

[From  official  reports  of  the  United  States  inspector  of  customs  at  Vancouver,  British  Columbia.] 


Gommoditiea. 

1888. 

Eleven 
mouths  of 

1889. 

Commodities. 

1888. 

Eleven 

months  of 

1889. 

Tea 

Pounds. 

14, 687,  627 

216,  385 

560,  591 

140,  374 

4.030 

Founds. 

8,  600,  550 

3,461,382 

790,  791 

361,  277 

3u5,  912 

100,  555 

83,  370 

37,  610 

27,  920 

16,  777 

10,  391 

7,  387 

7,350 

Pounds. 

Pounds. 
6, 420 
3,992 

Silk  tioss 

16,400 

748 

530 

Mattino'   

160 

167,  040 

19,  250 

180 

1,  065,  370 

Flax  iiber     

Merchandise  (not  other- 
wise described) 

Total 

644,  411 

16, 877, 427 

14, 467, 533 

iso 

Tkeasurt  Department,  Bureau  of  Statistics, 

December  27,  1889. 


S.  G.  Beock, 

Chief  of  Bureau. 


The  quantity  of  tea  imported  by  this  route  during  the  year  ended 
June  30,  1889,  constituted  20  per  cent,  of  the  total  imports  of  tea 
into  the  United  States  during  that  year. 

The  precise  question  which  confronts  Congress  and  the  country  is  : 
Shall  a  foreign  railroad,  built  by  a  foreign  government,  and  a  subsidized 
British  steamer  line,  established  in  connection  with  that  railroad  for 
commercial  and  political  purposes  inimical  to  the  United  States,  be  per- 
mitted to  divert  American  commerce  from  American  vessels,  American 
sea-ports  and  American  transportation  lines,  and  if  not,  what  measures 
shall  be  adopted  for  the  protection  of  these  American  interests  ? 

CANADIAN  DISCRIMINATIONS  IN  THE  MATTER  OF  ENTRANCE  AND 

CLEARANCE  FEES. 

Almost  all  the  commercial  nations  on  the  globe.  Great  Britain  in- 
cluded, now  allow  American  vessels  to  enter  their  ports  from  all  foreign 
ports  upon  the  same  terms,  as  to  duties  of  tonnage  or  import,  as  are 
levied  upon  their  own  vessels  entering  from  foreign  ports.  In  other 
words,  no  nation  discriminates  against  the  vessels  of  another  in  the  mat- 
ter of  duties  of  tonnage  or  impost.  This  arrangement  of  maritime  re- 
ciprocity in  its  general  application  is  not  based  upon  treaty  stipula- 
tions, but  upon  reciprocal  statutory  provisions  of  a  general  or  special 
nature.  Such  legislation  was,  I  think,  initiated  by  the  United  States 
in  Oiir  act  of  May  24,  1828.  But  notwithstanding  the  fact  that  this 
reciprocal  arrangement  now  characterizes  the  maritime  intercourse  of 
the  civilized  globe,  and  the  fact  that  Canadian  vessels  are  allowed  to 
enter  at  ports  of  the  United  States  upon  the  same  terms  as  to  tonnage 
duty  and  entrance  and  clearance  fees  as  are  charged  American  vessels, 
Canada  charges  American  vessels  arriving  from  American  ports  an 
entrance  fee  of  50  cents  and  a  clearance  fee  of  50  cents,  makiug  $1 
for  every  visit  to  a  Canadian  port,  whereas  no  entrance  or  clearance  fee 
whatever  is  imposed  upon  Canadian  vessels  having  a  license  issued  by 
the  Canadian  authorities,  and  the  Commissioner  of  Navigation  of  the 
United  States  informs  me  that  ''  it  is  presumed  that  the  license  is  ob- 
tained by  such  vessels,  practically,  in  every  case." 


THE    UNITED    STATES    AND    CANADA.  QGl 

This,  ill  dollars  and  cents,  is  comparatively  a  small  matter  to  the 
country  at  large,  but  it  serves  to  illustrate  the  general  fact  that  all 
along  the  line,  from  the  banks  of  Newfoundland  to  the  island  of  Van- 
couver, this  aggressive  Canadian  Government  leaves  no  chance  of  en- 
croachment upon  American  commerce  and  no  loop-hole  of  advantage 
for  Canadian  vessels  or  Canadian  trade  which  it  does  not  improve  by 
an  unfair  discrimination  of  some  sort  in  favor  of  Canadian  interests. 

In  passing  I  would  observe  that  the  United  States  does  not  allow 
Canadian  vessels  to  engage  in  trade  between  American  ports,  and  that 
Canada  does  not  allow  American  vessels  to  engage  in  trade  between 
Canadian  ports.  This  is  and  always  has  been  the  case.  Each  country 
absolutely  protects  its  own  coastwise  or  domestic  carrying  trade 
against  foreign  competition. 

CANADIAN  VIOLATIONS  OF  THE  TERMS  OF  THE  TREATY  OF  WASHING- 
TON AND  OF  THE  OBLIGATIONS  OF  THE  TRANSIT  TRADE. 

A  flagrant  and  most  absurd  violation  of  a  treaty  stipulation  between 
the  United  States  and  Great  Britain  was  brought  to  the  attention  of 
the  House  of  Representatives  on  the  4th  of  January,  1888,  in  the  form 
of  a  resolution  submitted  by  the  Hon.  Nelson  Dingley,  jr.,  of  Maine. 
During  the  three  preceding  years,  through  the  device  of  an  "order  in 
council,"  a  rebate  of  18  cents  per  ton  had  been  allowed  out  of  the  total 
toll  of  20  cents  per  ton  on  grain  of  all  sorts  passing  through  the  Wel- 
land  and  St.  Lawrence  Canals,  if  shipped  to  Montreal.  This  constitutes 
a  premium  of  18  cents  a  ton  offered  by  the  Canadian  Government  in 
favor  of  the  diversion  of  American  commerce  from  American  seaports 
and  American  transportation  lines.  An  officer  of  the  revenue  depart- 
ment of  Canada  has  innocently  confessed  that  "the  object  of  the  Do- 
minion Government  in  promulgating  this  order  was  to  encourage  trade 
over  the  St.  Lawrence  route  instead  of  allowing  it  to  go  to  American 
ports." 

On  the  16th  of  January,  1888,  Mr.  Dingley  showed  that  this  discrimina- 
tion was  clearly  in  violation  of  Art.  XXVII  of  the  treaty  of  Washing- 
ton. It  also  constitutes  a  most  flagrant  and  manifest  violation  of  the 
reciprocal  relations  under  which  the  "transit  trade"  exists.  The  life 
of  that  arrangement  subsists  in  an  entire  abstinence  from  any  sort  of 
discrimination  in  favor  of  the  cars,  the  vessels,  or  the  ports  of  either 
country.  When  the  two  countries  shall  attempt  to  vie  with  each  other 
by  discriminations  in  favor  of  their  own  cars,  or  vessels,  or  ports,  the 
whole  transit  trade,  with  all  its  conditions  of  mutual  benefit,  will  be 
wiped  out. 

It  was  hoped  that  the  Dominion  Government  would  have  recognized 
the  expediency,  if  not  the  justice,  of  receding  from  this  manifest  breacli  of 
treaty  obligation ;  but  this  has  not  been  done.  On  the  20th  of  April,  1888, 
the  offensive  discriminating  order  was  renewed.  The  Dominion  Govern- 
ment seemed  to  be  alarmed,  and  delayed  the  order  about  a  month,  un- 
til the  absorbing  issues  of  our  approaching  Presidential  campaign  had 
called  the  attention  of  Congress  and  the  country  away  from  Canada. 
But  again,  on  the  18th  of  March,  1889,  the  discriminating  order  was 
issued  by  an  order  of  council  for  the  season  of  navigation  of  1889. 
Last  year  there  was  no  awakened  public  sentiment  to  be  feared  in  this 
country,  and  the  order  was  issued  at  an  unusually  early  date. 

It  is  observed  that  this  violation  of  the  provisions  of  the  treaty  of 
V^ashington,  and  of  the  conditions  under  which  the  transit  trade  ex- 
ists, is  not  committed  through  an  act  of  Parliament,  but  by  the  sly  and 


n68  TRANSPORTATION  INTERESTS  OP 

facile  expedient  of  an  annual  "order  in  conncil,"  a  method  of  wrong:- 
doing  for  which  Charles  I,  King  of  England,  was  adjudged  a  tyrant, 
and  for  which  he  at  once  lost  his  crown  and  head. 

In  responding  to  this  indefensible  discrimination  against  American 
commerce,  the  Government  of  the  United  States  ought  at  once  to  im- 
pose a  tonnage  of  at  least  10  cents  per  ton  on  the  gross  tonnage  of  all 
Canadian  vessels  passing  through  the  canal  at  Sault  Ste.  Marie,  the 
rapids  in  the  strait  which  connects  the  navigation  of  Lake  Superior 
with  that  of  Lake  Huron.  This  canal,  with  its  locks  515  feet  long  and 
80  feet  wide,  was  constructed  at  a  cost  of  about  $4,000,000,  and  is  now 
owned  and  operated  by  the  Government  of  the  United  States.  Both 
American  and  Canadian  vessels  are  allowed  to  pass  through  Sault  Ste. 
Marie  Canal  free  of  tolls.  That  the  United  States  has  full  power  to 
order  such  discriminating  tax  upon  Canadian  vessels  will  be  readily 
seen  by  examining  Article  XXVII  of  the  treaty  of  Washington,  con- 
cluded July  4, 1871.  At  that  time  the  canal  belonged  to  the  State  of 
Michigan,  and  it  was  not  transferred  to  the  United  States  until  June 
5,  1881. 

There  are  also  other  appropriate  and  effective  means  of  retaliation 
upon  Canada  for  this  unjust  discrimination  against  American  interests, 
which  will  readily  suggest  themselves  to  the  legislative  mind. 

THE   CANADIAN  REFUSAX  TO  RECIPROCATE  IN   THE  MATTER   OF  AID- 
ING VESSELS  IN  DISTRESS. 

On  the  4th  of  February,  1888,  the  late  Hon.  Newton  W.  Nutting,  of 
New  York,  brought  to  the  attention  of  the  House  of  Kepresentatives 
the  fact  that  the  Dominion  Government  refuses  to  accept  the  offer 
made  by  the  United  States  by  act  of  June  19,  1878,  to  allow  Canadian 
wrecking  vessels  and  machinery  to  assist  Canadian  vessels  wrecked 
in  American  waters,  provided  a  like  privilege  is  extended  to  American 
wrecking  vessels  and  machinery  in  Canadian  waters. 

This  matter  has  time  and  again  been  brought  to  the  attention  of  the 
Dominion  Government,  and  the  subject  has  several  times  been  discussed 
in  Parliament.  But  the  political  influence  of  two  or  three  Canadian 
wrecking  companies  has  been  strong  enough  to  prevent  the  Dominion 
Government  from  accei)ting  the  terms  of  our  proffered  reciprocity, 
although  the  refusal  has  already  resulted  in  Isss  of  life.  But  this  re- 
fusal to  reciprocate,  in  a  cause  which  appeals  to  the  humane  impulses 
of  mankind,  is  perfectly  in  keeping  with  the  refusal  of  the  Canadian 
Government  to  allow  American  fishing  vessels  the  common  privilege  of 
seeking  refuge  in  her  ports  in  time  of  storm,  and  for  replenishment 
and  necessary  repairs. 

AN  ATTEMPTED  VIOLATION  OF   THE  RECIPROCAL  CHARACTER  OF  THE 

TRANSIT   TRADE. 

The  grasping  and  unfriendly  disposition  of  the  Canadian  Govern- 
ment toward  the  United  States  was  strikingly  illustrated  by  the 
attempted  refusal  of  the  Canadian  authorities  to  allow  grain  produced 
in  the  province  of  Manitoba  to  be  shipped  "in  bond"  from  one  point  in 
Canada  to  another  point  in  Canada  over  American  railroads.  This  took 
place  upon  the  completion  of  the  Canadian  Pacific,  early  in  the  year 
1886.  The  movement  of  several  million  bushels  of  grain  was  thus  for 
a  time  restrained.  This  was  a  flagrant  violation  of  the  privileges  of 
the  "transit  trade,"  under  which  recijuocal  arrangement  the  railroads 


THE    UNITED    STATES    AND    CANADA.  069 

of  Canada  have  profited  ten  times  as  much  as  the  railroads  of  the 
United  States.  The  "transit  trade"  has  also  been  of  enormous  advan- 
tage to  the  commercial  and  industrial  interests  of  Canada.  The  refusal 
of  the  Dominion  Government  to  allow  grain  to  be  transported  "in  bond" 
over  American  railroads  was  not  openly  announced,  but  it  was  carried 
on  surreptitiously. 

The  Ottawa  authorities  declared  that  no  instructions  had  been  issued 
to  the  officials  in  Manitoba  to  prevent  the  traffic,  and  the  customs  offi- 
cials in  Manitoba  declared  that  no  instructions  had  been  issued  to  them 
whereby  they  could  issue  the  necessary  certificates  allowing  the  move- 
ment of  grain  from  one  point  in  Canada  to  another  point  in  Canada  over 
an  American  line.  The  treaty  of  Washington,  concluded  May  8,  1871, 
bore  the  first  marks  of  this  scheme  of  refusing  to  be  bound  by  the  re- 
ciprocal conditions  of  the  transit  trade.  The  words  "  to  other  places  in 
the  United  States,"  near  the  end  of  the  second  paragraph  of  article  29, 
grant  to  Canadian  railroads  the  right  to  convey  goods  from  one  point 
in  the  United  States  to  another  point  in  the  United  States  without  pay- 
ment of  duty,  whereas  tliere  are  no  corresponding  words  in  the  first  para- 
graph of  the  article  referred  to,  which  grant  a  reciprocal  privilege  to  the 
railroads  of  this  country.  The  Canadian  Pacific  seemed  to  be  trying 
the  experiment  of  taking  advantage  of  this  omission,  which  was  either 
the  result  of  a  blunder  or  of  a  fraud.  But  the  gathering  storm  of  indig- 
nation convinced  the  Canadians  that  the  whole  transit  trade  might  be 
endangered  by  their  refusal  to  observe  the  obligations  of  its  reciprocal 
character  and  they  prudently  withdrew  their  covert  opposition. 

I  have  presented  this  case  merely  as  a  further  illustration  of  the  char- 
acter of  the  Dominion  Government  and  to  show  that  the  people  of 
Canada  carry  no  friendship  into  their  trade  with  the  United  States. 

ACTION  OF  THE  COMMERCIAL  AND  INDUSTRIAL  BODIES  OF  THE 
PACIFIC  COAST  IN  REGARD  TO  CANADIAN  PACIFIC  RAILWAY  EN- 
CROACHMENT. 

The  people  of  the  Pacific  coast  at  last  appear  to  be  awake  to  the 
dangers  of  Pacific  Kailway  encroachment.  A  resolution  was  unani- 
mously adopted  by  the  Chamber  of  Commerce  of  San  Francisco,  on  the 
23d  of  July  last,  inviting  commercial  and  industrial  bodies  of  the 
Pacific  coast  to  meet  in  conference  at  San  Francisco  for  the  purpose  of 
considering  various  subjects  of  interest,  but  particularly  the  assault 
made  upon  the  maritime,  commercial,  and  transportation  interests  of 
that  section  of  the  country  through  the  enormous  subventions  granted 
by  the  Canadian  Government  to  the  Pacific  Railway,  and  the  subsidies 
granted  by  the  Canadian  and  British  Governments  to  ocean  steam 
lines,  which  are  threatening  the  entire  destruction  of  American  steam 
navigation  on  the  Pacific  Ocean,  and  the  diversion  of  trade  from  Pacific 
Coast  ports. 

That  conference  was  held  at  San  Francisco  on  the  29th  and  30th  of 
July  last.  Eeferring  to  the  whole  scheme  of  British  and  Canadian 
subvention  the  report  of  the  conference  says  :  "  With  such  special  ad- 
vantages the  Canadian  Pacific  can  afford  to  quote  rates  which  must 
drive  the  American  lines  out  of  the  China  trade,  and  inflict  an  almost 
irreparable  injury  upon  San  Francisco." 

The  commercial  disaster  which  the  merchants  and  other  business  men 
of  the  Pacific  coast  so  clearly  see  to  be  impending,  and  against  which 
they  ask  the  Government  of  the  United  States  to  protect  them,  is  not, 
as  before  remarked,  the  result  of  a  struggle  between  private  enterprise 


670  TRANSPORTATION  INTERESTS  OF 

in  the  two  couutries,  but  is  the  outcome  of  a  struggle  between  private 
enterprise  in  the  United  States  as  against  a  Canadian  railroad  corpora- 
tion which  has  received  aid  from  the  Dominion  Government  in  excess 
of  its  cost,  and  which  has  been  appropriately  styled  "  the  Dominion 
Government  on  wheels."  It  is  also  the  outcome  of  a  struggle  on  the 
sea  between  private  enteri)rise  and  British  steamer  lines  so  lightly  i)ro- 
tected  by  subsidy  as  to  take  the  contest  out  of  the  arena  of  competition. 

The  commercial  and  political  schemes  of  Canada  and  Great  Britain 
are  re-enforced  by  the  formidable  fortress  and  naval  station  erected  by 
the  governments  of  those  countries  at  Esquimault  on  the  island  of  Van- 
couver. Certain  of  the  chief  officers  of  the  Canadian  Pacific  have  de- 
clared tliat  these  works  are  merely  intended  to  serve  as  defenses  against 
a  possible  naval  attack  by  Eussia.  This  is  manifestly  absurd,  and  is  so 
regarded  by  military  men.  Russia  sold  Alaska  to  the  United  States  to 
avoid  the  risk  of  having  it  captured  by  Great  Britain  in  the  event  of 
war,  and  to  avoid  warfare  with  Great  Britain  in  that  part  of  the  world. 
The  only  object  of  the  Esquimault  works  is  to  hold  the  commercial  van- 
tage of  this  protected  and  aggressive  transportation  line  across  North 
America,  and  connecting  Liv'erpool  with  China  and  Japan. 

In  an  editorial  notice  of  the  assembling  of  the  commercial  conference 
at  San  Francisco  the  Evening  Bulletin  of  that  city  stated  the  merits 
of  the  whole  case  in  a  single  paragraph:  "Briefly  stated,  all  the  ques- 
tions (to  be  considered)  may  be  resolved  in  this  one,  What  i)ower  is  to 
have  the  commercial  supremacy  on  that  part  of  the  Pacific  Ocean  bor- 
dering the  western  side  of  North  America  ?" 

This  summarizes  the  whole  case  which  now  demands  consideration  by 
the  Fifty-first  Congress  of  tlie  United  States. 

I  need  say  nothing  further  in  regard  to  the  San  Francisco  conference, 
as  copies  of  its  proceedings  were  sent  to  each  Senator  and  Representa- 
tive from  the  Pacific  coast,  with  the  request  that  they  would  use  every 
consistent  endeavor  to  place  the  subject  properly  before  Congress. 

CONCLUSION. 

And  now,  in  conclusion,  I  beg  leave  briefly  to  recapitulate  the  main 
facts  which  I  have  brought  to  your  notice,  and  the  points  which  I  have 
attempted  to  establish. 

The  most  important  feature  of  our  Canadian  relationship  appears  to 
consist  in  the  fact  that  the  Dominion  Government  is  quite  as  much  an 
active  owner  and  manager  of  the  traffic  interests  of  canals  and  rail- 
roads as  a  government.  Besides,  it  controls,  for  political  purposes,  a 
railroad  across  the  continent.  For  the  creation  of  this  aggressive  sys- 
tem of  transportation  the  people  of  Canada  have  submitted  to  a  burden 
of  debt,  as  great  as  that  assumed  by  the  people  of  the  United  States 
for  the  preservation  of  our  union.  This  Canadian  governmental  sys- 
tem of  transportation  encroaches  upon  the  commercial  interests  of  the 
United  States  apparently  from  the  very  necessities  of  its  being. 

Besides  this,  I  have  brought  to  your  attention  numerous  violations 
of  treaties  and  encroachments  upon  the  commercial  interests  of  the 
United  States.  The  British  Government  has  no  power  whatever  to  re- 
dress these  wrongs.  The  Canadians  refuse  to  allow  that  Government 
any  sort  of  interference  in  their  internal  aftairs.  Canada  has  no  array 
or  navy,  and  while  paying  no  tribute  to  Great  Britain,  imposes  duties 
on  British  goods  for  the  protection  of  Canadian  industries,  but  at  the 
same  time  looks  to  Great  Britain  for  military  protection  and  uses  her 


THE  UNITED  STATES  AND  CANADA.  671 

for  the  purpose  of  uegotiating  treaties,  the  obligation  of  which  the  Do- 
miuiou  Goveriimeut  is  uuable  or  unwilling  to  observe. 

All  along  the  line  from  Nova  Scotia  to  British  Columbia  the  United 
States  has  an  hundred  times  more  power  to  restrain  Canadian  encroach- 
ment upon  American  interests  than  can  possibly  be  exercised  by  Great 
Britain  in  any  peaceful  way. 

Do  not  all  these  facts  and  considerations  clearly  prove  the  folly  of  any 
iurther  attempt  to  cure  the  evils  connected  with  our  Canadian  relation- 
ship by  treaty  ? 

Appropriate  legislation  by  Congress,  prompted  not  by  any  hostile  or 
even  vengeful  feelings,  will,  I  believe,  be  found  sufficient  for  the  cure 
of  all  the  evils  of  which  we  now  justly  complain. 


m:  QAUwmm^ 


UNIVERSITY  OF  CALIFORNIA  AT  LOS  ANGELES 

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